TRIS Rating Co., Ltd. has affirmed the company rating of Nation Multimedia Group PLC (NATION) and the issue ratings (NMG043A and NMG055A) at "BBB" and assigns a rating for its proposed Bt1,600 million senior debentures at "BBB". The ratings reflect the sustained strong market position of its Thai business and English daily newspapers, "Krungthep Turakit" and "The Nation", respectively. The ratings also take into account the good performance of the mass circulation daily newspaper "Kom Chad Luek" during its first two years of operation. In addition, the ratings also reflect the competence of NATION's management team and a positive outlook for advertising spending which is likely to track the positive economic trend. However, these strengths are partially offset by volatility in the newsprint price and the company's high financial leverage.
TRIS Rating reported that NATION is the leading multimedia company in Thailand, covering publishing, broadcasting and the Internet. Publishing remains NATION's key business, contributing over 90% of total sales and service revenues and almost 100% of operating profit. NATION's Thai daily newspaper "Krungthep Turakit", offering in-depth business coverage, still maintains its circulation volume despite the debut of "Post Today" in February 2003. "The Nation" maintains its second position behind the "Bangkok Post" in the daily English newspaper segment. Within one year of its October 2001 debut, "Kom Chad Luek" became the major contributor to NATION in terms of circulation and advertising. With heavy sales promotion in numerous distribution channels, "Kom Chad Luek" gained reader awareness and claimed the third spot behind the two largest mass circulation dailies: "Thai Rath" and "Daily News". The major contributing factor to the success of NATION is its capable and experienced management team. The team is widely recognized for its professionalism. The team has a strategy to be the content provider in various media.
TRIS Rating said, advertising is the most important revenue source of NATION's publishing business. Normally, advertising spending for all media will track the economy, though newspaper advertising tends to be more volatile than other media spending. The economic expansion in 2002 boosted NATION's advertising spending, with spending for all media and for newspapers rising 15.4% and 16.3%, respectively. Additionally, advertising spending in newspapers for the first eleven months of 2003 hit Bt11,924 million, exceeding the full-year spending level of 2002 (Bt11,116 million). NATION's leverage remains high; its adjusted total debt to capitalization ratio was 69.5% as of September 2003 and 70.1% as of December 2002, compared with 64.3% as of December 2001. Of the additional debt taken on in 2003, a significant portion was used to fund the stock of newsprint.
TRIS Rating also said, newsprint is the main cost of running a newspaper, representing around 50% of total cost of goods sold during 2000-2002 and 47% for the first nine months of 2003, making the gross profit margin highly dependent on the world newsprint price since NATION imports most of its newsprint requirements. Since the 1997 financial crisis, NATION's yearly average newsprint cost per ton peaked at US$600 during 2000, which was a bit higher than the world average price at US$596. NATION's newsprint cost began to fall after 2000 along with the world price, averaging US$580 in 2001 and US$490 in 2002 compared with world prices of US$575 and US$490, respectively. The company's newsprint cost in 2004 has been mostly fixed at around US$390-US$420 per ton, compared with the market price at US$450-US$470 per ton in January 2004. The inventory level at the end of 2003 will cover approximately 9-10 months of newspaper production. -- End
Nation Multimedia Group PLC (NATION)Company Rating: Affirmed at BBBIssue Ratings: NMG043A: Bt1,200 million senior debentures due 2004 Affirmed at BBBNMG055A: Bt1,000 million senior debentures due 2005 Affirmed at BBBBt1,600 million senior debentures due 2009 BBB
TRIS Rating reported that NATION is the leading multimedia company in Thailand, covering publishing, broadcasting and the Internet. Publishing remains NATION's key business, contributing over 90% of total sales and service revenues and almost 100% of operating profit. NATION's Thai daily newspaper "Krungthep Turakit", offering in-depth business coverage, still maintains its circulation volume despite the debut of "Post Today" in February 2003. "The Nation" maintains its second position behind the "Bangkok Post" in the daily English newspaper segment. Within one year of its October 2001 debut, "Kom Chad Luek" became the major contributor to NATION in terms of circulation and advertising. With heavy sales promotion in numerous distribution channels, "Kom Chad Luek" gained reader awareness and claimed the third spot behind the two largest mass circulation dailies: "Thai Rath" and "Daily News". The major contributing factor to the success of NATION is its capable and experienced management team. The team is widely recognized for its professionalism. The team has a strategy to be the content provider in various media.
TRIS Rating said, advertising is the most important revenue source of NATION's publishing business. Normally, advertising spending for all media will track the economy, though newspaper advertising tends to be more volatile than other media spending. The economic expansion in 2002 boosted NATION's advertising spending, with spending for all media and for newspapers rising 15.4% and 16.3%, respectively. Additionally, advertising spending in newspapers for the first eleven months of 2003 hit Bt11,924 million, exceeding the full-year spending level of 2002 (Bt11,116 million). NATION's leverage remains high; its adjusted total debt to capitalization ratio was 69.5% as of September 2003 and 70.1% as of December 2002, compared with 64.3% as of December 2001. Of the additional debt taken on in 2003, a significant portion was used to fund the stock of newsprint.
TRIS Rating also said, newsprint is the main cost of running a newspaper, representing around 50% of total cost of goods sold during 2000-2002 and 47% for the first nine months of 2003, making the gross profit margin highly dependent on the world newsprint price since NATION imports most of its newsprint requirements. Since the 1997 financial crisis, NATION's yearly average newsprint cost per ton peaked at US$600 during 2000, which was a bit higher than the world average price at US$596. NATION's newsprint cost began to fall after 2000 along with the world price, averaging US$580 in 2001 and US$490 in 2002 compared with world prices of US$575 and US$490, respectively. The company's newsprint cost in 2004 has been mostly fixed at around US$390-US$420 per ton, compared with the market price at US$450-US$470 per ton in January 2004. The inventory level at the end of 2003 will cover approximately 9-10 months of newspaper production. -- End
Nation Multimedia Group PLC (NATION)Company Rating: Affirmed at BBBIssue Ratings: NMG043A: Bt1,200 million senior debentures due 2004 Affirmed at BBBNMG055A: Bt1,000 million senior debentures due 2005 Affirmed at BBBBt1,600 million senior debentures due 2009 BBB