MAJOR, remains a favored mid cap.

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MAJOR (29) An update due to opportunity.

MAJOR CINEPLEX GROUP PUBLIC COMPANY LIMITED (MAJOR, 29 Baht) is and remains one of my key mid cap selection (the other one being TTCL) for some time.  It just dropped in price recently no doubt due to the continued market malaise which however has little to do with the company’s good fundamentals that remain solid in my view.   At the current price of 29, I can see a dividend of around 4.1%, payable this year, for last year’ operation. This company has a high historical dividend payout ratio of 70% of its earnings and pays interim-dividends twice a year.  These recently amounted to 1 Baht per share, per year, increased last year to 1.10.  

According to the Bualuang analyst, a seasoned long pro I met on this stock for many years, the earnings are projected to rise 23% for all of calendar year 2015.   Hence a 0.60 Baht semi-annual dividend for this year, looks very likely.  A few years ago I had an extensive company visit which I wrote up at length and enthusiasm at the link shown below -as such has been a choice mid cap here ever since.  Its stock price has just about tripled (incls. of dividends) since and was the best performer in my  just previous model portfolio.  Here is my original company visit article:

Major is and remains the largest shareholder (23%) in SF,

SF (5.90) is a large highly successful shopping complex near Bangkok’s Airport, called “Mega Bangna”

This leading company is expanding all around the region and plans to triple its total screens in the next few years. Currently from a base at near 400 to 1000.  Hence it’s a near pure play on the still high growth emerging countries’ around Thailand vs. the overall slower growing domestic Thai market.  MAJOR is an astute marketing company with its pre-movie colorful ads and high margin concessionary sales.  Its movie theaters are upscale and grandiose which makes it an overall superior experience then watching films at home this is well entrenched in the culture.  And unlike other entertainment options, these will not be closed when the time comes for mourning.  Last year there was some sporadic insider selling.

The last Star War movie and Spectra have been received/viewed very successfully and the FY16 line-up remains strong, saved by nine superheroes and sequel movies—Batman v Superman, Suicide Squad, Captain America (3): Civil War, X-Men: Apocalypse, Sinister Six, Deadpool, Resident Evil 6, The Divergent Series: Allegiant and ID2.

To me MAJOR (29) is and remains a core mid cap choice which earnings growth will keep surprising while being resilient to other changes here as around the region.  I can see this company earning 1.60 per share in 2016, up from 1.50 last year and then jumping to 1.90 in 2017 on its well thought out regional expansion. Its return on equity (ROE) is hovering around 20% hence a p/e of 18 for this year and dropping to 15 in 2017 along with a high besides growing dividend looks undemanding.  Hence I would rate it with a “strong buy view” now at today’s price of 29.

Best Regards,

Paul A. Renaud.