ABS-CBN Corp. Review



ABS-CBN Corporation or ABS is one of the information and entertainment multimedia company in the Philippines. Incorporated in June 1946, ABS involved in producing various entertainment programs in multiple genres, and news programs that are aired on free-to-air TV via Channel 2 and 23.

Business Details:
1.  ABS-CBN Publishing, Inc. - (100% owned) print publishing
2. Star Records - (100%) audio and video production and distribution.
3. Roadrunner Network, Inc. - (98.9%) services-post production.
4. Star Songs, Inc. - (100%) music publishing.
5. Sarimanok News Network, Inc. - (100%) content development and programming services.

6. ABS-CBN Interactive, Inc. - services-interactive media.
7. The Big Dipper Digital Content & Design, Inc. - (100%) digital film archiving and central library of content licensing and transmission.
8. Creative Programs, Inc. - (100%) content development and programming services.
9. Studio 23, Inc. - (100%) content development and programming services.
10. TV Food Chefs, Inc. - services-restaurant and food.
11. ABS-CBN Film Productions, Inc. (Star Cinema) - (100%) movie production
12. ABS-CBN Integrated and Strategic Property Holdings, Inc.  - (100%) real estate.
13. ABS-CBN Global Cargo Corporation - (100%) non-vessel common carrier operations.
14. Sky Cable Corporation - (79.3%) cable television services
15. Culinary Publications, Inc. - (70%) print publishing.
16. E-Money Plus, Inc. - (100%) services-money remittance.
17. ABS-CBN Multimedia, Inc. - (100%) digital electronic content distribution.
18. Other International subsidiaries.

Business Performance:
For the year ending 2010, ABS' consolidated revenue is P32.2 billion,  a 30% increase from previous year. Excluding the sales on political advertisement, the company's revenue increased by 21%.

 ABS posted a net income of P3.2 billion in 2010 or 87% higher than last year.

For 1Q-2011, the consolidated revenue is P6.56 billion, a 15% decreased year-on-year while the net income of the company declined by 10% to P976 million compared to 1Q-2010. However, excluding the 1-time gained in 2011 due to sale of Sky Cable PDRs and election-related income in 2010, the net income would have increased bu 12% year-on-year.

Note: For reference about ratio and stocks analysis, read here.

Profitability:
ROE = 19.65%
Average ROE for 5 years = 7.56%
OCF/Equity = 30.78%
Net Profit Margin = 12.29%

Growth:
Annual Net Income Growth Rate (5 yrs) = 43.93%

Debt and Risk:
DE Ratio = 55.86%
Current Ratio = 1.35

Though leverage level is healthy, the liquidity level has to be improved since the current ration is below 1.5 which is the considered good level of current ratio.

Dividend:
Dividend Yield (2010) = 2.47%

Recently, ABS distributed dividend at P2.1 per share or a dividend yield of 5.2% based on closing price of P40.45 last Jun. 06, 2011.

Other factors:
Both GMA7 and ABS claimed that their audience shares climbed in May on higher primetime viewership.

Valuation:
PE Ratio = 9.49
PB Ratio = 1.81
Intrinsic Value = P74.1/share
Current Price = P40.45/share
Upside = 83.18%


Recommendation:
Long term buy is recommended for ABS.

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