Thailand 20130308

RHB Research

MARKET DATELINE THAILAND EQUITY Investment Research

08 Mar 2013 Morning Matters

SET Intraday Chart WHAT’S INSIDE

On the Platter

RS (RS TB; FV THB13.2 – BUY) Company Update: Bright Prospects for the Future

Having established a strong foothold in a currently-booming satellite TV industry, RS should see its advertising and occupancy rates growing significantly. Moreover, a low cost per rating point (CPRP) suggests that there is still room for ad rates to grow. Future growth will be driven by a higher ad

rate in its satellite channels, the World Cup 2014 event and the increasing popularity of two of its radio channels. While it turned out that the ‘Must-Have’ rule is not a big concern anymore, RS’ future looks promising. RS is attractive due to its cheap valuation, and is currently trading at 0.4x FY13 PEG. We maintain our BUY recommendation with a TP of THB13.2

Bumrungrad Hospital (BH TB; FV THB112 – BUY) Company Update: On a Healthy Growth Path We continue to like Bumrungrad Hospital (BH)’s niche in the premium market where it continues to receive a steady stream of local and domestic patients. The company’s ongoing capacity expansion will enable it to meet rising demand while delivering decent long-term earnings growth. Maintain BUY, with our FV unchanged at THB112, based on 34x FY13 EPS.

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MEDIA HIGHLIGHTS • CPB ad rankles Central Leases solicited for prime Rama IV site • BGH plans to add six more hospitals • Hana plugs into Cambodian market • Don Mueang aims for 27m passengers • Insurance premiums may rise 16% this year • Top 10 developers account for 45 per cent of property market revenue ECONOMIC HIGHLIGHTS • China: China Inflation Over 3.5% May Prompt Rate Rise • Japan : Japan Returned to Growth in Fourth Quarter With 0.2% Expansion • EU: German Factory Orders Fall as Euro Crisis Curbs Demand • UK: BOE Seen Awaiting Osborne Remit Ruling as QE Suspense Persists • US: Consumer Borrowing in U.S. Rises by Most in Five Months

Key Market Indices (7 March 2013) Key Statistics

Value Change % Change % YTD SET Value by investor Type: Daily SET 1560.98 1.63 0.1% 12.1% Buy (THBm) Sell (THBm) Net (THBm) SET50 1022.64 -1.50 -0.1% 8.2% Institution 6,239.56 4,942.71 1,296.85 SET100 2295.48 -1.53 -0.1% 10.4% Proprietary 5,173.98 4,840.44 333.54 Foreign 10,626.85 11,088.82 -461.97 Dow Jones 14329.49 33.25 0.2% 9.4% Retail 44,045.38 45,213.80 -1,168.42 S&P500 1544.26 2.80 0.2% 8.3% Nasdaq 3232.09 9.72 0.3% 7.0% SET Value by investor Type FTSE 6439.16 11.52 0.2% 9.2% MTD (THBm) YTD (THBm) FSSTI 3298.54 6.73 0.2% 4.2% Institution 1,285.51 21,117.49 Hang Seng 22771.44 -6.40 0.0% 0.5% Proprietary 1,163.33 -1,383.95 Nikkei 12138.23 92.54 0.8% 16.6% Foreign 3,742.84 1,392.78 KLCI 1650.93 -0.91 -0.1% -2.3% Retail -6,191.68 -21,126.33 SHANGHAI 2324.29 -22.89 -1.0% 2.4% JCISE 4848.30 23.62 0.5% 12.3% SET50 Index Future Long Short Net MTD YTD SET 5-yr avg 2011 2012F Institution 3,663 3,932 -269 -251 5,751 PE (x) 14.4 17.9 14.4 Foreign 1,571 2,071 -500 2,277 -9,622 P/BV(x) 1.9 2.5 2.4 Local 8,542 7,773 769 -2,026 3,871 Yield(%) 4.0 2.6 3.1

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MEDIA HIGHLIGHTS RHB Research

CPB ad rankles Central Leases solicited for prime Rama IV site Central Pattana Plc (CPN), the Central Group's commercial property developer, will seek assurances from the Crown Property Bureau (CPB) regarding its right to develop a plot on the busy corner of Rama IV and Wireless roads. The executive spoke after the CPB yesterday ran an ad in several newspapers telling the public it is seeking proposals for long-term leasing and development of the 88 rai (35,200 square wah) of vacant land on the corn er. It is the site of the old Suan Lum Night Bazaar. In the ad, the CPB said the development will be a mixed-use project including hotel, residential, office, cultural and education elements. Interested parties can submit proposals by March 29 for a 30-year lease term with an option for a 30-year extension. (Bangkok Post)

BGH plans to add six more hospitals Thailand's largest private hospital group, Bangkok Dusit Medical Services (BGH), plans to add six more hospitals this year, focusing mainly on Thail and. Att Thongtang, chief executive of the Phyathai Hospital Group and Paolo Memorial Hospital Group, both under the BGH umbrella, said the parent has already added three hospitals, in Khon Kaen, Udon Thani and Chiang Mai provinces. It also recently purcha sed Thonburi Hospital, while last month the group opened a clinic in Myanmar, with more set for Mandalay and Dawei. The move is part of BGH's strategy of becoming the No.1 hospital group in Asia and third in the world within three years. The group is consi dering whether to acquire more hospitals or build them, but the focus will be border provinces. (Bangkok Post)

Hana plugs into Cambodian market Hana Microelectronics Plc is investing 1.5 billion baht to build a new factory in Lamphun and another in Koh Kong, the latter marking a plunge into the Cambodian market. Chief executive Richard Han also hinted yesterday that the SET-listed electronic-parts maker could relocate some production from Thailand to Cambodia if it cannot cope with rising wages here over the next 3-5 years. Wages in Cambodia are one-third those in Thailand but will certainly rise as well, he said. Some 120 million baht has been allocated for buying a 60-rai plot of land in the Koh Kong special economic zone, while 360 million is slated f or the factory. Construction is scheduled to start by mid-year for the first phase comprising a 23,000-square-metre facility that would begin operation in April 2014, with another plot available nearby for future expansion. (Bangkok Post)

Don Mueang aims for 27m passengers Airports of Thailand expects 27.5 million passengers to use Don Mueang Airport by 2016 after it reopens Terminal 2. Don Mueang general manager Paranee Vatanotai said on Thursday that the improvements to Terminal 2 will benefit the airport through servicing more passengers entering and leaving Bangkok. The terminal will be refurbished this year with work expected to be complete in 2016. Don Mueang uses Terminal 1 for its present operation for low-cost airlines for domestic and international routes. Nok Air, Thai AirAsia, AirAsia, Indonesia AirAsia and One-Two-Go Orient Thai are among the no-frills airlines using Don Mueang after moving their operations from Suvarnabhumi. Siam GA is the only full-service airline flying in and out of the airport. (Bangkok Post)

Insurance premiums may rise 16% this year

The Office of the Insurance Commission has forecast continued growth for the insurance sector this year with total insurance premiums of Bt660 billion, 16-per-cent growth year on year. OIC secretary-general Pravej Ongartsittigul said yesterday that of the total, Bt449 billion in premiums would be from life insurance, up 18 per cent year on year, and disaster insurance Bt211 billion, up 15 per cent. The share of insurance premiums in GDP is expected to be 5.38 per cent.Total insurance premiums last year were Bt569.903 billion, a 21.48- per-cent increase year on year, and the premium share to GDP was 5.02 per cent. Of the total, Bt390.474 billion was from life insurance, up 18.72 per cent, on rising confidence of consumers in insurance and the expansion of sales channels of insurance firms and the customisation of products to better serve the peoples' needs. (The Nation)

Top 10 developers account for 45 per cent of property market revenue

Amid a highly competitive property market in Bangkok and its suburbs, the top 10 listed developers recorded combined revenue of Bt161.53 billion last year, accounting for 45 per cent of the overall market value of Bt357 billion. Sansiri was the market leade r with revenue of Bt30.08 billion for a share of about 8.4 per cent, followed by Pruksa Real Estate with 7.6 per cent and Land & Houses with 6.8 per cent, according to a survey by The Nation.This is the first time that Sansiri, which was established in 198 4 and listed in the Stock Exchange of Thailand in 1996, has led the market. The top-three rankings changed last year because of the number of condominiums transferred by Sansiri exceeding the level achieved by the company in 2011, thanks to strong demand. According to a survey by the Government Housing Bank's Real Estate Information Centre, the number of new residential transfers in greater Bangkok was 156,300 units last year, up 3 per cent from the 2011 level.Some 43 per cent of the total, or 66,700 units, were condominiums, while 46,000 units (29 per cent) were townhouses and 26,700 homes (17 per cent) were detached houses. (The Nation)

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ECONOMICS HIGHLIGHTS

China: China Inflation Over 3.5% May Prompt Rate Rise China may need to raise interest rates should gains in the consumer-price index stay at more than 3.5 percent for three months, a senior researcher affiliated with the country’s top planning agency said. “In theory, if CPI remains above 3.5 percent for three months, there should be an interest-rate movement,” Chen Dongqi , the deputy head of the National Development and Reform Commission’s macroeconomic research institute, said in an interview yesterday after a speech at Tsinghua University in Beijing. “But it also can be decided by authorities’ own judgment.” Speculation that China will raise interest rates for the first time since mid-2011 is rising as the world’s second- la rgest economy recovers from the weakest growth in 13 years, credit expands and property prices rebound. Premier Wen Jiabao this week set a 3.5 percent inflation goal for 2013, down from 4 percent last year, after price gains slowed to half the pace of 2011. (Bloomberg)

Japan : Japan Returned to Growth in Fourth Quarter With 0.2% Expansion Japan ’s economy returned to growth in the fourth quarter, bolstering Prime Minister Shinzo Abe’s campaign to end 15 years of deflation and revive the world’s third-biggest economy. Gross domestic product rose an annualized 0.2 percent in the three months through December, the Cabinet Office said in Tokyo today, compared with a preliminary calculation of a 0.4 percent contraction. The current account deficit in January was 364.8 billion yen ($3.8 billion), the finance ministry said in a separate release . (Bloomberg)

EU: German Factory Orders Fall as Euro Crisis Curbs Demand German factory orders unexpectedly fell in January as the sovereign debt crisis curbed demand in the euro area. Orders, adjusted for seasonal swings and inflation, declined 1.9 percent from December, when they rose a revised 1.1 percent, the Economy Minist ry in Berlin said today. Economists forecast a 0.6 percent gain, according to the median of 41 estimates in a Bloomberg News survey. In the year, workday- adjusted orders dropped 2.5 percent. The Bundesbank expects the German economy to rebound in the current quarter after contracting 0.6 percent in the final three months of 2012. Confidence among entrepreneurs and investors jumped in February and retail sales rose the most in more than six years in January. At the same time, the euro area, Germany ’s largest export market, is in a recession and the European Central Bank predicts only a gradual recovery later this year. (Bloomberg)

UK: BOE Seen Awaiting Osborne Remit Ruling as QE Suspense Persists Bank of England policy makers who voted to hold fire on stimulus today will have more legitimacy to act in a month if Chancellor of the Exchequer George Osborne changes their remit and clears the path for more loosening. Inflation that remains in breach of the BOE’s 2 percent target may have stayed officials’ hand before the March 20 budget, when the chancellor traditionally reaffirms the mandate. With Mark Carney having started a debate on new tools before he replaces Governor Mervyn King on July 1, Osborne may give the BOE license to act sooner by loosening its goal. (Bloomberg)

US: Consumer Borrowing in U.S. Rises by Most in Five Months Consumer credit in the U.S. rose in January by the most in five months as Americans took out loans f or auto purchases and tuitions. The $16.2 billion increase followed a revised $15.1 billion advance in December that was larger than initially reported, the Federal Reserve said today in Washington. The median forecast of 27 economists surveyed by Bloomberg called for a $14.7 billion gain in January. Non-revolving debt , which includes financing for auto purchases and college, climbed $16 billion. Employment gains, rising stock prices and stable home values may be making households more willing to borrow, helping sustain the consumer spending that accounts for about 70 percent of the economy. Cheaper financing is underpinning purchases of big-ticket items like motor vehicles. (Bloomberg)

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Outperform

Current Target Upside/ Yield Recc. Price Price Downside PE (x) (%) Remarks (Bt) (Bt) (%) 2013f 2013f

Trading CK Buy 26.50 43.30 63.4 44.4 2.3 MBK Buy 159.00 267.00 67.9 6.7 4.4 SAMART Buy 22.60 30.00 32.7 13.4 5.2 LOXLEY Buy 6.55 10.10 54.2 15.6 1.9 ITD Buy 7.10 9.65 35.9 62.8 0.2 AIT Buy 79.25 110.00 38.8 10.6 7.1 KK Buy 60.50 79.00 30.6 10.1 5.5 MINT Buy 25.25 32.50 28.7 24.6 1.1 KTB Buy 26.25 32.80 25.0 8.9 3.2 BLAND Buy 2.16 2.56 18.5 144.4 0.0 BTS Buy 8.65 9.33 7.9 49.7 2.4

Underperform

Current Target Upside/ Yield Recc. Price Price Downside PE (x) (%) Remarks (Bt) (Bt) (%) 2013f 2013f

CPF Sell 32.00 28.00 -12.5 26.1 1.8 TISCO Sell 54.00 48.00 -11.1 10.5 4.7 CPALL Neutral 47.50 48.50 2.1 32.0 2.3 PSL Neutral 16.30 12.83 -21.3 11.5 3.4 PTTEP Neutral 156.00 157.00 0.6 8.7 3.8 TTA Sell 17.00 13.60 -20.0 146.2 1.5 SPALI Sell 22.10 15.50 -29.9 11.6 3.4

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DIARY OF EVENTS

7-May 8-May 9-May 10-May 11-May US Data US Data US Data US Data US Data Arial 7pt. MBA Mortage Applications Initial Jobless Claims (May (May 4) 5) Continuing Claims (Apr 28)

MY Data MY Data MY Data MY Data Automobile COE Open Bid Cat A (May 9) MY Data Automobile COE Open Bid Cat B (May 9) Automobile COE Open Bid Cat C (May 9)

MY Results MY Results MY Results MY Results Second Chance Properties Singapore Airlines Ltd Sembcorp Industries SIA Engineering ASL Marine Holdings MY Results Mewah International OSIM International Ellipsiz Ltd Wilmar International Sembcorp Marine City Developments United Overseas Bank Hiap Hoe Singapore Telecommunications Vicom Ltd

14 -May 15 -May 16 -May 17 -May 18 -May US Data US Data US Data US Data US Data MBA Mortage Applications Initial Jobless Claims (May (May 11) 12) Continuing Claims (May 5)

MY Data MY Data MY Data MY Data Retail Sales Ex Auto (YoY) MY Data (Mar) Retail Sales (YoY) (Mar) Retail Sales (MoM) sa (Mar)

MY Results MY Results MY Results SATS Ltd MY Results MY Results Tiger Airways ComfortDelgro Corp Fragrance Group Global Premium Hotels First Resources Ltd Armstrong Industrial Olam International

21-May 22-May 23-May 24-May 25-May US Data US Data US Data US Data US Data Existing Home Sales (Apr) MBA Mortage Applications Initial Jobless Claims (May Existing Home Sales MoM (May 18) 12) (Apr) New Home Sales (Apr) Continuing Claims (May 5) New Home Sales MoM (Apr)

MY Data MY Data MY Data MY Data MY Data Automobile COR Open Bid Initial Jobless Claims (May Cat A (May 23) 19) Automobile COR Open Bid Continuing Claims Cat B (May 23) (May12) Automobile COR Open Bid Cat C (May 23) MY Results MY Results MY Results Avago Technologies Ltd MY Results

MY Results Global Logistics Properties Ltd

RHB Research | See important disclosures at the end of this report 6 A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

8 March 2013

THAI NVDR : Top Ranking

Most Active Values (Btmn)

BUY VALUES SELL VALUES NET BUY NET SELL Month to Date Year to Date

Mar / Feb 13 Mar / Feb 13 1 - 7 Mar 13 2 Jan- 7 Mar 13 7 6 5 4 1 7 6 5 4 1 Net Buy Net Sell Net Buy Net Sell

1 TMB 415.5 197.1 -1.0 -13.2 -41.5 KBANK -395.2 77.0 -242.5 297.9 589.5 INTUCH 696.2 PTT -411.1 INTUCH 17,436.5 LH -4,153.0

2 OFM 244.0 9.2 -0.1 0.6 0.0 TRUE -265.8 -5.2 -30.5 -48.4 -7.4 SCB 600.1 TRUE -357.3 PTT 5,802.2 SCC -2,336.3

3 QH 224.1 -40.2 -9.1 -24.6 -6.7 CPF -238.4 -2.8 19.6 -51.3 -3.0 TCAP 571.6 CK -279.7 PTTEP 4,604.4 BANPU -1,396.3

4 SCC 199.7 143.3 180.0 17.6 -35.3 BBL -165.9 168.4 118.0 -2.2 37.3 TMB 557.0 CPF -275.9 KBANK 4,561.0 SIRI -1,029.2

5 SCB 139.3 353.3 -151.0 139.7 118.8 INTUCH -132.7 -75.3 158.9 -9.7 755.1 SCC 505.3 AMATA -253.5 ADVANC 4,491.0 MINT -887.0

6 PTTEP 122.2 189.7 -7.7 -43.5 -3.9 HMPRO -77.6 -29.3 -3.1 25.0 4.0 PTTGC 455.9 CPN -218.9 BBL 4,415.7 HMPRO -499.5

7 AOT 122.1 27.2 6.8 26.9 -33.9 BTS -74.2 5.0 40.6 3.8 34.4 SIRI 373.1 DTAC -200.2 DTAC 3,409.0 TTCL -335.4

8 PTTGC 118.3 222.4 82.3 -98.1 131.1 DTAC -64.8 -41.6 -8.4 -93.9 8.5 BIGC 334.3 LH -175.3 BAY 3,122.4 UV -323.2

9 BANPU 102.2 1.1 -6.4 -6.7 -15.8 CPN -61.1 22.6 -118.6 -30.0 -31.9 KBANK 326.7 TRC -142.6 PTTGC 2,915.0 STPI -280.6

10 ADVANC 79.1 66.3 -77.6 -15.5 88.2 AMATA -60.7 -42.8 -101.2 -77.0 28.1 KTB 305.1 IRPC -110.8 KTB 2,452.4 RML -202.0

11 TCAP 54.2 77.8 164.6 204.3 70.7 IRPC -54.4 -35.1 -4.4 -9.5 -7.4 PTTEP 256.9 ASP -87.3 TMB 2,358.8 STEC -163.6

12 SIRI 53.7 208.7 22.7 24.9 63.1 ASP -50.2 -36.8 0.9 -0.4 -0.9 OFM 253.6 HMPRO -80.9 TCAP 2,198.6 MINT-W4 -154.7

13 STEC 51.8 31.3 26.8 -41.9 5.7 KGI -38.2 -28.5 1.3 0.5 -8.1 TUF 238.9 KGI -73.0 TOP 2,185.9 SF -150.1

14 CPALL 49.7 41.1 74.7 -78.2 12.5 GLOBAL -37.1 0.2 0.1 0.4 -6.2 NMG 237.0 SF -60.2 BIGC 1,907.0 CK -136.3

15 GUNKUL 35.6 -17.3 -15.1 -4.0 0.3 TICON -35.5 -19.0 41.3 19.5 -0.3 VGI 235.4 MDX -55.1 BGH 1,792.5 JAS -132.5

16 THAI 33.5 4.0 -35.4 81.2 1.8 BAY -30.9 -2.0 8.5 55.5 -33.0 DELTA 199.9 ROBINS -48.5 TUF 1,667.9 SITHAI -131.2

17 MAKRO 32.8 5.1 -0.1 -11.8 11.5 THCOM -26.9 8.6 4.0 3.7 3.0 BGH 184.3 GLOBAL -42.7 CPALL 1,502.2 AAV -112.7

18 SPALI 32.3 29.7 36.2 0.5 4.4 BGH -24.9 85.0 83.7 62.8 -22.2 TISCO 165.3 BEAUTY -41.9 SPALI 1,468.9 MDX -112.5

19 BEC 28.9 21.8 20.2 -63.8 1.7 LOXLEY -24.0 1.3 -1.3 25.8 -1.8 HEMRAJ 160.7 UV -41.4 AOT 1,249.4 MK -108.6

20 BIGC 28.1 80.6 70.0 55.9 99.8 NWR -21.4 14.1 8.2 13.2 20.9 BBL 155.6 GLOW -40.0 AP 1,167.8 IEC -105.2

Most Active Volume (shares) NVDR Shares to Total Paid-up Shares(%)

Total Volume Shares % NVDR Shrs. % of NVDR Shrs. % of Paid up Capital

Buy Sell Total Net Turn. 7-Mar-13 paidup 2-Jan-13 paidup 7-Mar-13

1 TMB 185,223,600 21,238,533 206,462,133 163,985,067 14.95 1 TISCO-P 22,400 66.16 22,300 65.86 33,858

2 QH 61,628,800 11,920,189 73,548,989 49,708,611 11.58 2 BBL 594,663,423 31.15 572,486,791 29.99 1,908,842,894

3 TRUE 6,980,700 43,580,675 50,561,375 -36,599,975 6.31 3 KBANK 704,727,286 29.45 682,155,834 28.50 2,393,260,193

4 LH 18,416,900 18,790,900 37,207,800 -374,000 47.79 4 TWFP 2,126,606 22.37 2,354,634 24.77 9,506,055

5 GJS-W3 1,801,310 29,398,475 31,199,785 -27,597,165 2.08 5 LPN 320,408,151 21.71 320,609,239 21.73 1,475,698,768

6 GJS 24,359,600 - 24,359,600 24,359,600 7.46 6 SPALI 364,672,326 21.24 307,949,569 17.94 1,716,553,249

7 IRPC 2,081,500 15,252,200 17,333,700 -13,170,700 21.12 7 L&E-W2 710,633 20.75 660,933 7.77 3,424,427

8 BAY 7,304,200 8,194,300 15,498,500 -890,100 60.82 8 SIRI-W1 385,472,668 18.93 268,936,368 11.05 2,036,627,210

9 GSTEL 13,735,100 30,000 13,765,100 13,705,100 12.39 9 THRE 635,601,902 18.10 544,461,149 15.50 3,512,494,860

10 BTS 2,495,200 11,131,576 13,626,776 -8,636,376 7.10 10 LH 1,708,531,260 17.04 2,123,251,472 21.18 10,025,921,523

11 NMG 6,761,700 6,649,800 13,411,500 111,900 2.41 11 AP 471,446,785 16.55 367,964,647 12.92 2,848,272,038

12 ASP 92,600 12,679,300 12,771,900 -12,586,700 15.95 12 TCAP 200,548,191 15.69 161,065,653 12.60 1,277,816,397

13 KGI 421,000 12,172,400 12,593,400 -11,751,400 9.66 13 LRH 25,526,656 15.31 26,226,480 15.73 166,682,701

14 GBX 3,864,300 8,017,100 11,881,400 -4,152,800 3.78 14 BAY 925,890,019 15.24 843,803,210 13.89 6,074,143,747

15 CPF 1,550,597 8,967,900 10,518,497 -7,417,303 21.25 15 GOLD-W1 74,265,998 14.75 74,970,598 14.87 503,405,255

16 SIRI 10,195,100 22,000 10,217,100 10,173,100 4.21 16 SPCG-W1 40,979,900 14.64 37,278,800 13.31 279,999,581

17 CGD 8,580,100 550,000 9,130,100 8,030,100 5.33 17 THIP 1,128,700 14.11 1,011,300 12.64 8,000,000

18 NWR 1,241,700 7,567,700 8,809,400 -6,326,000 1.34 18 TISCO 101,325,108 13.92 99,645,251 13.69 727,878,228

19 N-PARK 1,303,000 7,150,000 8,453,000 -5,847,000 0.50 19 GBX 151,571,800 13.92 147,453,300 13.54 1,089,076,392

20 JAS 2,646,400 5,511,900 8,158,300 -2,865,500 4.79 20 LALIN 114,008,000 13.82 111,592,900 13.53 825,000,000

Source : SET.OR.TH RHB Research 08 Mar 2013

THAILAND EQUITY Investment Research

Wirin Eiamphoklarp 66 2862 9999 ext 2028 [email protected] Company Update

Buy ··· Target THB13.2 Bright Prospects For The Future

Price THB11.7 Having established a strong foothold in a currently-booming satellite TV industry, RS should see its advertising and occupancy rates Entertainment growing significantly. Moreover, a low cost per rating point (CPRP) RS is a complete entertainment operator. suggests that there is still room for ad rates to grow. Future growth will be driven by a higher ad rate in its satellite channels, the World

Cup 2014 event and the increasing popularity of two of its radio Stock Statistics Bloomberg Ticker RS TB channels. While it turned out that the ‘Must-Have’ rule is not a big Market Cap THB9,789m concern anymore, RS’ future looks promising. RS is attractive due to USD328m its cheap valuation, and is currently trading at 0.4x FY13 PEG. We 52 wk H/L price 12.4 2.98 maintain our BUY recommendation with a TP of THB13.2 (THB ) 3m ADT THB48.0m Substantial growth from the satellite business. RS’ CPRP suggests that YTD Returns (%) 91.5 the company still has substantial room to increase its ad rates. Despite a huge Beta (x) 1.04 difference in ad rates between satellite and free-to-air (FTA) TV channels, the

Major Shareholders (%) CPRP, which is calculated by dividing the advertising rate by rating point, Mr. Surachai Chatechotisuk 24.25 should only show small deviations due to a rating method on satellite channels Mr. Sorat Wanichwarakit 14.15 being less standardized. The CPRP on BEC’s channel 3 prime time is roughly THB45,000 per one rating point (ad rate/rating point = THB360,000/8 = THB45,000 per one rating point). However, the CPRP of RS’s Channel 8 prime Share Price Performance (%) time program is only THB10,000 per rating point (THB20,000/2 rating points). Month Absolute Relative A 3.5x higher CPRP on a FTA TV channel shows that the company still has 1m 47.4 43.5 more room to increase its ad rates, especially when the method becomes more 3m 93.1 76.7 standardized as the rate of penetration increases. 6m 115.4 90.0 12m 278.4 243.2 Buy with a TP THB13.2 We valued RS at 27x PE or +2SD above its historical average PE multiple. The stock will potentially benefit from the growth of 6-month Share Price Performance satellite TV penetration and rising ad rates on satellite TV platforms. The Price Close Relative to Stock Exchange of Thailand Index (RHS) counter is currently trading at a cheap PEG of only 0.4x in FY13. We expect its 14 420 net profit for FY13-FY15 to have a CAGR of 21.3%, with its ROE approaching 12 362

10 303 30% in FY14.

8 245

6 187 Forecasts and Valuations Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F 4 128

2 70 Total turnover (THBm) 2,918 2,765 2,873 4,070 5,257 Recurring net profit (THBm) 317 209 281 492 623 10-Jul-12 15-Jan-13 06-Mar-12 11-Sep-12 13-Nov-12 08-May-12 Recurring net profit growth 318.9% (33.9%) 34.3% 74.8% 26.7% Source: Bloomberg Core EPS (THB) 0.45 0.26 0.32 0.52 0.61

Core EPS growth 316.5% (41.5%) 21.0% 62.0% 18.0%

DPS (THB) 0.21 0.17 0.19 0.34 0.43 Dividend Yield 1.9% 1.5% 1.7% 3.0% 3.8% Core P/E (x) 24.9 42.6 35.2 21.7 18.4 Return on average equity 43.7% 20.3% 23.2% 33.7% 35.4% P/B (x) 8.91 8.40 7.90 6.88 6.19 EV/EBITDA (x) 10.8 21.6 20.2 12.9 11.1 Net debt to equity net cash net cash 7.8% net cash net cash

RHBRI vs consensus EPS

Source: Company data, RHBRI estimates

FINANCIAL

Profit & Loss (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Total turnover 2,918 2,765 2,873 4,070 5,257 Cost of sales (1,968) (1,853) (1,825) (2,632) (3,415) Gross profit 950 912 1,048 1,438 1,842 Gen & admin expenses (466) (481) (483) (645) (833) Selling expenses (85) (101) (151) (161) (208) Other operating costs - (10) (9) (12) (16) Operating profit 400 320 404 620 785 Operating EBITDA 709 405 497 827 1,035 Depreciation of fixed assets (309) (85) (93) (207) (250) Operating EBIT 400 320 404 620 785 Interest expense (14) (3) (8) (3) (4) Pre-tax profit 386 317 397 617 781 Taxation (59) (97) (126) (123) (156) Minority interests (10) (10) 10 (2) (2) Profit after tax & minorities 317 209 281 492 623 Net income to ord equity 317 209 281 492 623 Recurring net profit 317 209 281 492 623 Source: Company data, RHBRI

Balance Sheet (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Total cash and equivalents 364 282 314 283 273 Inventories 52 37 141 50 66 Accounts receivable 487 628 664 927 1,198 Total current assets 1,163 1,215 1,520 1,664 2,057 Other current assets 259 268 402 403 520 Tangible fixed assets 135 112 260 282 297 Intangible assets 163 469 643 826 861 Total other assets 96 77 67 121 156 Total non-current assets 395 658 970 1,229 1,315 Total assets 1,558 1,873 2,491 2,893 3,371 Short-term debt 24 2 331 245 245 Accounts payable 225 233 197 332 430 Other current liabilities 415 430 564 605 786 Total current liabilities 664 665 1,092 1,182 1,461 Total long-term debt - - 81 - - Other liabilities 6 33 60 39 51 Total non-current liabilities 6 33 141 39 51 Total liabilities 670 698 1,232 1,221 1,512 Share capital 708 883 883 1,023 1,023 Retained earnings reserve 7 18 32 57 88 Other reserves 175 276 337 585 739 Shareholders' equity 890 1,177 1,252 1,664 1,849 Minority interests 15 15 5 7 9 Other equity (17) (17) 1 1 1 Total equity 888 1,175 1,258 1,672 1,859 Total liabilities & shareholders' equity 1,558 1,873 2,491 2,893 3,371 Source: Company data, RHBRI

RHB Research

Cashflow (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Operating profit 400 320 404 620 785 Depreciation & amortisation 309 85 93 207 250 Change in working capital 27 (163) (260) (72) (148) Other operating cashflow 108 95 108 Operating cashflow 843 337 345 755 887 Interest paid (14) (3) (8) (3) (4) Tax paid (59) (97) (126) (123) (156) Cashflow from operations 770 237 212 628 727 Capex (31) (29) (183) (100) (100) Other new investments (60) (323) (222) (300) (200) Other investing cashflow 7 (5) 16 - - Cashflow from investing activities (84) (357) (388) (400) (300) Dividends paid to ordinary shareholders - (221) (131) (345) (437) Proceeds from issue of shares 14 298 0 266 - Increase in debt (421) (15) 403 (167) - Other financing cashflow (26) (25) (64) (12) - Cashflow from financing activities (434) 38 208 (259) (437) Cash at beginning of period 113 364 282 314 283 Total cash generated 252 (82) 31 (31) (10) Implied cash at end of period 365 282 314 283 273 Source: Company data, RHBRI

RHB Research

Revenue from media to be main growth driver. We are positive that RS’s five satellite channels will continue to have high ratings and enjoy improving occupancy and ad rates, which will underpin the company’s future growth. Revenue from its satellite business will account for 30% of RS’s total revenue, up from less than 20% in FY11-FY12. The radio business will also continue to post solid growth, evidenced by its high ratings and market share. The new FM88.5 ‘Sabaidee Radio’ network now has a market share of 8.5% and is ranked third after another popular radio station Cool 93 Fahrenheit (which is also owned by RS) and MCOT’s FM95.0 Luktung Mahanakorn, which has highest market share.

Figure 1: FM radio market shar es by operator

Ranking # Operator No. of listeners ('000) % share of listeners

1 MCOT 1881 26.70% 2 Sky High Network (RS) 1111 11.50% 3 RS 695 8.50%

4 Click Radio 642 4.70% 5 Pacific Corporation 512 4.70% Source: RS, OSK

‘Must-Have’ rule not a big concern. We mentioned in our earlier report that the company’s prospects were cloudy due to the ‘Must Have’ rule which implied that RS would eventually be forced to air the FIFA2014 matches on free TV as well. However, it turned out that the rule is not a big concern anymore. RS is in a process of filing and documenting for an exemption, as it bought the broadcasting license before the regulation was finalized. If it turns out that RS has to abide by the law and broadcast the football matches on free-TV channel, potential revenue will come from the advertising minutes sold for broadcast during the event. During the previous World Cup in which RS also possessed the right to broadcast the matches, it generated ~THB550 in revenue in total. On the other hand, if it is exempted from the regulation, RS will broadcast those matches on its ‘Sun Channel’. Therefore, we see no threat on either outcome even though the latter case might generate more revenue.

RHB Research

RS AT A GLANCE

RS PCL (RS) runs a complete integrated entertainment business that includes traditional and modern media. The company started off in the traditional media business, which ranges from music production, promotion, marketing and artist management to the distribution of both digital and physical music. Later, it expanded into modern media by producing films, organizing events and concerts, producing television programs and managing radio stations.

REVENUE STRUCTURE

Revenue from music & digital comprises music production & promotion, digital mobile downloads, physical sales, music rights management and online sales. Digital and music revenue has declined since 2006. In FY12, the segment accounted for 31% of total revenue, down from 37%. We believe this figure will likely continue to decline slightly in the future, as it increasingly easier for consumers to access music without paying any fees.

Revenue from show business comes from organizing concerts and events for government and private organizations, and accounts for 25% of total revenue. Its GPM hovers around 12%.

Revenue from film production fluctuates from year to year depending on the number of movies it produces. Its core customers are cinemas, provincial film distributors, free and cable TV broadcasters, home entertainment operators and copyright buyers. Currently, there are five major players in the film industry, namely RS Group, Saha Mongkol Film, Five Stars, Phranakorn Film and GTH.

Revenue from media is generated from three sources namely TV, radio and modern trade stores. The company produces programs/shows/dramas for both FTA TV (The army’s Channel 5 and MCOT’s Modern Nine Channel) and its own satellite channels. Currently, RS has four FTA satellite channels (Sabaidee, StarMax, YOU and Ch.8) and a semi-pay channel (Sun Channel). In its radio business, RS’s Cool 93 Fahrenheit and Sabaidee Radio, broadcasted on FM frequency, have a combined market share of 20%, ranked just after MCOT’s country radio station which has the largest market share of the airwaves. RS also owns the rights to manage a point-of-purchase radio station in three modern trade stores comprising Tesco Lotus Express, Tops Supermarket and BIG C. Revenue from media represented 42% of FY12’s total revenue. We believe this proportion will grow significantly to ~47% in FY13, driven by a promising outlook for satellite TV businesses.

Figure 2: FY12 revenue b reakdown Figure 3: FY1 3 revenue b reakdown

Source: RS, OSK Source: RS, OSK

RHB Research FINANCIALS HIGHLIGHTS

Improving margins. RS’s gross and net margin, despite being quite volatile, have improved from 28% and 5% in 2006 to 35% and 10% in FY12 respectively. This is due to two main reasons: economies of scale and its penetration into a booming satellite business. Economies of scale boosted margins as RS utilized its artists/studios/other resources to generate several sources of revenue. Meanwhile, its satellite business hiked their ad rates, as its TV programs received better ratings and its occupancy rate improved. Moving forward, we are confident that RS would be able to maintain its GPM and NPM at about 35% and 12% respectively.

Strong balance sheet. RS has low interest-bearing debt and some amount of cash of hand. Most of its interest-bearing debts are short-term and account payables which do not have high interest rates. As at end-FY12, the company has a net DE ratio of 0.08x, which comprises mostly short-term loans. The low gearing ratio enables the company’s balance sheet to be leveraged should it need financing in the future.

Figure 5: Net debt to equity ratio Figure 4 : GPM and NPM

Source: RS, OSK Estimates Source: RS, OSK Estimates

Low capex. RS’s nature of business requires a low capex of only approximately THB400m per year. The company is still deciding whether to join the digital TV auction expected to take place in 2H13. However, we believe that it will continue to do well with its satellite business, and that there will be an insignificant impact should RS decides not to bid for the digital TV license.

RHB Research SWOT ANALYSIS

The dependence on local artists

S TRENGTH: RS owns a full WEAKNESS: Some business units spectrum of resources including have volatile margins, which could artists, studios, equipment and result in fluctuating overall expertise, which gives it economies margins. of scale.

OPPORTUNITY: The expansion of THREAT: A slowdown in the global

the satellite TV industry in which RS economy will lead to lower

has already established a strong advertising revenue, which is one of foothold there. the major sources of RS’s income.

Source: OSK

VALUATION

The two tables show our assumptions of RS’s advertising and occupancy rates, which are still below management’s guidance for FY13. Therefore, there is still room for a further upside should its rates turn out to be higher than our estimates, after 1Q13.

Channel SABAIDEE StarMax YOU CH 8 Sun Channel Utilization rate 0.68 0.35 0.58 0.7 0.2 Advertising rate (THB/minute) 7,500 1,500 2,800 8,000 1,500

Channel

SABAIDEE StarMax YOU CH 8 Sun Channel Utilization rate 0.74 0.4 0.64 0.76 0.35 Advertising rate (THB/minute) 8,000 2,000 3,300 8,500 3,000

We value RS at 27x PE or +2SD above its historical average PE multiple and believe that the stock will potentially benefit from the growing penetration of satellite TV in Thailand, and rising ad rates on satellite TV platforms. The counter is currently trading at a cheap PEG of only 0.4x in FY13. We expect its net profit for FY13-FY15 to have a CAGR of 21.3%, with its ROE approaching 30% in FY14.

RHB Research | See important disclosures at the end of this report 7 A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

RHB Research RECOMMENDATION CHART

Price Close

14 Recommendations & Target Price

NR 12 4.40

0 Buy Neutral Sell Trading Buy Take Profit Unrated Mar-08 Jun-09 Sep-10 Dec-11 Source : RHBRI, Bloomberg

Date RecommendationTarget Price Price 2012-11-14 Sell 4.40 5.30 Source : RHBRI, Bloomberg

RHB Research | See important disclosures at the end of this report 8 A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com

RHB Research 08 Mar 2013

THAILAND EQUITY Investment Research

The Research Team +662 862 9999 ext 2030 Company Update

Bumrungrad Hospital

Buy  Target THB112 On a Healthy Growth Path Previous THB112 We continue to like Bumrungrad Hospital (BH)’s niche in the premium Price THB89.75 market where it continues to receive a steady stream of local and domestic patients. The company’s ongoing capacity expansion will

enable it to meet rising demand while delivering decent long-term Healthcare Services BH owns and operates Bumrungrad earnings growth. Maintain BUY, with our FV unchanged at THB112, International Hospital, a premium based on 34x FY13 EPS. hospital in Bangkok. Capex of THB7.2bn. Due to strong demand and its limited capacity, BH

currently operates at such a high utilization rate that it has to turn patients Stock Statistics Bloomberg Ticker BH TB away. In order to cope with current and future demand, it has allocated a total Market Cap THB63,188m capex of THB7.2bn over the next five years to expand in- and outpatient USD2,124m capacity. With the construction of five new floors at its outpatient building 52 wk H/L price 91.8 50.0 almost done, BH expects to open additional outpatient clinics in 2Q13 pending 3m ADT THB116m approvals from relevant authorities. These new clinics will boost its outpatient YTD Returns (%) 17.2 capacity by 40%. The company has also started construction to convert the top Beta (x) 0.82 floor of its inpatient building, which upon completion, will add 44 ICU beds and 58 wards to the current capacity. Major Shareholders (%) Bangkok Dusit Medical Services 20.32 Soi 1 and new campus. Other than expanding its existing campus, BH is also Bangkok Insurance 41.65 undertaking development on two new sites, namely in Soi 1 and Petchburi Road. Demolition works for the existing building on Soi 1 will begin in end- 1Q13 and construction is expected to commence in 3Q13. The facilities at this Share Price Performance (%) site will form part of the extension of its existing campus due to the close Month Absolute Relative proximity (~90m) between these two sites. Meanwhile, the development plan 1m 11.9 8.0 for its Petchburi Road site, which has been marked to become a second 3m 14.1 (2.3) campus that will house a hospital for women and children, is being finalized 6m 6.4 (19.0) and construction is expected to start later this year. 12m 77.0 41.8 Maintain BUY. We maintain our forecast and BUY call on BH with our FV 6-month Share Price Performance unchanged at THB112, based on 34x FY13 EPS. We like BH for its strong Price Close Relative to Stock Exchange of Thailand Index (RHS) branding in the premium segment, as it stands to benefit from the increasing 104 173 affluence among Thai patients as well as from the inflows of medical tourists. 94 160 84 146 74 133

64 120 Forecasts and Valuations Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F 54 106 Total turnover (THBm) 10,056 11,306 14,042 13,711 15,757

44 93 -12 -12 Recurring net profit (THBm) 1,188 1,588 2,038 2,349 2,688 y p 09-Jul-12 09-Jan-13 07-Mar-12 08-Nov-12 07-Se 08-Ma Recurring net profit growth na 33.7% 28.4% 15.3% 14.4% Source: Bloomberg Core EPS (THB) 1.63 2.18 2.80 3.23 3.69 Core EPS growth na 33.7% 28.4% 15.3% 14.4% DPS (THB) 0.85 1.09 1.83 1.61 1.85 Dividend Yield 1.0% 1.3% 2.1% 1.9% 2.1% Core P/E (x) 53.2 39.8 31.0 26.9 23.5 Return on average equity 39.2% 24.8% 35.6% 28.4% 30.4% P/B (x) 10.4 9.4 7.6 7.7 6.7 EV/EBITDA (x) 21.5 9.5 17.6 16.0 14.0 Net debt to equity 14.9% 54.9% net cash net cash net cash RHBRI vs consensus EPS (9.0%) (2.1%)

Source: Company data, RHBRI estimates RHB Research | See important disclosures at the end of this report 1 A comprehensive range of market research reports by award-winning economists and analysts are exclusively available for download from www.rhbinvest.com Powered by Enhanced Datasystems’ EFA Platform RHB Research 08 Mar 2013 On the lookout for acquisition targets. Apart from expanding its existing campus and setting up a new one, BH is also keen on expanding into a new market segment under a second brand. It is constantly on a look out for potential acquisitions as a faster alternative to introduce its second brand rather than go through the required gestation period of a greenfield project. While it is keen to remain a premium player, BH’s target market for the second brand will be one tier below the premium market (charging about 70%-80% of BH’s rates). With its net cash position and strong operating cash flow, funding future acquisitions should not be an issue and we believe it is just a matter of time before BH finds the right asset and a reasonable price.

Expect strong 1Q13 results. With 1Q being the peak season for medical tourism, we expect BH to register a strong set of results for 1Q13, driven by heavy inflows of international patients and supported by the organic growth of its local patients. Other than the UAE and USA, two regions that had traditionally brought in high proportions of international patients, it is now also seeing a large number of patients from neighbouring countries, especially Myanmar and Cambodia, as well as from the Middle East. Recall that in 2012, international patients accounted for about 61.3% of its total revenue. As its international patient numbers have grown faster than that of local patients, we expect revenue from international patients to continue rising in FY13.

Figure 1: BH’s estimated capex over the next five years

Source: OSK, Company Data

FINANCIAL

Profit & Loss (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Total turnover 10,056 11,306 14,042 13,711 15,757 Cost of sales (5,979) (6,682) (8,232) (7,795) (8,967) Gross profit 4,077 4,624 5,810 5,916 6,789 Gen & admin expenses (1,537) (1,859) (2,305) (2,037) (2,346) Selling expenses (124) 0 (200) (162) (186) Other operating costs (619) (565) (591) (705) (821) Operating profit 1,798 2,201 2,714 3,012 3,436 Operating EBITDA 2,394 2,848 3,423 3,781 4,321 Depreciation of fixed assets (596) (648) (709) (769) (886) Operating EBIT 1,798 2,201 2,714 3,012 3,436 Net income from investments (35) 83 93 65 65 Interest income - - - 100 100 Interest expense (68) (189) (241) (241) (241) Exceptional income - net - - 790 - - Pre-tax profit 1,695 2,094 3,356 2,936 3,360 Taxation (507) (506) (690) (587) (672) Minority interests - - (1) - - Profit after tax & minorities 1,188 1,588 2,665 2,349 2,688 Net income to ord equity 1,188 1,588 2,665 2,349 2,688 Recurring net profit 1,188 1,588 2,038 2,349 2,688

Source: Company data, RHBRI

Balance Sheet (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Total cash and equivalents 627 1,261 6,034 5,909 6,218 Inventories 218 266 234 297 342 Accounts receivable 946 1,126 1,335 1,295 1,492 Total current assets 1,855 2,704 7,670 7,587 8,138 Other current assets 63 52 67 87 87 Total investments 1,212 4,253 239 242 242 Tangible fixed assets 5,785 6,242 7,683 7,800 7,900 Intangible assets 282 256 236 290 290 Total other assets 18 17 34 439 1,198 Total non-current assets 7,297 10,768 8,192 8,771 9,630 Total assets 9,152 13,473 15,862 16,359 17,768 Short-term debt 100 - - 200 200 Accounts payable 556 603 800 715 823 Other current liabilities 997 903 1,460 1,788 1,867 Total current liabilities 1,652 1,506 2,260 2,703 2,891 Total long-term debt 1,430 4,955 4,960 5,000 5,000 Other liabilities - 278 376 400 420 Total non-current liabilities 1,430 5,233 5,337 5,400 5,420 Total liabilities 3,082 6,739 7,597 8,103 8,311 Share capital 728 728 728 728 728 Retained earnings reserve 4,528 5,115 6,578 6,637 7,080 Other reserves 811 887 957 887 1,645 Shareholders' equity 6,068 6,730 8,263 8,252 9,454 Minority interests - 2 - 2 2 Other equity 2 2 2 2 2 Total equity 6,069 6,734 8,265 8,256 9,458 Total liabilities & equity 9,152 13,473 15,862 16,359 17,768

Source: Company data, RHBRI

RHB Research

Cashflow (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F Operating profit 1,798 2,201 2,714 3,012 3,436 Depreciation & amortisation 596 648 709 769 886 Change in working capital 278 (243) 98 (148) (55) Other operating cashflow 133 84 (12) (313) (605) Operating cashflow 2,805 2,690 3,508 3,320 3,661 Interest received - - - 100 100 Interest paid (69) (182) - (253) (253) Tax paid (465) (634) (442) (587) (672) Cashflow from operations 2,272 1,874 3,066 2,580 2,837 Other new investments (667) (1,071) (982) (1,200) (1,200) Other investing cashflow 3 (2,874) (980) 110 110 Cashflow from investing activities (665) (3,945) (1,962) (1,090) (1,090) Dividends paid (620) (693) (912) (1,175) (1,344) Proceeds from issue of shares 5,500 (131) 201 - - Increase in debt 100 3,425 - (500) (1,500) Other financing cashflow 264 (133) (1,910) 127 1,422 Cashflow from financing activities 5,245 2,468 (2,621) (1,548) (1,422) Cash at beginning of period - 627 1,261 6,034 5,909 Total cash generated 6,852 397 (1,517) (57) 325 Implied cash at end of period 6,852 1,025 (256) 5,977 6,233

Source: Company data, RHBRI

RHB Research

RECOMMENDATION CHART

Price Close

100 Recommendations & Target Price 81 81 NR 90 112 80 70 60 50 40 30 20 10 Buy Neutral Sell Trading Buy Take Pro f it Unrated Mar-08 Jun-09 Sep-10 Dec-11 Source : RHBRI, Bloomberg

Date RecommendationTarget Price Price 2013-02-26 Buy 112 91 2012-11-09 Neutral 81 76 2012-08-14 Neutral 81 76

Source : RHBRI, Bloomberg

RHB Guide to Investment Ratings

Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage

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