20140820-Maybank_KERPL-Strong_start_for_FY15_11页_270kb

报告摘要

Eros International (EROS IN) Summary

Core Content and Key Information

Share Price: INR227
Target Price: INR277 (+22%)
Market Cap (USD): 344M
Average Daily Trading Volume (USD): 2M
Recommendation: BUY (unchanged)

Strong Start for FY15

1QFY15 Revenue: INR2.4B, up 30% YoY.
1QFY15 EPS: INR3.9, up 22% YoY, beating consensus and forecasts.
Monetisation of Movie Catalogue: Increased to 18% of revenue (from 12% in 1QFY14), contributing to a 300bps YoY improvement in EBITDA margin to 24.2%.
Acquisition of Techzone: EROS has signed an agreement to acquire a controlling stake in Techzone, a mobile value-added services provider, expected to be completed in 2Q.
Debt Refinancing: EROS plans to raise up to INR7.5B through non-convertible debentures (NCDs) to refinance existing debt.
Parent Company Funding: Eros International Plc (EROS:US) raised USD90M through a follow-on equity offering (FPO), strengthening EROS's funding for movie pipeline and catalogue.

Strong Movie Slate for FY15 and FY16

FY15 Movie Releases: Includes 'Action Jackson', 'Happy Ending', 'Shamitab', 'Tanu Weds Manu - Season 2', 'Tevar', 'Aagudu', and 'Uttama Villain'.
FY16 Movie Releases: Includes 'Bajirao Mastani', 'Shivay', 'Farzi', 'Gabbar Singh 2', 'Ankhen 2', 'Penoza', 'Banjo', and 'Rana'.
Acquisition Strategy: EROS continues to acquire movie rights in production or post-production stages.

EROS NOW: Key Focus Area

Monetisation Strategy: EROS NOW is a key platform for monetising its library of over 2,000 movies.
Performance: EROS NOW has crossed 2B video views on YouTube and has a monthly run rate of 50M.
Techzone Acquisition Impact: Techzone has tie-ups with 12 major telcos in India and executes an average of 25M transactions per month. EROS expects to convert 10% of these subscribers, significantly boosting EROS NOW's user base.
Partnerships: Launched 'Broadband Movies' with Hathway Cable to increase paid users. Plans to expand tie-ups with broadband and cable/DTH players.
Long-Term Growth: Expected strong growth from subscription and advertisement income.

HBO Collaboration and Subscriber Growth

HBO Channels: Reached 0.5M subscribers in 1Q, up 100K QoQ.
Subscriber Target: Expected to reach 5M subscribers by FY15-16, which would lead to a break-even point and profit sharing.
Current Revenue Model: EROS earns revenue from providing movie content, but once channels reach 1M, profit sharing will be enabled.

Financial Projections and Metrics

Metric	FY12A	FY13A	FY14A	FY15E	FY16E
Revenue (INR m)	9,438.8	10,679.5	11,346.6	13,789.3	16,064.0
EBITDA (INR m)	(1,345.8)	(2,383.8)	2,997.5	3,878.8	4,556.4
Core Net Profit (INR m)	1,478.4	1,545.3	1,996.9	2,554.3	3,040.0
Core EPS (INR)	16	17	22	28	33
Core EPS Growth (%)	11.8	4.1	29.0	27.8	19.0
P/E (x)	14.1	13.5	10.5	8.2	6.9
P/BV (x)	2.5	2.1	1.7	1.4	1.2
Net Debt/EBITDA (%)	12.5	23.4	18.9	14.6	8.8

EPS Forecast: Revised to INR27.7 for FY15F and INR33.0 for FY16F, with 4% growth each year.
Re-rating Potential: Current PER of 8.2x FY15F and 6.9x FY16F is considered undemanding, with a target PER of 10x FY15F.
ROE and ROAA: Expected to average 19% and 11.3% respectively over FY14-16.
Net Debt/EBITDA: Projected to decline to less than 1x by FY16.

Strategic and Operational Highlights

Movie Catalogue Sales: Played a crucial role in FY15 performance, driving revenue and EBITDA growth.
Funding Stability: EROS:US's FPO and stable FX rates provide better access to capital for EROS.
Financial Performance: EBITDA margin improved to 24.2% in 1QFY15.
Recurring Profit: Expected to grow at 22.2% in FY15 and 19.0% in FY16.
Capital Expenditure: Capex is expected to remain at 42-46% of revenue in FY15-16.

Key Ratios and Trends

Ratio	FY12A	FY13A	FY14A	FY15E	FY16E
Revenue Growth (%)	33.5	13.1	6.2	21.5	16.5
EBITDA Growth (%)	nm	nm	nm	29.4	17.5
EBIT Growth (%)	39.8	8.3	27.5	28.8	17.0
Pretax Profit Growth (%)	39.8	2.2	23.0	33.2	19.5
Net Profit Growth (%)	26.1	4.5	29.2	27.9	19.0
EBITDA Margin (%)	nm	nm	26.4	28.1	28.4
EBIT Margin (%)	22.6	21.6	26.0	27.5	27.6
Pretax Profit Margin (%)	22.5	20.3	23.5	25.8	26.5
Net Debt/EBITDA (%)	12.5	23.4	18.9	14.6	8.8

Payout Ratio: Remains low, with no dividends paid in FY15E and FY16E.
Liquidity: Current ratio improved to 2.1 in FY16E.
Efficiency: Days inventory outstanding reduced to 2.1 in FY15E.

Conclusion

EROS International has demonstrated strong performance in FY15, driven by effective monetisation of its movie catalogue and strategic acquisitions. The company is well-positioned for continued growth through its EROS NOW platform and collaborations with HBO and Hathway Cable. Despite a lower current PER, the stock has significant re-rating potential, supported by strong revenue and EBITDA growth forecasts. EROS is also working to reduce net debt/EBITDA and improve financial metrics over the next few years.

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