1、Asia Pacific Equity Research 27 October 2010 AirMedia Neutral AMCN, AMCN US 3Q10 review: Expect further near-term stock upside; Introduce Dec-11 PT of US$9 Price: $7.21 Price Target: $9.00 Previous: $4.90 China Digital Media Dick WeiAC (852) 2800-8535 J.P. Morgan Securities (Asia Pacific) Limited R
2、itesh Gupta (91-22) 6157 3307 J.P. Morgan India Private Limited Imran Khan (1-212) 622-6693 J.P. Morgan Securities LLC 2610$Oct-09 Jan-10 Apr-10 Jul-10 Oct-10Price PerformanceAMCN share price ($)NASDAQ Composite (rebased)YTD 1m 3m 12mAbs -12.1% 85.3% 112.7% -19.3%Rel -20.3% 80.4% 104.0% -35.9%See
3、page 12 for analyst certification and important disclosures, including non-US analyst disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should be aware that the firm may have a conflict of interest that could affect the obje
4、ctivity of this report. Investors should consider this report as only a single factor in making their investment decision. AirMedia turns to profitability: AirMedia reported 3Q10 revenues of US$60.6MM, in line with our estimate of US$61.7MMM (up 7.6% QoQ and 60.6% YoY) and the consensus estimate of
5、US$60.4MM. The company had earlier guided to revenues of US$60MM-US$62MM. GAAP EPS of US$0.02 (vs. loss of US$0.07 in 2Q10 and US$0.15 in 3Q09) was better than our and consensus estimates of just breakeven. The earnings upside was due to good operating expense leverage. The company expects 4Q10 reve
6、nues to be in the range of US$69MM-US$71MM, implying a rise of 14%-17% QoQ and 53%-57% YoY, in line with our expectations. Concession-fee guidance was also in line with our expectation. Good control over costs: We like the good control over concession costs and decline in G Bloomberg: AMCN US US$ in
7、 millions, year-end December FY09 FY10E FY11E FY12E FY09 FY10E FY11E FY12E Net Sales 152.5 235.0 293.8 349.6 ROE (%) -11 1 8 13 52-Week range US$2.8-9.0Operating Profit (EBIT) -46.5 -10.0 15.2 30.6 ROIC (%) -12 0 7 13 Shares Outstg 66MnEBITDA -33.2 28.8 33.4 50.6 Qtr GAAP EPS (US$) 1Q 2Q 3Q 4Q Avg d
8、aily value US$1.1MPre Tax Profit -43.2 -7.7 16.2 31.7 EPS FY09 0.00 -0.09 -0.12 -0.27 Avg dly volume 0.3MnReported Net profit -37.2 -5.1 15.6 29.0 EPS FY10E -0.07 -0.02 0.04 0.09 Index (NASD) 2,497Reported EPS (US$) -0.57 -0.08 0.24 0.44 EPS FY11E 0.02 0.06 0.11 0.13 Free float 74%P/E (x) nm nm 30.5
9、 16.5 1M 3M 12M Dividend Yld (%) 0%Adj. EPS * -0.45 0.09 0.34 0.60 Abs. Perf. (%) 85.3 112.7 -19.3 Market Cap US$0.47BAdj. P/E (x) -16.2 78.5 21.3 12.0 Rel. Perf. (%) 80.4 104.0 -35.9 Price Target US$9.0EV/EBITDA -14.3 16.4 14.2 9.3 Cash 126 85 78 76 Price Date Oct 26, 2010P/B (x) 3.6 3.5 3.4 3.2 Eq
10、uity 263 269 281 302 Y/E BPS (US$) 2.0 2.0 2.1 2.3 Source: Company, Bloomberg, J. P. Morgan estimates. * Excluding share-based compensation expense. 2 Asia Pacific Equity Research 27 October 2010Dick Wei (852) 2800-8535 Company description P (2) a reduction in rental rates with contract renewal or
11、discontinuation; and (3) sell-down on unprofitable media. Downside risks to our PT include: (1) further investments in new media properties which lead to additional loss near-term; (2) increase in rental rates; and (3) macro economic slowdown in China leading to reduced ad spend. 3 Asia Pacific Equi
12、ty Research 27 October 2010Dick Wei (852) 2800-8535 Peer group valuation comparison Price (LC) Market cap EV/EBITDA P/E (Oct 26) US$ MM 2010E 2011E 2010E 2011E Airmedia N AMCN 7.2 473 74.2 13.4 87.0 21.3 VisionChina N VISN 4.7 338 -4.7 12.1 nm 31.1 FocusMedia OW FMCN 24.3 3,478 13.6 9.7 23.7 18.7 C
13、lear Media NR 100.HK 4.6 312 6.1 5.4 15.6 14.6 JC Decaux OW DEC FP 21.7 6,606 10.4 9.0 28.9 19.4 Clear Channel N CCO 11.5 4,097 11.2 10.0 nm 575.5 Lamar Advertising OW LAMR 35.4 3,262 14.9 13.6 nm nm Median 11.2 10.0 26.3 20.3 Source: Bloomberg, J.P. Morgan estimates. Consensus estimates for non rat
14、ed companies. 4 Asia Pacific Equity Research 27 October 2010Dick Wei (852) 2800-8535 3Q10 earnings highlights AirMedia reported 3Q10 revenues of US$60.6MM (up 7.6% QoQ and up 60.6% YoY). Concession costs remained stable at US$33.3MM. The company returned to profitability on a non-GAAP basis. Conces
15、sion costs remained relatively stable at US$33.4MM. SG Renewed concession rights with China Southern Airlines until Sep-2015; 50 newly installed 50-inch digital TV screens and traditional light boxes beneath these digital TV screens in Dalian International Airport; Commenced operations of 22 newly i
16、nstalled 65-inch stand-alone digital frames in Dalian International Airport; Started selling advertisements on the digital TV screens on Hainan Airlines in Aug-2010. 5 Asia Pacific Equity Research 27 October 2010Dick Wei (852) 2800-8535 Tie-up with CCTV AirMedia signed a strategic co-operation agre
17、ement with CCTV to have a joint promotion during the period of the annual CCTV Prime Time Advertising Auction. As per the co-operation agreement, AirMedia will jointly market its platform with CCTV for their annual advertising auction marketing. AirMedia will also sell its advertising slots during t
18、he auction. Table 2: Key renewal contracts in future T3 of Beijing airport End-2010 Traditional Media in Beijing Mar-2012 Digital TV in Guangzhou airport 2011 2012 TV-attached Digital Frames in Guangzhou 2012 2012 T1 of Shanghai Hongqiao and Pudong airport Feb-2012 Feb-2012 T2 of Hongqiao Sep-2012 S
19、ep-2012 Gas station End-2014 End-2014 Guangzhou LED End-2015 End-2015 Source: Company. Earnings estimate revisions Our 2010 estimates are slightly down due to lower 3Q10 revenue and 4Q10 revenue guidance. Our 2011 revenue numbers remain unchanged. Non-GAAP EPS improvement for 2010 is due to lower G
20、(2) AirMedia has high exposure to high-end autos, financial services and high-end food and beverage segments. These advertisers could pull back ad spending earliest and deepest if macro environment turns less favorable. Risk to our PT Upside risks to our PT include: (1) better-than-expected revenue
21、leading to margin leverage; (2) reduction in rental rates with contract renewal or discontinuation; (3) sell-down on unprofitable media. Downside risks to our PT include: (1) further investments in new media properties which lead to additional losses in the near term; (2) increase in rental rates; a
22、nd (3) macro economic slowdown in China leading to reduced ad spend. Table 2: AirMediaDCF model (base-case scenario) 2010E 2011E 2012E 2013E 2014E 2015E 2016E 2017E 2018E 2019E 2020E Sales growth 53.3% 24.4% 19.0% 17.7% 14.0% 13.3% 10.0% 10.0% 10.0% 10.0% 10.0% EBIT margin -0.8% 7.3% 12.0% 13.3% 14.
23、6% 14.8% 15.0% 15.0% 15.0% 15.0% 15.0% NOPAT margin -1.0% 6.8% 11.2% 12.3% 13.4% 13.6% 13.8% 13.8% 13.8% 13.8% 13.8% Year end net fixed assets turns 2.9 3.4 3.7 3.9 3.9 3.9 3.0 3.0 3.0 3.0 3.0 Year end net working capital turns 3.6 3.6 3.5 3.7 3.6 3.7 3.0 3.0 3.0 3.0 3.0 Year end net other assets tu
24、rns 3.9 4.9 5.8 6.8 7.8 8.8 7.0 7.0 7.0 7.0 7.0 Cash operating taxes as % of EBIT -15.4% 6.3% 6.6% 7.6% 8.1% 8.2% 8.2% 8.2% 8.2% 8.2% 8.2% Year end Invested Capital turns 1.1 1.3 1.4 1.5 1.5 1.6 1.2 1.2 1.24 1.24 1.24 Source: J.P. Morgan estimates. Table 3: DCF sensitivity analysis Terminal growth (
25、%) 0% 1% 2% 3% 4% 5% 6% 7% 10.0% 11.1 11.8 12.7 13.8 15.3 17.4 20.6 25.8 11.0% 9.5 10.0 10.6 11.4 12.4 13.7 15.5 18.3 12.0% 8.3 8.6 9.1 9.6 10.3 11.1 12.3 13.9 13.0% 7.2 7.5 7.8 8.2 8.7 9.3 10.0 11.1 14.0% 6.4 6.6 6.8 7.1 7.5 7.9 8.4 9.1 15.0% 5.7 5.9 6.0 6.3 6.5 6.8 7.2 7.6 WACC 16.0% 5.1 5.2 5.4 5
26、.5 5.7 5.9 6.2 6.5 Source: J.P. Morgan estimates. 9 Asia Pacific Equity Research 27 October 2010Dick Wei (852) 2800-8535 Table 4: AirMediaIncome statement US$ in millions, year-end December 1Q09 2Q09 3Q09 4Q09 1Q10 2Q10 3Q10 4Q10E 1Q11E 2Q11E 3Q11E 4Q11E FY09 FY10E FY11E FY12E Total Revenue 32.8 36
27、.8 37.7 45.2 48.8 56.3 60.6 69.3 64.5 70.4 77.5 81.3 152.5 235.0 293.8 349.6 Digital TV screens in airports 12.2 9.1 8.4 7.5 6.5 6.6 7.3 8.5 7.1 8.2 8.7 9.5 37.3 28.8 33.4 38.7 Digital TV screens on airplanes 2.8 3.9 4.1 6.3 6.9 5.9 5.2 6.9 6.5 7.1 7.3 8.0 17.1 24.8 28.8 33.7 Digital Frames in airpo
28、rts 12.0 16.5 17.1 20.7 22.4 27.0 31.1 33.8 31.4 34.4 39.2 40.7 66.3 114.4 145.7 171.4 Traditional Media in Airports 4.0 5.7 7.3 10.2 9.9 12.2 12.1 14.5 13.5 13.9 15.1 15.7 27.2 48.7 58.3 68.2 Sinopec Gas Stations Displays 0.0 0.0 0.0 0.1 0.2 0.8 1.1 1.7 2.3 3.0 3.3 3.6 0.1 3.8 12.2 20.6 Other Displ
29、ays 1.7 1.6 0.9 0.4 3.0 3.8 3.7 3.9 3.7 3.8 3.9 4.0 4.6 14.5 15.4 17.0 Business Tax -1.1 -0.5 -0.6 -0.9 -1.0 -1.2 -1.6 -2.1 -1.9 -2.1 -2.3 -2.4 -3.1 -6.0 -8.8 -10.5 Net Revenues 31.7 36.3 37.2 44.3 47.8 55.1 59.0 67.2 62.6 68.3 75.2 78.9 149.4 229.0 285.0 339.1 COGS -25.9 -36.8 -37.8 -47.1 -45.5 -48
30、.6 -49.4 -52.1 -50.9 -52.9 -55.2 -56.7 -147.5 -195.7 -215.7 -244.1 Concession Fee -19.0 -28.1 -27.9 -35.1 -31.9 -33.3 -33.3 -34.4 -34.9 -35.5 -36.0 -36.5 -110.1 -132.9 -143.0 -157.5 Agency Fee -5.2 -5.9 -6.0 -7.2 -7.8 -9.0 -9.7 -11.1 -10.3 -11.3 -12.4 -13.0 -24.4 -37.6 -47.0 -55.9 Depn, Content, Mai
31、ntenance Fee -1.6 -2.8 -3.9 -4.7 -5.8 -6.3 -6.4 -6.6 -6.7 -6.9 -7.2 -7.4 -13.0 -25.1 -28.2 -31.4 Gross Profit 5.8 -0.5 -0.6 -2.8 2.2 6.5 9.5 15.1 11.6 15.4 20.0 22.2 1.9 33.3 69.2 95.0 Operating Expense -8.1 -7.9 -10.6 -21.7 -10.8 -12.2 -9.7 -10.6 -11.7 -13.0 -14.3 -15.0 -48.4 -43.3 -54.0 -64.4 SG a
32、nd (2) no part of any of the research analysts compensation was, is, or will be directly or indirectly related to the specific recommendations or views expressed by the research analyst(s) in this report. Important Disclosures Market Maker: JPMS makes a market in the stock of AirMedia. Client of the
33、 Firm: AirMedia is or was in the past 12 months a client of JPM. Non-Investment Banking Compensation: An affiliate of JPMS has received compensation in the past 12 months for products or services other than investment banking from AirMedia. 011223344Price($)Nov07Feb08May08Aug08Nov08Feb09May09Aug09No
34、v09Feb10May10Aug10Nov10AirMedia (AMCN) Price ChartN $4.9N $4.6Source: Bloomberg and J.P. Morgan; price data adjusted for stock splits and dividends.Initiated coverage Jun 03, 2010. This chart shows J.P. Morgans continuing coverage of this stock; the current analystmay or may not have covered it over
35、 the entire period.J.P. Morgan ratings: OW = Overweight, N = Neutral, UW = Underweight.Date Rating Share Price ($) Price Target ($) 03-Jun-10 N 4.16 4.60 12-Aug-10 N 3.23 4.90 Explanation of Equity Research Ratings and Analyst(s) Coverage Universe: J.P. Morgan uses the following rating system: Overw
36、eight Over the next six to twelve months, we expect this stock will outperform the average total return of the stocks in the analysts (or the analysts teams) coverage universe. Neutral Over the next six to twelve months, we expect this stock will perform in line with the average total return of the
37、stocks in the analysts (or the analysts teams) coverage universe. Underweight Over the next six to twelve months, we expect this stock will underperform the average total return of the stocks in the analysts (or the analysts teams) coverage universe. J.P. Morgan Cazenoves UK Small/Mid-Cap dedicated
38、research analysts use the same rating categories; however, each stocks expected total return is compared to the expected total return of the FTSE All Share Index, not to those analysts coverage universe. A list of these analysts is available on request. The analyst or analysts teams coverage univers
39、e is the sector and/or country shown on the cover of each publication. See below for the specific stocks in the certifying analyst(s) coverage universe. Coverage Universe: Dick Wei: AirMedia (AMCN), A Limited (1688.HK), Ambow Education (AMBO), B (BIDU), China Finance Online (JRJC), Focus Media (FMCN
40、), Netease (NTES), Shanda Games (GAME), Shanda Interactive Entertainment Ltd (SNDA), Sina Corp (SINA), Sohu.Com (SOHU), Tencent (0700.HK), The9 Limited (NCTY), VanceInfo Technologies Inc. (VIT), VisionChina (VISN) 13 Asia Pacific Equity Research 27 October 2010Dick Wei (852) 2800-8535 J.P. Morgan E
41、quity Research Ratings Distribution, as of September 30, 2010 Overweight (buy) Neutral (hold) Underweight (sell) J.P. Morgan Global Equity Research Coverage 46% 43% 12% IB clients* 49% 45% 33% JPMS Equity Research Coverage 43% 48% 8% IB clients* 69% 60% 50% *Percentage of investment banking clients
42、in each rating category. For purposes only of FINRA/NYSE ratings distribution rules, our Overweight rating falls into a buy rating category; our Neutral rating falls into a hold rating category; and our Underweight rating falls into a sell rating category. Valuation and Risks: Please see the most re
43、cent company-specific research report for an analysis of valuation methodology and risks on any securities recommended herein. Research is available at http:/ , or you can contact the analyst named on the front of this note or your J.P. Morgan representative. Analysts Compensation: The equity resear
44、ch analysts responsible for the preparation of this report receive compensation based upon various factors, including the quality and accuracy of research, client feedback, competitive factors, and overall firm revenues, which include revenues from, among other business units, Institutional Equities
45、 and Investment Banking. Registration of non-US Analysts: Unless otherwise noted, the non-US analysts listed on the front of this report are employees of non-US affiliates of JPMS, are not registered/qualified as research analysts under FINRA/NYSE rules, may not be associated persons of JPMS, and ma
46、y not be subject to FINRA Rule 2711 and NYSE Rule 472 restrictions on communications with covered companies, public appearances, and trading securities held by a research analyst account. Other Disclosures J.P. Morgan (“JPM“) is the global brand name for J.P. Morgan Securities LLC (“JPMS“) and its a
47、ffiliates worldwide. J.P. Morgan Cazenove is a marketing name for the U.K. investment banking businesses and EMEA cash equities and equity research businesses of JPMorgan Chase for securities where the holding is 1% or greater, the specific holding is disclosed in the Important Disclosures section a
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