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UBS Investment Research
HT Media
A good start to FY12
Event: Q1 results largely in line with UBS estimates, ahead of consensus
HT Media reported its Q1 FY12 results: revenue grew 23% YoY to Rs4,969m vs.
the UBS estimate of Rs4,872m. EBITDA grew 13% YoY to Rs903m vs. the UBS
estimate of Rs916m. Net profit grew 24% YoY to Rs515m, 3% above the UBS
estimate of Rs499m and 11% ahead of the consensus estimate of Rs464m. HT
Media has achieved 24% of our FY12 net profit estimate during Q1 FY12.
Impact: maintain earning estimates despite weak ad rev. outlook for FY12
We maintain our FY12 earnings estimates for HT Media and expect advertising
revenues to grow 16% led by advertising yield improvements as its newspapers
continue to gain readership in the IRS surveys. We expect EBITDA margins to
improve in FY12-13E—despite an increase in newsprint prices—as Mint and
Hindustan Times’ Mumbai edition are likely to achieve EBITDA breakeven.
Losses for its Internet business should also fall in FY12.
Action: maintain positive view on India print media sector and HT Media
We expect India print media revenue to rise in the next five years, led by
favourable demographics, rising income and literacy levels, increasing print
penetration and limited competition from online platforms. We believe HT Media
is likely to outperform its peers as its key newspapers continue to report strong
growth in average daily readership, ahead of industry growth rates.
Valuation: maintain Buy with price target of Rs195
We derive our price target from FY13E EPS of Rs10.91 and 18x PE.
Key takeaways from conference call
Q1 FY12 has been a weak quarter for Hindi print media as ad revenues were
impacted due to lower spends from the education sector given a delay in
examination results and a late start to the season. Management expects the
advertising industry outlook to remain weak in FY12 as some sectors, such
as real estate, could see a slowdown. HT Media is likely to outperform the
industry.
HT Media’s average newsprint price increased to Rs32,200/t. Management
expects domestic newsprint prices to stabilise and start declining if waste
paper prices decline.
HT Media expects circulation revenue to grow 2-4% in FY12 as it will focus
on increasing the circulation of Hindustan Times’ Mumbai edition,
Hindustan’s UP edition and Mint.
HT-Burda achieved EBITDA breakeven in Q1 FY12. The HT-Burda plant is
operating at 25-40% capacity and has a potential to generate Rs2bn revenue
at peak capacity utilization level. Currently 55% of its order book is from
domestic customers.
HT Media management is optimistic about the education business in India. It
has partnered with MT Educare (Mahesh Tutorials) and is operating six
coaching centres in Delhi NCR under the brand name ‘Studymate’, which
provide supplementary coaching to class 9-12 students.
It expects to make investments of Rs80m in FY12, which should gradually
increase going ahead.
HT Media
HT Media is one the largest print media companies in India with presence in the
English and Hindi print media segments. It publishes the Hindustan Times, an
English daily, and Mint, a business daily newspaper. Hindustan Times is the
second-largest English newspaper in India with an average daily readership of
3.6m (Q410 IRS survey). HT Media has radio licences in four cities and
operates under the brand ‘Fever104'. It also has presence in the Internet business
through various portals such as www.hindustantimes.com, www.livemint.com,
www.shine.com (a job portal) and www.desimartini.com.
Statement of Risk
We believe the key risks for HT Media are intense competition, weakness in the
macroeconomic environment, delays in HT Mumbai’s and Mint’s turnaround,
and raw material cost pressures.
India Equity Research Reports, IPO and Stock News
Visit http://indiaer.blogspot.com/ for complete details �� ��
UBS Investment Research
HT Media
A good start to FY12
Event: Q1 results largely in line with UBS estimates, ahead of consensus
HT Media reported its Q1 FY12 results: revenue grew 23% YoY to Rs4,969m vs.
the UBS estimate of Rs4,872m. EBITDA grew 13% YoY to Rs903m vs. the UBS
estimate of Rs916m. Net profit grew 24% YoY to Rs515m, 3% above the UBS
estimate of Rs499m and 11% ahead of the consensus estimate of Rs464m. HT
Media has achieved 24% of our FY12 net profit estimate during Q1 FY12.
Impact: maintain earning estimates despite weak ad rev. outlook for FY12
We maintain our FY12 earnings estimates for HT Media and expect advertising
revenues to grow 16% led by advertising yield improvements as its newspapers
continue to gain readership in the IRS surveys. We expect EBITDA margins to
improve in FY12-13E—despite an increase in newsprint prices—as Mint and
Hindustan Times’ Mumbai edition are likely to achieve EBITDA breakeven.
Losses for its Internet business should also fall in FY12.
Action: maintain positive view on India print media sector and HT Media
We expect India print media revenue to rise in the next five years, led by
favourable demographics, rising income and literacy levels, increasing print
penetration and limited competition from online platforms. We believe HT Media
is likely to outperform its peers as its key newspapers continue to report strong
growth in average daily readership, ahead of industry growth rates.
Valuation: maintain Buy with price target of Rs195
We derive our price target from FY13E EPS of Rs10.91 and 18x PE.
Key takeaways from conference call
Q1 FY12 has been a weak quarter for Hindi print media as ad revenues were
impacted due to lower spends from the education sector given a delay in
examination results and a late start to the season. Management expects the
advertising industry outlook to remain weak in FY12 as some sectors, such
as real estate, could see a slowdown. HT Media is likely to outperform the
industry.
HT Media’s average newsprint price increased to Rs32,200/t. Management
expects domestic newsprint prices to stabilise and start declining if waste
paper prices decline.
HT Media expects circulation revenue to grow 2-4% in FY12 as it will focus
on increasing the circulation of Hindustan Times’ Mumbai edition,
Hindustan’s UP edition and Mint.
HT-Burda achieved EBITDA breakeven in Q1 FY12. The HT-Burda plant is
operating at 25-40% capacity and has a potential to generate Rs2bn revenue
at peak capacity utilization level. Currently 55% of its order book is from
domestic customers.
HT Media management is optimistic about the education business in India. It
has partnered with MT Educare (Mahesh Tutorials) and is operating six
coaching centres in Delhi NCR under the brand name ‘Studymate’, which
provide supplementary coaching to class 9-12 students.
It expects to make investments of Rs80m in FY12, which should gradually
increase going ahead.
HT Media
HT Media is one the largest print media companies in India with presence in the
English and Hindi print media segments. It publishes the Hindustan Times, an
English daily, and Mint, a business daily newspaper. Hindustan Times is the
second-largest English newspaper in India with an average daily readership of
3.6m (Q410 IRS survey). HT Media has radio licences in four cities and
operates under the brand ‘Fever104'. It also has presence in the Internet business
through various portals such as www.hindustantimes.com, www.livemint.com,
www.shine.com (a job portal) and www.desimartini.com.
Statement of Risk
We believe the key risks for HT Media are intense competition, weakness in the
macroeconomic environment, delays in HT Mumbai’s and Mint’s turnaround,
and raw material cost pressures.
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