STOCK FOCUS
Major Cineplex Group
SCB Securities has placed a "buy" recommendation on Major Cineplex Group shares, with a revised target price Bt18.60 apiece, up from Bt15.20.
Even assuming full dilution after all warrants are exercised when they expire next February, the broker predicts outstanding core earnings-per-share (EPS) growth of 20 per cent next year, driven by better earnings from all of its business lines and a greater contribution from equity investments, including California Wow Xperience and Siam Future Development.This would be greatly improved from this year's core EPS growth of only 2.4 per cent year on year. Core profit growth is also expected to be outstanding at an estimated 28 per cent next year, compared with average core EPS growth by sector of 10 per cent year on year. Starting in 2008, the broker foresees improved earnings from new projects funded from next year out of a Bt1.6-billion cash reserve, which is far higher than normal cash on hand of Bt100 million to Bt350 million per year. The broker has cut next year's earnings forecast a negligible 2 per cent but left this year's unchanged after considering such factors as higher interest expenses and a tax savings of Bt15 million this year and Bt24 million next year from Revenue Department tax-incentive measures. The broker explained that its prediction of higher interest expenses was based on the assumption that Major Cineplex would reserve remaining cash instead of prepaying debt like earlier expected. This will affect only next year's interest expenses.
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