India Equity Research Reports, IPO and Stock News Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
Zee Entertainment Enterprises Ltd
3Q disappoints due to higher sports losses
One-off income shores up reported revenue
Zee Entertainment’s (Zee) 3QFY11 revenue grew 16% QoQ to Rs8.2bn, which
was above UBS’s estimate (Rs7.1bn) mainly on one-off revenue of Rs700m.
EBITDA (including the one-off income) grew 19% QoQ to Rs2.2bn (versus UBS’s
estimate Rs2.0bn); EBITDA margin was 27.2% (versus UBS’s estimate of 27.0%).
Reported net profit came in at Rs1.55bn, in line with UBS’s estimate. Adjusting for
the one-off revenue, EBITDA was 24% below our estimate (20.4% EBITDA
margin) while revenue was in line with our estimate.
Advertising and subscription revenue growth in line with UBS estimates
Advertising revenue grew 7% QoQ to Rs4.4bn and subscription revenue grew 3%
QoQ to Rs2.8bn in line with UBS estimates. Other revenue included a one-time fee
of Rs700m due to the pre-mature termination of the rights to a sporting event.
Programming costs increased due to higher sports costs
Programming costs rose 80% YoY and 20% QoQ to Rs4.2bn (50.3% of sales)
primarily led by higher sports costs as Zee hosted several soccer and cricket
properties in 3Q. Sports business operating losses rose from Rs276m in 3QFY10 to
~Rs1bn. Excluding the sports business, EBITDA margin was 39.1% (versus 39.3%
in 3QFY10).
Valuation: Buy rating with DCF-based price target of Rs180
We derive our price target from a DCF-based methodology and explicitly forecast
long-term valuation drivers using UBS’s VCAM tool. Zee is hosting a conference
call on 17 January 2011 at 2pm India time (refer to Table 3 for dial-in details). We
will review our numbers post the conference call.
No comments:
Post a Comment