SET Announcements

VGI, Thailand’s leading provider of OOH advertising media solutions, revealed its growth results in Q2 2015/16 (Jul-Sep’15) despite the overall industry’s continued to slump, with a 0.3% decline in advertising expenditure as customers waited for signs of economic improvement and the outcomes of the government’s stimulus packages, which might take time to evaluate. The advertising business is expected to recover this calendar year-end, after a number of the government's stimulus measures have been implemented.

Mrs. Suparanan Tanviruch, Chief Financial Officer of VGI Global Media Public Company Limited, or VGI, revealed the company’s success in reaching the growth targets for its core advertising segments – BTS-related Media and Office Building Media - over the second quarter of 2015/16, and highlighted its total revenue of THB 537 million, a 10% growth from the previous year while net profit was 259 million baht, 7% increase over the same period (revenue and net profit excluding the Modern Trade Media business which the contracts had expired). In this quarter, the company booked net gain from extraordinary items amounting to 46 million baht (after tax), the bulk of which was mainly derived from sales of overseas investment.

“VGI posted revenue growth of 7% from advertising space and shop-rental space on BTS stations resulting from our clients’ confidence in the effective reach of the on-station advertisements and sales-promotion campaigns. These were augmented by additional revenue from BTS extensions stations which VGI covering 7 more stations (Onnut-Bearing, Saphan Taksin-Wongwian Yai). Moreover, revenue from Office Building Media in Q2 also rose substantially by 28% as a result of the accelerated expansion in this particular sector,” Mrs Suparanan said.

She added that these positive factors have enabled VGI to maintain a healthy revenue growth which outperforming the advertising industry average. “With our strong financial structure and low operating costs, we are able to maintain a high Margin of Safety of 48%, which puts us in a most resilient position to withstand any economic downturn than other operators. We also believe that the advertising industry has passed the lowest point in this quarter,” Mrs Suparanan said.

The CFO noted that VGI has managed to grow both revenues and profits amid the transition in the advertising industry structures following the recent introduction of a large number of digital television channels which are leading to a wider distribution of television audiences, and to the younger generation’s changing lifestyles that involve more Out-of-Home activities. These factors have encouraged our clients to increase their utilization of BTS-related Media and Office Building Media for more effective communication of their products and services to their consumers.

Meanwhile, Mr Marut Arthakaivalvatee, Executive Director and Chief Executive Officer, added that in the third quarter (Oct-Dec) of VGI’s financial period of 2015/16, which will be the industry’s peak season and during which several stimulus packages (including the cuts of transfer fees and mortgage fees to boost the real estate sector and the relaxation of commercial banks' loan terms) will be introduced by the government, Thailand's construction and related industries will likely pick up, speeding up recovery of the economy and leading to greater advertising spending during the period.

“Therefore, we believe that VGI is likely to achieve the 10% growth target in 2015/16. Most recently, VGI has successfully expanded the Office Building Media to a total of 118 buildings (1,052 screens) which exceeding the target of 113 buildings. VGI is now already Thailand’s biggest operator of office-building advertising medium and we are set to expand to cover a total of 130 buildings within this year.

Mr Marut stated that the company has also targeted to expand its advertising media agency business nationwide through its partnership with Midas Global Media, which will secure the space for and install giant LED screens, called “Midas Clock Towers”, in highly urban communities in 15 provinces (in the first phase). Midas Clock Towers will enable customers to pursue “localize marketing” campaigns, which involve, for example, use of local languages for effective communication of promotional information to local target audiences. They will also enhance customers’ confidence as they will enable the customers to perform monitoring of their advertising spots using a CCTV application on a 24-hour basis. As this is a highly desirable feature in this era of digital advertising, the product has been enthusiastically welcomed by customers.

“We expect to see an economic recovery in the fourth quarter of this calendar year. In addition, as the quarter will be the high season, during which the consumers will increase their spending in connection with several festivals and the brand owners or advertising agencies will allocate more advertising budgets,” said he.