TRIS Rating Co., Ltd. has affirmed the company rating of Nation Multimedia Group PLC (NATION) and the rating of NATION’s Bt1,000 million senior debentures (NMG092A) at “BBB” with “stable” outlook. The ratings reflect the sustained strong market positions of the company’s newspapers, Krungthep Turakit and The Nation and its ability to be a content provider for various media, and the competence of its management team. However, these strengths are partially offset by the company’s high financial leverage and the challenging operating environment of the newspaper business, including a slowdown in advertising for the newspaper segment and sustained high newsprint prices.
The “stable” outlook reflects TRIS Rating’s expectation that NATION will maintain its strong position in the daily newspaper publisher business and that advertising spending should recover in the medium term. TRIS Rating expects that management will continue to pursue cost saving programs and the company’s adjusted debt will continue to decline. NATION’s success in selling its non-core assets and using the proceeds to reduce debt will help improve its financial profile from its current weak level.
TRIS Rating reported that NATION is a leading multimedia company in Thailand involved in publishing, broadcasting, and the Internet. Publishing remains NATION’s key business, contributing around 90%-95% 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 despite growing competition from Post Today and Manager. The Nation continues to hold second position, just behind The Bangkok Post, in the daily English newspaper segment. NATION’s mass circulation newspaper, Kom Chad Luek, has been a major contributor to NATION in terms of both advertising and circulation revenues since 2002, and has claimed a spot among the top three mass circulation dailies.
TRIS Rating said, NATION’s advertising revenue from the publishing business fell sharply from Bt1,974 million in 2004 to Bt1,709 million in 2005 (-13.4% growth) and to Bt1,572 million in 2006 (-8% growth). Advertising revenue fell further to Bt1,082 million for the first nine months of 2007, a 6.9% decline from the same period in 2006. However, the impact of the slowdown in performance in NATION’s publishing business was partially mitigated by the company’s improvement in broadcasting revenue, which was mainly derived from regular television programs. NATION’s broadcasting revenue increased from Bt181 million in 2005 to Bt209 million in 2006 (15.5% growth). In addition, the turnaround in revenue from regular television programs, as well as the growth in revenue from new media (e.g. website and short messaging service), continued for the first nine months of 2007. Revenue during that period increased by 62.1% to Bt252 million from Bt155 million for the same period in 2006. NATION’s total advertising revenue decreased by 5.8% in 2006 and was considered flat during the first nine months of 2007. The fall was a result of a slowdown in advertising spending in the newspaper segment, and increased competition in the newspaper industry.
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 those spending in other media. Advertising spending for all media grew by 5.0% in 2006 and by 1.2% for the first nine months of 2007, while newspaper advertising decreased by 5.0% in 2006 and dropped by 1.1% for the first nine months of 2007. NATION’s share of the total newspaper advertising market was in the range of 9.4%-10.9% during 2004-2006 and was at 9.6% for the first nine months of 2007.
TRIS Rating said that it expects NATION to be able to maintain its market 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’s 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 the inclusion of its operating lease transactions. Although the company’s adjusted debt (including operating leases) has gradually declined since 2005, NATION’s reported net losses since 2005 caused its equity to decline from Bt2,158 million at the end of 2004 to Bt1,364 million at the end of September 2007. Therefore, its adjusted debt to capitalization ratio, including operating leases, was in the range of 70%-72% during 2005-2006 and the end of September 2007.
Although world newsprint prices remained high in 2007, NATION implemented a cost saving scheme that helped reduce newsprint usage from 16,000 tonnes for the first nine months of 2006 to 14,000 tonnes for the same period in 2007. However, NATION’s operating margin declined from 19.13% during the first nine months of 2006 to 13.6% during the same period in 2007, due to bad debt provisions incurred during the period, said TRIS Rating. — End
Nation Multimedia Group PLC (NATION)
Company Rating: Affirmed at BBB
Issue Rating:
NMG092A: Bt1,000 million senior debentures due 2009 Affirmed at BBB
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.
The “stable” outlook reflects TRIS Rating’s expectation that NATION will maintain its strong position in the daily newspaper publisher business and that advertising spending should recover in the medium term. TRIS Rating expects that management will continue to pursue cost saving programs and the company’s adjusted debt will continue to decline. NATION’s success in selling its non-core assets and using the proceeds to reduce debt will help improve its financial profile from its current weak level.
TRIS Rating reported that NATION is a leading multimedia company in Thailand involved in publishing, broadcasting, and the Internet. Publishing remains NATION’s key business, contributing around 90%-95% 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 despite growing competition from Post Today and Manager. The Nation continues to hold second position, just behind The Bangkok Post, in the daily English newspaper segment. NATION’s mass circulation newspaper, Kom Chad Luek, has been a major contributor to NATION in terms of both advertising and circulation revenues since 2002, and has claimed a spot among the top three mass circulation dailies.
TRIS Rating said, NATION’s advertising revenue from the publishing business fell sharply from Bt1,974 million in 2004 to Bt1,709 million in 2005 (-13.4% growth) and to Bt1,572 million in 2006 (-8% growth). Advertising revenue fell further to Bt1,082 million for the first nine months of 2007, a 6.9% decline from the same period in 2006. However, the impact of the slowdown in performance in NATION’s publishing business was partially mitigated by the company’s improvement in broadcasting revenue, which was mainly derived from regular television programs. NATION’s broadcasting revenue increased from Bt181 million in 2005 to Bt209 million in 2006 (15.5% growth). In addition, the turnaround in revenue from regular television programs, as well as the growth in revenue from new media (e.g. website and short messaging service), continued for the first nine months of 2007. Revenue during that period increased by 62.1% to Bt252 million from Bt155 million for the same period in 2006. NATION’s total advertising revenue decreased by 5.8% in 2006 and was considered flat during the first nine months of 2007. The fall was a result of a slowdown in advertising spending in the newspaper segment, and increased competition in the newspaper industry.
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 those spending in other media. Advertising spending for all media grew by 5.0% in 2006 and by 1.2% for the first nine months of 2007, while newspaper advertising decreased by 5.0% in 2006 and dropped by 1.1% for the first nine months of 2007. NATION’s share of the total newspaper advertising market was in the range of 9.4%-10.9% during 2004-2006 and was at 9.6% for the first nine months of 2007.
TRIS Rating said that it expects NATION to be able to maintain its market 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’s 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 the inclusion of its operating lease transactions. Although the company’s adjusted debt (including operating leases) has gradually declined since 2005, NATION’s reported net losses since 2005 caused its equity to decline from Bt2,158 million at the end of 2004 to Bt1,364 million at the end of September 2007. Therefore, its adjusted debt to capitalization ratio, including operating leases, was in the range of 70%-72% during 2005-2006 and the end of September 2007.
Although world newsprint prices remained high in 2007, NATION implemented a cost saving scheme that helped reduce newsprint usage from 16,000 tonnes for the first nine months of 2006 to 14,000 tonnes for the same period in 2007. However, NATION’s operating margin declined from 19.13% during the first nine months of 2006 to 13.6% during the same period in 2007, due to bad debt provisions incurred during the period, said TRIS Rating. — End
Nation Multimedia Group PLC (NATION)
Company Rating: Affirmed at BBB
Issue Rating:
NMG092A: Bt1,000 million senior debentures due 2009 Affirmed at BBB
Rating Outlook: Stable
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Copyright 2008, TRIS Rating Co., Ltd. All rights reserved. Any unauthorized use, disclosure, copying, republication, further transmission, dissemination, redistribution or storing for subsequent use for any purpose, in whole or in part, in any form or manner or by any means whatsoever, by any person, of the credit rating reports or information is prohibited. The credit rating is not a statement of fact or a recommendation to buy, sell or hold any debt instruments. It is an expression of opinion regarding credit risks for that instrument or particular company. The opinion expressed in the credit rating does not represent investment or other advice and should therefore not be construed as such. Any rating and information contained in any report written or published by TRIS Rating has been prepared without taking into account any recipient’s particular financial needs, circumstances, knowledge and objectives. Therefore, a recipient should assess the appropriateness of such information before making an investment decision based on this information. Information used for the rating has been obtained by TRIS Rating from the company and other sources believed to be reliable. Therefore, TRIS Rating does not guarantee the accuracy, adequacy, or completeness of any such information and will accept no liability for any loss or damage arising from any inaccuracy, inadequacy or incompleteness. Also, TRIS Rating is not responsible for any errors or omissions, the result obtained from, or any actions taken in reliance upon such information.