Key Takeaways 6 March 2015

Key Takeaways 6 March 2015 GMM Grammy Public Company Ltd. (GRAMMY) Not rated Digital TV competition to heat up TP: N.A. Closing price: Bt15.30 ► Analyst meeting held on 5 March 2015. Upside/downside: N.A. ► Reported full-year 2014 normalized loss of Bt2.5bn, Services down 92% YoY. Sector Paid-up shares (shares mn) 819.95 ► Neutral toward GRAMMY at present as competition Market capitalization (Bt bn) 12.54 among digital TV operators is set to intensify this year. Free float (%) 24.89 12-mth daily avg. turnover (Bt mn) 11.49 2014 normalized loss of Bt2.5bn, down 92% YoY 12-mth trading range (Bt) 19.20/11.40 GRAMMY reported a 2014 normalized loss of Bt2.5bn, dropping 92% YoY. Major shareholders (%) 1) Operating revenue decreased 7% YoY as national ad spending Mr. Paiboon Damrongchaitham 47.89 fell 10% YoY in 2014 and the company had fewer concerts. Mr. Thaveechat Jrurangkool 15.29 However, revenues from movies (The Teacher’s Diary, Swimmers, Mr. Nuttapol Jurangkool 6.27 and I Fine Thank You Love You) and its home shopping network Geurt Fah Co., Ltd. 3.25 were good, increasing 20.9% YoY and 103% YoY, respectively. 2) GRAMMY’s digital TV channels (ONE 31 and GMM 25) booked net losses of Bt733mn due to huge costs (content, license fees, MUX expenses, etc.). However, revenue from digital TV climbed slightly to Bt126mn in 2014. GRAMMY successfully stopped net loss in 2H14 by discontinuing its Pay TV business since July, after booking a loss of Bt1.5bn for 1H14. Moreover, the company increased capital by Bt2.5bn which reduced its interest bearing debt to equity ratio to 1x at the end of 4Q14, from 3x in the previous quarter with abundant cash on hand of Bt2bn at present. Management’s outlook for 2015 Management believes that advertising spending this year should recover from 2014 alongside the country’s overall economy. Earnings from every business unit is expected to improve from last year’s low bases and positive momentum in ad revenues. Home shopping business should be solid and break-even as net loss from this business fell from Bt51mn to Bt18mn. For its two digital TV channels, GRAMMY has estimated total operating costs of up to Bt3.4bn this year to boost TV ratings. ONE channel is targeted to be a drama channel after its ratings during primetime (20.30-22.30 PM.) improved with the launch of “Songkram Nang Ngam” during Nov14-Jan15. Thailand Research Department Mr. Warut Siwasariyanon, License, No. 17923 AWS’ opinion Tel: 02 680 5041 We believe competition among digital TV operators will intensify Ms. Sukanya Leelarwerachai this year as each is ready to compete after the first year of building Assistant Analyst base in 2014. GRAMMY’s two channels (ONE 31 and GMM 25) still need time to boost ratings and revenues. We have not clearly seen significant positive catalysts for the company to turnaround in 1H15, but ratings should improve during ONE’s broadcast of “The Stars”. 1 Please see disclaimer on last page Key Takeaways 6 March 2015 Figure 1: GRAMMY's 4Q14 earning results Unit: Btmn 4Q13 3Q14 4Q14 %QoQ %YoY 2013 2014 %YoY Operating Revenue 2,906 2,566 2,954 15% 2% 10,612 9,822 -7% Cost of sales 2,109 1,803 2,195 22% 4% 6,991 6,963 -0.4% Gross profit 797 763 759 -1% -5% 3,621 2,858 -21% SG&A 1,103 956 1,100 15% -0.3% 4,192 4,014 -4% Operating profit (305) (193) (341) 77% 12% (571) (1,156) -103% Interest expense 36 92 83 -10% 129% 135 307 128% Income taxes expenses (Income) (14) (36) (30) 91 (32) Normalized profit (556) (164) (592) -261% -7% (1,283) (2,461) -92% Extra item 147 147 Net profit (556) (164) (445) 172% 20% (1,283) (2,314) -80% EPS (Bt/share) (0.92) (0.26) (0.57) 119% 38% (2.27) (3.51) -55% Gross Profit Margin (%) 27% 30% 26% 34% 29% Operating Profit Margin (%) -11% -8% -12% -5% -12% Net Profit Margin (%) -19% -6% -15% -12% -24% Source: SET, Compiled by AWS 2 Please see disclaimer on last page CG Report Corporate Governance Report of Thai Listed Companies (CGR). CG Rating by the Thai Institute of Directors Association (IOD) in 2014. BAFS EGCO IRPC KTB PTTEP SAT SIM TOP BCP GRAMMY IVL MINT PTTGC SC SPALI BTS HANA KBANK PSL SAMART SCB TISCO CPN INTUCH KKP PTT SAMTEL SE-ED TMB AAV BIGC DELTA HMPRO NBC PJW SAMCO SVI TOG ACAP BKI DRT ICC NCH PM SCC TCAP TRC ADVANC BLA DTAC KCE NINE PPS SINGER TF TRUE ANAN BMCL DTC KSL NKI PR SIS THAI TSTE AOT BROOK EASTW LANNA NMG PRANDA SITHAI THANI TSTH ASIMAR CENTEL EE LH NSI PS SNC THCOM TTA ASK CFRESH ERW LHBANK OCC PT SNP TIP TTW ASP CIMBT GBX LOXLEY OFM QH SPI TIPCO TVO BANPU CK GC LPN PAP RATCH SSF TK UAC BAY CNT GFPT MACO PE ROBINS SSI TKT VGI BBL CPF GUNKUL MC PG RS SSSC TNITY VNT BECL CSL HEMRAJ MCOT PHOL S&J STA TNL WACOAL 2S BEAUTY CSS IHL MFEC PPM SKR TBSP TSC ZMICO AF BEC DCC INET MJD PPP SMG TEAM TSC AH BFIT DEMCO IRC MODERN PREB SMK TFD TTCL AHC BH DNA IRCP MONO PRG SMPC TFI TUF AIT BJC EA ITD MOONG PRIN SMT THANA TVD AJ BJCHI ESSO KBS MPG PTG SOLAR THIP TWFP AKP BOL FE KGI MTI QLT SPC THREL UMI AKR BTNC FORTH KKC NC QTC SPCG TIC UP AMANAH BWG FPI KTC NTV RCL SPPT TICON UPF AMARIN CCET GENCO L&E NUSA SABINA SST TIW UPOIC AMATA CGD GL LRH NWR SALEE STANLY TKS UT AP CGS GLOBAL LST NYT SCBLIF STEC TLUXE UV APCO CHOW GLOW MAJOR OGC SCCC STPI TMI UWC APCS CI GOLD MAKRO OISHI SCG SUC TMT VIH AQUA CKP HOTPOT MATCH PACE SEAFCO SWC TNDT WAVE ARIP CM HTC MBK PATO SEAOIL SYMC TPC WHA AS CMR HTECH MBKET PB SFP SYNEX TPCORP WIN ASIA CSC HYDRO MEGA PDI SIAM SYNTEC TRT WINNER AYUD CSP IFS MFC PICO SIRI TASCO TRU YUASA Source: Thai Institute of Directors (IOD) Score Range Number of Logo Description Corporate Governance Report disclaimer 90 – 100 Excellent The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate governance is made pursuant 80 – 89 Very Good to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed 70 – 79 Good on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the public and able to be accessed by a 60 – 69 Satisfactory general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. 50 – 59 Pass The survey result is as of the date appearing in the Corporate Below 50 No logo given N/A Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date, Asia wealth Securities Company Limited does not conform nor certify the accuracy of such survey result. 3 Please see disclaimer on last page Contact Branch Address Phone Fax 540 Floor 7,14,17 , Mercury Tower, Ploenchit Road, Lumphini, 02-680-5000 02-680-5111 Head Office Pathumwan Bangkok 10330 191 Silom Complex Building,21st Floor Room 2,3-1 Silom Rd., 02-630-3500 02-630-3530-1 Silom Silom, Bangrak, Bangkok, 10500 Thailand 159 Sermmitr Tower, 17th FL. Room No.1703, Sukhumvit 21 02-261-1314-21 02-261-1328 Asok Road, Klong Toey Nua, Wattana, Bangkok 10110 7/3 Central Plaza Pinklao Office Building Tower B, 16th Flr., 02-884-7333 02-884-7357, Pinklao Room No.1605-1606 Baromrajachonnanee Road, Arunamarin, 02-884-7367 Bangkoknoi, Bangkok 10700 Chaengwattana 99/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd 02-119-2300 02-835-3014 Flr., Room 2204 Chaengwattana Road, Bang Talad, Pakkred, Nonthaburi 11120 Chaengwattana 2 9/99 Moo 2 Central Plaza Chaengwattana Office Tower, 22nd Flr., 02-119-2388 02-119-2399 Room 2203 Chaengwattana Road, Bang Talad, Pakkred, Nonthaburi 11120 39 Moo6 Megabangna, 1st Flr., Room 1632/7 Bangna-Trad 02-106-7345 02-105-2070 Mega Bangna Road, Bangkaew Bangplee, Samutprakarn 10540 356/18 Sukhumvit Road, Nuen-Phra Sub District, Muang 038-808200 038-807200 Rayong District, Rayong Province 21000 26/9 Srijanmai Road, Tamboonnaimuang, Khon Khaen 043-334-700 043-334-799 Khonkaen 40000 55/22 Moo 1, Samed Sub District, Muang District, Chonburi 038-053-858 038-784-090 Chonburi 20000 233-233/2 Moo2 1st Flr., Sukprayoon Road, Na Meung Sub- 038-981-587 038-981-591 Chaseongsao District, Meung District, Chachoengsao 24000 4 Please see disclaimer on last page .

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