Tài liệu Nothing But Net 2009 Internet Investment Guide 33 docx

321 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Table 225: NCTY Quarterly Income Statement $ in millions 1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08E 1Q'09E 2Q'09E 3Q'09E 4Q'09E Revenue 270.0 270.0 316.0 423.7 439.4 455.1 408.4 446.6 467.2 479.3 570.2 583.8 Online games services 266.8 262.3 310.9 427.4 438.0 454.0 406.8 445.2 465.8 477.9 568.7 582.3 Game operation support 2.5 7.0 2.0 -3.4 0.2 0.1 0.1 0.1 0.0 0.0 0.0 0.0 SMS services 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Other revenue 0.7 0.7 9.0 -0.4 1.3 0.9 1.5 1.3 1.4 1.4 1.4 1.4 COGS -139.7 -155.4 -183.8 -221.1 -231.4 -241.0 -227.6 -251.0 -265.3 -270.2 -334.8 -344.7 Gross Profit 130.3 114.6 132.2 202.5 208.0 214.0 180.9 195.6 202.0 209.1 235.4 239.1 Operating Expenses -58.1 -74.5 -88.5 -122.6 -94.0 -100.3 -103.0 -116.1 -116.8 -119.8 -142.5 -145.9 Sales & Mktg. expenses -16.1 -22.5 -31.9 -32.8 -22.4 -26.8 -24.8 -35.7 -37.4 -38.3 -45.6 -46.7 G&A expenses -32.4 -40.6 -48.6 -58.7 -59.1 -58.0 -56.9 -58.1 -60.7 -62.3 -74.1 -75.9 R&D expenses -9.6 -11.4 -8.0 -12.4 -12.5 -15.6 -21.2 -22.3 -18.7 -19.2 -22.8 -23.4 Other expenses 0.0 0.0 0.0 -18.7 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Share-based compensation -6.2 -9.2 -17.2 -15.4 -12.0 -12.1 -12.2 -17.0 -17.0 -17.0 -17.0 -17.0 EBIT 72.1 40.1 43.7 79.9 114.1 113.7 77.9 79.5 85.2 89.3 92.8 93.2 Adj. EBIT (ex-share-based comps.) 78.3 49.3 60.9 95.4 126.1 125.8 90.1 96.5 102.1 106.3 109.8 110.1 EBITDA 121.9 106.2 116.8 151.0 182.9 184.8 149.6 190.8 210.7 219.6 218.2 225.3 Equity earnings in affiliates -1.5 -2.1 -0.7 -1.4 -0.4 -0.6 -0.3 -0.9 -0.9 -0.9 -0.9 -0.9 Net Other Income 3.5 13.7 2.0 1.4 -11.6 9.8 26.6 -2.2 -4.4 -4.6 -7.3 -7.0 Pre Tax Profit 74.2 51.7 45.0 79.9 102.0 122.9 104.3 76.4 79.8 83.8 84.6 85.3 Tax Expense/(Credit) 8.1 1.1 6.8 -6.7 10.5 7.0 6.4 7.6 8.0 8.4 8.5 8.5 Net Profit (after MI) 66.1 50.6 38.2 86.0 89.7 115.9 98.4 68.8 71.9 75.4 76.2 76.8 Net Profit (excl 123R option exp.) 72.3 59.8 55.4 101.4 101.7 128.0 110.6 85.7 88.8 92.4 93.1 93.7 Pre Tax EPS (US$) 3.00 1.96 1.53 2.73 3.65 4.46 3.78 2.77 2.89 3.03 3.06 3.08 After Tax EPS (US$) 2.67 1.92 1.30 2.94 3.21 4.20 3.57 2.49 2.60 2.73 2.75 2.77 After Tax EPS Diluted (US$) 2.65 1.90 1.29 2.93 3.21 4.19 3.56 2.47 2.57 2.70 2.72 2.73 After Tax EPS Diluted excl 123R option exp. (US$) 2.89 2.24 1.87 3.45 3.64 4.63 4.00 3.07 3.18 3.30 3.32 3.34 Margins (%) Gross Margin 48.2 42.4 41.8 47.8 47.3 47.0 44.3 43.8 43.2 43.6 41.3 41.0 Operating Margin (excl 123R option expense) 29.0 18.3 19.3 22.5 28.7 27.7 22.1 21.6 21.9 22.2 19.3 18.9 EBITDA Margin 45.1 39.3 37.0 35.6 41.6 40.6 36.6 42.7 45.1 45.8 38.3 38.6 Net Margin 24.5 18.7 12.1 20.3 20.4 25.5 24.1 15.4 15.4 15.7 13.4 13.1 Net Margin (excl 123R option expense) 26.8 22.2 17.5 23.9 23.1 28.1 27.1 19.2 19.0 19.3 16.3 16.1 Sequential Growth (%) Revenue -4.5 0.0 17.0 34.1 3.7 3.6 -10.2 9.3 4.6 2.6 18.9 2.4 Gross Profit -3.3 -12.0 15.3 53.2 2.7 2.9 -15.5 8.2 3.2 3.6 12.5 1.6 Adj. EBIT -9.3 -37.0 23.5 56.6 32.2 -0.2 -28.4 7.1 5.9 4.1 3.3 0.3 Pre Tax Profit -26.6 -30.3 -13.0 77.6 27.7 20.5 -15.2 -26.7 4.5 4.9 1.0 0.8 Net Profit -37.1 -23.4 -24.6 125.2 4.3 29.2 -15.1 -30.1 4.5 4.9 1.0 0.8 After Tax EPS Diluted -37.7 -28.3 -32.1 127.2 9.6 30.6 -15.1 -30.7 4.4 4.8 0.8 0.6 After Tax EPS Diluted excl 123R option exp. -35.7 -22.5 -16.6 84.7 5.3 27.2 -13.5 -23.1 3.5 3.8 0.7 0.5 Source: Company reports and J.P. Morgan estimates. 322 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Table 226: NCTY Annual Balance Sheet $ in millions 2007 2008E 2009E 2010E Cash and Cash Equivalents 294.17 279.74 327.44 400.27 Account Receivables 3.54 4.99 6.60 7.28 Inventory 13.40 14.26 18.84 20.80 Total Other Current Assets 9.55 13.41 13.56 13.56 Total Current Assets 320.66 312.41 366.43 441.90 Gross Fixed Assets 78.63 137.52 198.99 264.99 Accumulated Depreciation (32.89) (60.56) (106.54) (170.66) Net Fixed Assets 45.73 76.95 92.45 94.33 Other Long Term Assets (Intangibles + Goodwill) 40.83 32.37 38.18 21.34 Long Term Investments and Associates 23.83 71.07 71.30 70.76 Total Long Term Assets 110.39 180.39 201.93 186.44 Total Assets 431.05 492.81 568.36 628.33 ST Debt and Current Portion of LT Debt 14.15 - - - Accounts Payable 37.85 35.66 47.11 51.99 Other Current Liabilities 6.42 10.41 13.76 15.18 Total Current Liabilities 58.43 46.07 60.87 67.17 Long Term Debt - - - - Other Long Term Liabilities - 0.03 0.03 0.03 Total Long Term Liabilities - 0.03 0.03 0.03 Share Capital 0.31 0.33 0.33 0.33 Share Premium 294.60 319.40 334.58 346.50 Other Reserves 2.75 3.62 3.66 3.66 Retained Earnings 74.96 123.36 168.90 210.64 Preferred Stock - - - - Total Equity 372.62 446.71 507.47 561.13 Total Liabilities and Equity 431.05 492.81 568.36 628.33 Source: Company reports and J.P. Morgan estimates. 323 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Table 227: NCTY Annual Cash Flow Statement $ in millions 2007 2008E 2009E 2010E Net Income 31.99 54.31 44.21 41.75 Add Non cash Expenses/(income) - - - - Depreciation and Amortization 28.15 39.29 65.61 80.96 Extraordinaries 0.08 0.21 - - Other Non-Cash Items 6.38 7.77 10.00 10.00 Changes in Working Capital: - - - - (Increase)/Decrease Receivables (2.19) (1.11) (1.55) (0.68) (Increase)/Decrease Inventories 1.41 0.44 (4.43) (1.95) (Increase)/Decrease Other Current Assets (5.89) (2.93) - - Increase/(Decrease) Payables 11.38 (5.88) 11.07 4.88 Increase/(Decrease) Other Current Liabilities (0.55) 3.37 3.23 1.43 Net Cash from Operations 70.76 95.47 128.14 136.38 Cash Flow from Investing - - - - Purchase of Property, Plant & Equipment (31.81) (50.36) (60.00) (66.00) Purchase/Sale of Other LT assets / amortization (16.24) (3.27) (25.74) - Purchase/Sale of Investments (19.12) (44.91) 0.53 0.53 Net Cash from Investing Activities (67.17) (98.55) (85.21) (65.47) Cash Flow from Financing - - - - Issuance/Repayment of Debt 9.29 (15.53) - - Change in other LT liabilities (Intangibles + Goodwill) - 0.03 - - Change in Common Equity - net 163.20 (11.06) 1.76 1.92 Payment of Cash Dividends - - - - Other Financing Charges, Net (6.46) (13.41) (0.00) 0.00 Net Cash from Financing Activities 166.04 (39.98) 1.76 1.92 Net Effect of Exchange Rate Changes - - - - Net Change in Cash and Cash Equivalents 169.63 (43.06) 44.69 72.83 Cash at end of the Period 294.17 279.74 327.44 400.27 Source: Company reports and J.P. Morgan estimates. 324 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com UOL, Neutral, R$7.3 We maintain our Neutral rating and R$7.5 Dec-09 price target for UOL, a leading Brazilian online media portal and Internet company. We expect advertising revenues to suffer from weaker GDP growth in Brazil. Key points on the company: • Weak resource allocation and potential lack of opportunities: the company holds a net cash position of R$567m, constituted by R$264m raised during the IPO in the end of 2005 and free cash flow thereafter, which was intended to be used for acquisitions. However, only minor acquisitions were made, and there is no guidance that a deal of significant stature will be closed or the cash distributed back to shareholders (bylaws set minimum dividend payout of 1%, unlike usual 25% for Brazilian companies). We believe the long permanence of these resources might indicate a lack of opportunities for the company. • Downside to advertising business on global downturn: Internet advertising has been presenting strong growth, which we believe will be affected by the economic downturn (JPM revised ‘09E Brazilian GDP growth to 1.8% from 5.1%). During the conference call with investors, UOL admitted that there might be a slowdown in this line in 1Q09. • Low visibility on margins ex-subscription business: while there is no margin disclosure per business, declining or stagnant margin trends challenge company guidance that advertising revenues have higher margins than subscription revenues. The company attributes this to development and marketing costs for new products, but we believe there could be a recurring need to update the portal and keep revenues growing. • 2009 drivers. In our view, the following factors will drive shares in 2009: (1) impact of downturn in advertising, (2) margin recovery. • 4Q’08 estimates. We expect the company to post net revenues of R$151m, EBITDA of R$32m and EPS of R$0.2.shr in the fourth quarter. Our estimates for 2008-10 are in the table below. They were introduced in our note Brazilian TMT: Small Caps Also Affected by Downturn, Cutting Estimates for Positivo/UOL, published on Nov 17th. Table 228: UOL Financial Snapshot R$ in millions, except per share data UOL 4Q'08E F'08E F'09E F'10E F'08E Y/Y F'09E Y/Y F'10E Y/Y JPMorgan Revenue 150.6 573.6 574.9 636.9 9.2% 0.2% 10.8% EBITDA 32.1 132.7 132.9 149.5 -2.5% 0.1% 12.4% EPS(R$/shr) 0.2 0.9 0.9 0.9 -6.2% 0.3% 2.3% Consensus Revenue NA 575 626 670 10% 9% 7% EBITDA NA 138 154.5 170 1% 12% 10% EPS NA 0.85 0.86 1.035 -8% 2% 20% Source: J.P. Morgan estimates, Company data, and Bloomberg Latin American Media & Internet Andre Baggio AC (55-11) 3048-3427 andre.baggio@jpmorgan.com Banco J.P. Morgan S.A. 325 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Our Estimates and Outlook for 2009 We expect a sharp deceleration in revenue growth during 2009, to 0.2% from 9.2% in 2008E, given that the key driver of the company has been the advertising business, which we expect to suffer as companies reduce marketing expenses on the global crisis. EBITDA is expected to increase 1.4% in 2009, as we believe margins could present some recovery in 2009 to 23% from 3Q08's low of 20%. EPS are expected to increase 0.2%, lower than EBITDA as depreciation charges should be higher on the back of investments in the company's new datacenter. Our Estimates and Outlook for 2010 We assume the economic crisis will be mostly over by 2010, and that growth should resume for UOL. We expect revenues to increase 10.8% and EBITDA to rise 12.4% on a 0.2pp margin expansion. EPS are projected to increase 2.3%, on the back of higher tax rates, as currently the company enjoys fiscal benefits of investing in Norway bonds, which we assume will end in 2010. We Hold a Price Target of R$7.5 Our R$7.5/shr price target for Dec-09 is based on a DCF model employing 13.7% WACC (454bps country risk), 4.2% 10yr revenue CAGR, 24% long-term EBITDA margins, 12% long-term CAPEX, 2% growth in perpetuity, all in nominal US$. We apply a 25% discount factor on our DCF to account for increased investor aversion to small-cap stocks with reduced visibility. Valuation and Rating Analysis We maintain our Neutral rating for UOL. The company trades at a low multiple of 8.5x P/E’09E, 55%, lower than peers’ 18.8x, but we believe this is offset by (1) negative short-term prospects given GDP slowdown, (2) low visibility regarding long-term margins and margin recovery from current low levels, and (3) a large net cash position of R$567m as well as a dividend policy of distributing only 1% of net income. Risks to Our Rating and Price Target Key risks to the upside include: (1) high resilience in Brazilian Internet advertising industry, which could gain share in total advertising revenues offsetting the economic downturn; (2) change in dividend policy or high dividend payment; (3) significant uptake in margins; and (4) large and accretive acquisitions. To the downside, risks include: (1) further deterioration in margins and (2) steeper decline in Internet access markets. 326 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Table 229: UOLL4 Annual Income Statement R$ in millions INCOME STATEMENT 2007 2008E 2009E 2010E Paying subscribers 1,685 1,816 1,914 2,031 Subs Revs, Gross 525 518 538 561 Ads and Other Revs, Gross 192 276 273 338 Gross Revenue 716 794 812 899 Net Revenue 525 574 575 637 Recurring Cash Costs -389 -441 -442 -487 Adj. EBITDA 136 133 133 149 Adj. EBITDA Margin 25.9% 23.1% 23.1% 23.5% Non Recurring Items 18 -2 0 0 EBITDA 154 131 133 149 EBITDA margin 29.4% 22.9% 23.1% 23.5% Depreciation -44 -58 -77 -82 Net Interest Expense 31 52 68 71 Non Op Income -8 0 0 0 Income Taxes -23 -23 -21 -33 Net Income 109 103 103 105 Shares O/S 120.1 120.1 120.1 120.1 EPS (R$/shr) 0.91 0.85 0.86 0.88 Source: Company reports and J.P. Morgan estimates. 327 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Table 230: UOLL4 Quarterly Income Statement R$ in millions 1Q'07 2Q'07 3Q'07 4Q'07 1Q'08 2Q'08 3Q'08 4Q'08E 1Q'09E 2Q'09E 3Q'09E 4Q'09E Paying subscribers 1,640 1,700 1,730 1,685 1,700 1,740 1,780 1,816 1,841 1,864 1,889 1,914 Subs Revs, Gross 128 131 134 132 130 127 130 132 133 134 135 136 Ads and Other Revs, Gross 34 52 46 59 53 69 73 81 54 69 71 80 Gross Revenue 162 183 180 191 183 196 203 213 187 203 206 216 Net Revenue 118 129 132 146 137 142 144 151 133 144 146 153 Recurring Cash Costs -90 -93 -96 -111 -101 -108 -113 -118 -103 -110 -112 -117 Adj. EBITDA 28 36 37 36 36 34 31 32 30 34 34 36 Adj. EBITDA Margin 23.7% 27.9% 27.8% 24.4% 26.3% 23.8% 21.3% 21.3% 22.3% 23.3% 23.3% 23.3% Non Recurring Items 2 17 1 -1 -1 1 -2 0 0 0 0 0 EBITDA 30 53 37 34 35 35 29 32 30 34 34 36 EBITDA margin 25.3% 41.0% 28.2% 23.5% 25.5% 24.6% 20.2% 21.3% 22.3% 23.3% 23.3% 23.3% Depreciation -9 -11 -12 -12 -13 -14 -15 -16 -18 -19 -20 -20 Net Interest Expense 9 8 8 5 8 11 17 17 16 17 17 18 Non Op Income 0 0 0 -8 0 0 0 0 0 0 0 0 Income Taxes -8 -12 -1 -3 -5 -9 -4 -5 -5 -5 -5 -6 Net Income 22 38 32 18 25 24 27 27 23 26 26 28 Shares O/S 120.1 120.1 120.1 120.1 120.1 120.1 120.1 120.1 120.1 120.1 120.1 120.1 EPS(R$/shr) 0.19 0.31 0.27 0.15 0.21 0.20 0.22 0.22 0.19 0.22 0.22 0.23 Source: J.P. Morgan estimates and Company report 328 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Table 231: UOLL4 Annual Balance Sheet R$ in millions 2007 2008E 2009E 2010E Cash and Equivalents 475 598 685 789 Accounts receivable 74 83 85 88 Other Current Assets 38 32 33 36 Total Current Assets 588 714 803 913 Total LT Assets 114 117 119 132 PP&E, Net 65 59 74 68 Deferred charges 0 0 0 0 Total Assets 798 938 1,043 1,161 Suppliers + Other Acc. Payable 59 88 89 93 Short Term Debt 0 0 0 0 Other Current Liabilities 83 88 90 99 Total Current Liab. 142 176 179 192 Long Term Debt 0 0 0 0 Other LT Liabilities 15 18 18 18 Minorities 2 2 2 3 Shareholder Equity 639 742 844 949 Net Debt -475 -598 -685 -789 Adj. Net Debt -475 -598 -685 -790 BVPS (R$/shr) 5.32 6.17 7.03 7.90 Source: Company reports and J.P. Morgan estimates. 329 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com Table 232: UOLL4 Annual Cash Flow Statement R$ in millions 2007 2008E 2009E 2010E Net Income 109 103 103 105 Depreciation 44 58 77 82 Cash Earnings 153 161 180 188 Chg Work. Cap -6 31 1 6 Cash Flow After WC 147 192 181 194 Capex -60 -103 -92 -76 as % of revs 11% 18% 16% 12% LT Assets 1 -4 -2 -13 Total Investment -59 -106 -94 -89 Free Cash Flow Equity 88 85 87 105 Chg Short Term debt 0 0 0 0 Chg Long Term debt 0 0 0 0 Chg Other LT Liabilities 0 2 0 0 Chg Other Financing -8 36 0 0 Dividend Payments 0 0 0 -1 Total Financing CF -8 38 0 -1 Change in Cash 80 124 87 104 Dividend per Share(R$/shr) 0.00 0.00 0.00 0.01 Source: Company reports and J.P. Morgan estimates. 330 Global Equity Research 05 Januar y 2009 Imran Khan (1-212) 622-6693 imran.t.khan@jpmorgan.com . Term Liabilities - 0.03 0.03 0.03 Share Capital 0.31 0 .33 0 .33 0 .33 Share Premium 294.60 319.40 334 .58 346.50 Other Reserves 2.75 3.62 3.66 3.66 Retained. (106.54) (170.66) Net Fixed Assets 45.73 76.95 92.45 94 .33 Other Long Term Assets (Intangibles + Goodwill) 40.83 32.37 38.18 21.34 Long Term Investments and