TRIS Rating Co., Ltd. has affirmed the company rating of Nation Multimedia Group PLC (NATION) and its issue ratings (NMG072A, NMG092A) at "BBB" with "stable" outlook. The ratings reflect the sustained strong market positions of "Krungthep Turakit" and "The Nation" and the company's ability to be a content provider for various media. The ratings also take into account the competence of its management team. However, these strengths are partially offset by the volatility of newsprint prices, the company's high financial leverage and a slowdown in the advertising market.
While the "stable" outlook reflects TRIS Rating's expectation that NATION will maintain its strong position in daily publishing business and that advertising spending should recover in the medium term. However, NATION's ratings or outlook will be revised if advertising does not recover as expected or the company's financial profile does not improve from its current weak level during the next 6-12 months.
TRIS Rating reported that NATION is the leading multimedia company in Thailand, as it is involved in 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-language daily newspaper, "Krungthep Turakit", which offers in-depth business coverage, has been able to maintain its strong position and circulation despite growing competition from "Post Today" and "Manager". "The Nation" continues to hold second position, behind "Bangkok Post", in the daily English newspaper market. NATION launched its first mass circulation newspaper, "Kom Chad Luek" in October 2001, and this publication has become the major contributor to NATION in terms of both advertising and circulation revenues since 2002. With heavy sales promotion through numerous distribution channels, "Kom Chad Luek" rapidly gained readership and has claimed a spot among the top three mass circulation dailies. However, Kom Chad Luek's advertising revenue declined to Bt386 million for the first nine months of 2005 from Bt424 million during the same period in 2004. This was mainly the result of a slowdown in total newspaper advertising for the first nine months of 2005; growth for the first nine months of 2005 was 2%. Normally, a slowdown in advertising spending is likely to have a greater impact on smaller newspapers.
TRIS Rating said, 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. During the first nine months of 2005, advertising spending for all media grew 5.0%, and newspapers advertising increased by 2.0%. NATION's advertising revenue declined by 13% for the first nine months of 2005 compared with the same period of 2004. Although, NATION's share of the total newspaper advertising market declined from 12.5% in 2004 to 10.2% for the first nine months of 2005, TRIS Rating expects that the company will be able to maintain share due to the strong positions of its major newspapers, Krungthep Turakit, The Nation, and Kom Chad Luek. The major contributing factor to the success of NATION is its capable and experienced management team. NATION management is widely recognized for its professionalism, and its strategy to be a content provider in various media has proved successful.
NATION's leverage remained high after inclusion of its operating lease transactions. Its adjusted debt to capitalization ratio, including operating leases, was 66.3% at the end of 2004 and increased to 70.3% as of September 2005. The additional financing was mainly to support the company amidst sharply reduced internal cash flow from operations and to fund the purchase of a stock of newsprint for the first nine months of 2005 since newsprint is the main cost of newspaper business, said TRIS Rating. -- End
Nation Multimedia Group PLC (NATION) Company Rating: Affirmed at BBB Issue Ratings: NMG072A: Bt600 million senior debentures due 2007 Affirmed at BBB NMG092A: Bt1,000 million senior debentures due 2009 Affirmed at BBB Rating Outlook: Stable
While the "stable" outlook reflects TRIS Rating's expectation that NATION will maintain its strong position in daily publishing business and that advertising spending should recover in the medium term. However, NATION's ratings or outlook will be revised if advertising does not recover as expected or the company's financial profile does not improve from its current weak level during the next 6-12 months.
TRIS Rating reported that NATION is the leading multimedia company in Thailand, as it is involved in 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-language daily newspaper, "Krungthep Turakit", which offers in-depth business coverage, has been able to maintain its strong position and circulation despite growing competition from "Post Today" and "Manager". "The Nation" continues to hold second position, behind "Bangkok Post", in the daily English newspaper market. NATION launched its first mass circulation newspaper, "Kom Chad Luek" in October 2001, and this publication has become the major contributor to NATION in terms of both advertising and circulation revenues since 2002. With heavy sales promotion through numerous distribution channels, "Kom Chad Luek" rapidly gained readership and has claimed a spot among the top three mass circulation dailies. However, Kom Chad Luek's advertising revenue declined to Bt386 million for the first nine months of 2005 from Bt424 million during the same period in 2004. This was mainly the result of a slowdown in total newspaper advertising for the first nine months of 2005; growth for the first nine months of 2005 was 2%. Normally, a slowdown in advertising spending is likely to have a greater impact on smaller newspapers.
TRIS Rating said, 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. During the first nine months of 2005, advertising spending for all media grew 5.0%, and newspapers advertising increased by 2.0%. NATION's advertising revenue declined by 13% for the first nine months of 2005 compared with the same period of 2004. Although, NATION's share of the total newspaper advertising market declined from 12.5% in 2004 to 10.2% for the first nine months of 2005, TRIS Rating expects that the company will be able to maintain share due to the strong positions of its major newspapers, Krungthep Turakit, The Nation, and Kom Chad Luek. The major contributing factor to the success of NATION is its capable and experienced management team. NATION management is widely recognized for its professionalism, and its strategy to be a content provider in various media has proved successful.
NATION's leverage remained high after inclusion of its operating lease transactions. Its adjusted debt to capitalization ratio, including operating leases, was 66.3% at the end of 2004 and increased to 70.3% as of September 2005. The additional financing was mainly to support the company amidst sharply reduced internal cash flow from operations and to fund the purchase of a stock of newsprint for the first nine months of 2005 since newsprint is the main cost of newspaper business, said TRIS Rating. -- End
Nation Multimedia Group PLC (NATION) Company Rating: Affirmed at BBB Issue Ratings: NMG072A: Bt600 million senior debentures due 2007 Affirmed at BBB NMG092A: Bt1,000 million senior debentures due 2009 Affirmed at BBB Rating Outlook: Stable