Thai Rating and Information Services Co., Ltd. (TRIS) announced Friday 16 February 2001 that it has assigned a "BBB" rating to Nation Multimedia Group PLC's (NATION) Bt1,200 million senior debentures. The rating reflects the strong market position of its Thai business and English daily newspapers, "Krungthep Turakij" and "The Nation", its competent management and a positive trend in advertising spending. These strengths are partially offset by relatively low cash flow protection, earnings volatility because of newsprint price fluctuation and the cyclicality of advertising demand, which is highly sensitive to the economic environment.
TRIS reported that NATION is the leading multimedia conglomerate in Thailand with businesses covering the full range of media: publishing, broadcasting and the internet. NATION's key business is publishing, which contributes more than 80% to total sales and profit. Its principal publications, "Krungthep Turakij" and "The Nation", have strong readership bases in the daily business and English newspaper segments. "Krungthep Turakij" is the dominant market leader of daily business newspapers while "The Nation" is running a very close second to its only competitor, "Bangkok Post", in the English newspaper market. A major contributing factor to the success of NATION is its capable management team who have long operational experience in this field and are widely recognized for professionalism.
TRIS said that NATION's most important revenue source is advertising from its publishing business. Advertising spending in newspapers is highly sensitive to economic conditions. During the economic crisis in 1997 and 1998, advertising spending in newspapers decreased 18% and 34% respectively. As the economy began to recover in 1999 and 2000, advertising spending in newspapers increased dramatically more than 30% per year. Newspaper advertising demand is expected to grow further as the economy continues to improve. NATION's financial position has improved since the beginning of the economic recovery. Its funds from operation to total debt for 2000 is expected to be 7%, an improvement from a low 4.4% in 1998. As of September 2000, EBITDA interest coverage ratio was 1.7 times, even though NATION recorded pre-operating expenses to launch a 24-hour television news channel "Nation Channel" and its new internet business.
In general, the earnings of newspapers are dependent upon newsprint price fluctuation as newsprint is a major cost of production. Newsprint costs, which accounted for around 50% of NATION's total cost of sales and services in Q3/2000, are increasing and this will have a negative impact on its operating performance. For the first nine months of 2000, NATION was paying US$530 per ton on average for newsprint compared to US$460 per ton in 1999. Newsprint currently costs around US$610 per ton. In addition, at least five US and Canadian newsprint producers support an increase of US$50 per ton in March 2001, which was initiated by the two top producers, Abitibi-Consolidated and Bowater.
Nation Multimedia Group PLC (NATION) Issue Rating NATION#4: Bt1,200 million senior debentures due 2004 BBB
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TRIS reported that NATION is the leading multimedia conglomerate in Thailand with businesses covering the full range of media: publishing, broadcasting and the internet. NATION's key business is publishing, which contributes more than 80% to total sales and profit. Its principal publications, "Krungthep Turakij" and "The Nation", have strong readership bases in the daily business and English newspaper segments. "Krungthep Turakij" is the dominant market leader of daily business newspapers while "The Nation" is running a very close second to its only competitor, "Bangkok Post", in the English newspaper market. A major contributing factor to the success of NATION is its capable management team who have long operational experience in this field and are widely recognized for professionalism.
TRIS said that NATION's most important revenue source is advertising from its publishing business. Advertising spending in newspapers is highly sensitive to economic conditions. During the economic crisis in 1997 and 1998, advertising spending in newspapers decreased 18% and 34% respectively. As the economy began to recover in 1999 and 2000, advertising spending in newspapers increased dramatically more than 30% per year. Newspaper advertising demand is expected to grow further as the economy continues to improve. NATION's financial position has improved since the beginning of the economic recovery. Its funds from operation to total debt for 2000 is expected to be 7%, an improvement from a low 4.4% in 1998. As of September 2000, EBITDA interest coverage ratio was 1.7 times, even though NATION recorded pre-operating expenses to launch a 24-hour television news channel "Nation Channel" and its new internet business.
In general, the earnings of newspapers are dependent upon newsprint price fluctuation as newsprint is a major cost of production. Newsprint costs, which accounted for around 50% of NATION's total cost of sales and services in Q3/2000, are increasing and this will have a negative impact on its operating performance. For the first nine months of 2000, NATION was paying US$530 per ton on average for newsprint compared to US$460 per ton in 1999. Newsprint currently costs around US$610 per ton. In addition, at least five US and Canadian newsprint producers support an increase of US$50 per ton in March 2001, which was initiated by the two top producers, Abitibi-Consolidated and Bowater.
Nation Multimedia Group PLC (NATION) Issue Rating NATION#4: Bt1,200 million senior debentures due 2004 BBB
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