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DB Corp Ltd.
Overweight
DBCL.BO, DBCL IN
Q4FY11: Solid ad growth, but newsprint prices a
concern
DBCL reported Q4 profit growth of 23% YoY, driven by strong growth in
advertising revenues (up 31% YoY). Q4 EBITDA margins were down 180bps
YoY on account of higher newsprint costs and new launches. Management
have guided at higher newsprint costs going forward, we pare our FY12E/13E
EPS estimates by 3%/6%. Remain OW with TP of Rs290.
• Robust ad revenue growth: FY11 advertising revenues were up 24% YoY
driven by volumes and yield improvement in equal measure. Management
guided to similar growth driven mostly by yield improvements in FY12.
DBCL have raised ad rates from April, which would improve yields 12%-
14% going forward
• Newsprint costs pressure to continue: DBCL saw newsprint prices rising
8% YoY in FY11. Management guided to 12%-14% further increase in
newsprint prices for FY12. We expect total newsprint costs to increase 21%
YoY in FY12 on back of higher prices as well as increased circulation from
new edition launches. As a result, we cut our FY12/FY13 EPS estimates by
3%/6%. We roll forward our TP to Mar-12(from Sep-11), to Rs290 based
on 18x FY13E P/E, in-line with its historic trading average.
• Roll out in Maharashtra imminent: Management indicated that Jharkhand
editions are performing in-line with modest contribution to FY11 ad
revenues. DBCL is set to launch its Marathi daily from Aurangabad from
May 29 and management noted that intial response to subscriptions has
been promising. DBCL further plans to launch a Nashik Marathi edition
soon after Auraganbad launch. DBCL indicated that they might delay the
launch in Bihar to end FY12 (from Oct-Nov 11) to focus on Maharashtra.
• FY11 results highlights: FY11 revenues increased 19% YoY driven by ad
revenue growth (+24% YoY). EBITDA margins moderated 40bps YoY to
32.2% with mature editions’ margins at 36.5%. Net profit increased 41%
YoY.
• Risks: Key risks include rising competitive intensity, failure to scale up in
new markets, significant increase in newsprint costs and slowdown in
economic growth.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
DB Corp Ltd.
Overweight
DBCL.BO, DBCL IN
Q4FY11: Solid ad growth, but newsprint prices a
concern
DBCL reported Q4 profit growth of 23% YoY, driven by strong growth in
advertising revenues (up 31% YoY). Q4 EBITDA margins were down 180bps
YoY on account of higher newsprint costs and new launches. Management
have guided at higher newsprint costs going forward, we pare our FY12E/13E
EPS estimates by 3%/6%. Remain OW with TP of Rs290.
• Robust ad revenue growth: FY11 advertising revenues were up 24% YoY
driven by volumes and yield improvement in equal measure. Management
guided to similar growth driven mostly by yield improvements in FY12.
DBCL have raised ad rates from April, which would improve yields 12%-
14% going forward
• Newsprint costs pressure to continue: DBCL saw newsprint prices rising
8% YoY in FY11. Management guided to 12%-14% further increase in
newsprint prices for FY12. We expect total newsprint costs to increase 21%
YoY in FY12 on back of higher prices as well as increased circulation from
new edition launches. As a result, we cut our FY12/FY13 EPS estimates by
3%/6%. We roll forward our TP to Mar-12(from Sep-11), to Rs290 based
on 18x FY13E P/E, in-line with its historic trading average.
• Roll out in Maharashtra imminent: Management indicated that Jharkhand
editions are performing in-line with modest contribution to FY11 ad
revenues. DBCL is set to launch its Marathi daily from Aurangabad from
May 29 and management noted that intial response to subscriptions has
been promising. DBCL further plans to launch a Nashik Marathi edition
soon after Auraganbad launch. DBCL indicated that they might delay the
launch in Bihar to end FY12 (from Oct-Nov 11) to focus on Maharashtra.
• FY11 results highlights: FY11 revenues increased 19% YoY driven by ad
revenue growth (+24% YoY). EBITDA margins moderated 40bps YoY to
32.2% with mature editions’ margins at 36.5%. Net profit increased 41%
YoY.
• Risks: Key risks include rising competitive intensity, failure to scale up in
new markets, significant increase in newsprint costs and slowdown in
economic growth.
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