TRIS Rating Co., Ltd. has affirmed the company rating of Nation Multimedia Group PLC (NATION) and its issue ratings at "BBB" with "stable" outlook. The ratings reflect the sustained strong market position of its Thai business newspapers, "Krungthep Turakit" and its English-language daily, "The Nation". The ratings also take into account the sustained growth of advertising revenue of its mass circulation daily newspaper "Kom Chad Luek", the competence of its management team and a positive outlook for advertising spending that is likely to track the positive economic trend. However, these strengths are partially offset by volatility in the newsprint prices and its high financial leverage. NATION's "stable" outlook reflects TRIS Rating's belief that it will be able to deliver performance as expected. With the strong franchise value and various media on hand, NATION will maintain its strong market position despite the threat from increasing competition. TRIS Rating expects that NATION's financial leverage will gradually improve in the medium term because capital expenditures for capacity expansion has been almost completed.
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 revenue and almost 100% of operating profit. NATION's Thai daily newspaper "Krungthep Turakit", offering in-depth business coverage, has been able to maintain its strong position and circulation despite the debut of "Post Today" in February 2003, and "The Nation" continues to hold second position, behind the "Bangkok Post", in the daily English newspaper segment. NATION launched its first mass circulation newspaper, "Kom Chad Luek" in October 2001, and this publication became the major contributor to NATION in terms of both circulation and advertising revenues during 2002-2004. With heavy sales promotion through numerous distribution channels, "Kom Chad Luek" rapidly gained reader awareness and claimed to be one of the top three mass circulation dailies. Circulation revenue of "Kom Chad Luek" started to stabilize in 2003, once NATION reduced its sales promotion activities, however, NATION was able to sustain growth in advertising revenue. The major contributing factor to the success of NATION is its capable and experienced management team. The team, which is widely recognized for its professionalism, has a strategy to be a content provider in various media.
TRIS Rating said that advertising has been the largest source of revenue for NATION's publishing business. Normally, advertising spending for all media will track economic trends; however, newspaper advertising tends to be more volatile than other media spending. The economic expansion in 2003 boosted NATION's advertising revenue, which grew by 11%. Advertising spending for all media grew by 16.8% in 2003, and overall newspapers advertising increased by 20.0%. Although NATION's advertising revenue grew during the first nine months of 2004, NATION's share of the total newspaper advertising market declined from 13% in 2003 to 10.6% for the first nine months of 2004. NATION's leverage remained high, with its total debt to capitalization adjusted ratio, including operating lease adjusted, of 66.9% as of December 2003 and 66.8% as of September 2004, compared with 70.2% at the end of 2002. Of the additional debt taken on in 2003, a significant portion was used to fund a large stock of newsprint, which was used to hedge against the expected cyclical upturn of newsprint prices in 2004. However, the stock started declining in 2004.
Newsprint is the main cost of running a newspaper, representing around 50% of NATION's total cost of goods sold during 2000-2003. While this declined to 44% for the first nine months of 2004, NATION's gross profit margin is highly dependent on the world newsprint price. 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 costs began to fall after 2000, in line with the global market. The company's average newsprint cost in 2004 was US$440 per ton, compared with US$400 per ton in 2003, while the global market price was at US$480 at the beginning of 2004 and gradually increased and remained around US$550 until the last quarter of 2004. These prices were significantly higher than the 2003's world average price, TRIS Rating said. -- End
Nation Multimedia Group PLC (NATION) Company Rating: Affirmed at BBB Issue Ratings: NMG055A: Bt1,000 million senior debentures due 2005 Affirmed at BBB NMG072A: Bt600 million senior debentures due 2007 Affirmed at BBB NMG092A: Bt1,000 million senior debentures due 2009 Affirmed at BBB Rating Outlook: Stable
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 revenue and almost 100% of operating profit. NATION's Thai daily newspaper "Krungthep Turakit", offering in-depth business coverage, has been able to maintain its strong position and circulation despite the debut of "Post Today" in February 2003, and "The Nation" continues to hold second position, behind the "Bangkok Post", in the daily English newspaper segment. NATION launched its first mass circulation newspaper, "Kom Chad Luek" in October 2001, and this publication became the major contributor to NATION in terms of both circulation and advertising revenues during 2002-2004. With heavy sales promotion through numerous distribution channels, "Kom Chad Luek" rapidly gained reader awareness and claimed to be one of the top three mass circulation dailies. Circulation revenue of "Kom Chad Luek" started to stabilize in 2003, once NATION reduced its sales promotion activities, however, NATION was able to sustain growth in advertising revenue. The major contributing factor to the success of NATION is its capable and experienced management team. The team, which is widely recognized for its professionalism, has a strategy to be a content provider in various media.
TRIS Rating said that advertising has been the largest source of revenue for NATION's publishing business. Normally, advertising spending for all media will track economic trends; however, newspaper advertising tends to be more volatile than other media spending. The economic expansion in 2003 boosted NATION's advertising revenue, which grew by 11%. Advertising spending for all media grew by 16.8% in 2003, and overall newspapers advertising increased by 20.0%. Although NATION's advertising revenue grew during the first nine months of 2004, NATION's share of the total newspaper advertising market declined from 13% in 2003 to 10.6% for the first nine months of 2004. NATION's leverage remained high, with its total debt to capitalization adjusted ratio, including operating lease adjusted, of 66.9% as of December 2003 and 66.8% as of September 2004, compared with 70.2% at the end of 2002. Of the additional debt taken on in 2003, a significant portion was used to fund a large stock of newsprint, which was used to hedge against the expected cyclical upturn of newsprint prices in 2004. However, the stock started declining in 2004.
Newsprint is the main cost of running a newspaper, representing around 50% of NATION's total cost of goods sold during 2000-2003. While this declined to 44% for the first nine months of 2004, NATION's gross profit margin is highly dependent on the world newsprint price. 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 costs began to fall after 2000, in line with the global market. The company's average newsprint cost in 2004 was US$440 per ton, compared with US$400 per ton in 2003, while the global market price was at US$480 at the beginning of 2004 and gradually increased and remained around US$550 until the last quarter of 2004. These prices were significantly higher than the 2003's world average price, TRIS Rating said. -- End
Nation Multimedia Group PLC (NATION) Company Rating: Affirmed at BBB Issue Ratings: NMG055A: Bt1,000 million senior debentures due 2005 Affirmed at BBB NMG072A: Bt600 million senior debentures due 2007 Affirmed at BBB NMG092A: Bt1,000 million senior debentures due 2009 Affirmed at BBB Rating Outlook: Stable