Plan B Media: Strategic Acquisitions Signal a Bright Future

Broker Name: UOB Kay Hian

Date of Report: 17 February 2025

Overview of Plan B Media’s Strategic Moves

Plan B Media Public Company Limited (PLANB), a leader in out-of-home (OOH) advertising media and engagement marketing, has announced two transformative transactions. These include the acquisition of Hello LED and an exclusive five-year agreement to manage VGI’s OOH media assets in Thailand. These initiatives reflect PLANB’s commitment to long-term growth and market dominance in the OOH advertising sector.

Transaction Highlights

PLANB’s dual transactions are structured to significantly bolster its portfolio and market influence:

• Acquisition of Hello LED: PLANB will acquire all 1,000,000 ordinary shares of Hello LED for a total value of Bt4 billion. This includes a 50% stake from Roctec Global, 49.99% from Win Harvest International, and 0.001% from an individual shareholder. The payment structure involves Bt2 billion in cash to Roctec, Bt1 billion in cash to Win Harvest, and Bt1 billion in shares issued to Win Harvest.
• Exclusive Rights to Manage VGI’s OOH Assets: PLANB will manage and sell all VGI advertising media assets in Thailand for five years (1 May 2025 – 4 December 2029). This includes transit, office spaces, and BTS Columns, with PLANB earning a minimum 3% of total revenue from sales and an incentive fee tied to gross profit growth.

Financial Impact and Growth Potential

These strategic acquisitions are anticipated to drive significant financial and operational benefits for PLANB:

• Revenue and Earnings Growth: The Hello LED acquisition is expected to contribute approximately Bt200 million to PLANB’s bottom line. Previously, PLANB recognized revenue from Hello LED through a 20% revenue-sharing arrangement, but post-acquisition, full revenue consolidation will occur.
• EPS Impact: While the financing of the Hello LED transaction involves a bank loan and private placement, resulting in a projected EPS dilution of 6.21%, PLANB expects an overall EPS upside of 4% in 2025 after accounting for financing costs.
• Enhanced Profit Margins: The exclusive rights to manage VGI’s OOH assets are projected to add Bt300-500 million to PLANB’s bottom line over the contract period, alongside an annual revenue boost of Bt50 million from BTS Column sales.

Strengthening Market Position

PLANB’s acquisition of Hello LED and collaboration with VGI are strategically aligned to strengthen its market position:

• Media Capacity Expansion: The Hello LED acquisition allows PLANB to expand its static billboard network in prime locations, leveraging its expertise in static media management.
• Integrated Media Network: Managing VGI’s OOH media assets enhances PLANB’s portfolio connectivity, boosting its ability to offer comprehensive advertising solutions.
• Resilience of OOH Sector: With the recovery in economic activities and outdoor mobility, the OOH advertising sector is poised for growth. PLANB’s expanded media capacity and prime area dominance ensure it remains a key player in this sector.

Key Financial Metrics and Projections

Valuation and Recommendation

UOB Kay Hian maintains a BUY recommendation for PLANB with a target price of Bt9.00, based on a discounted cash flow (DCF) methodology. This valuation incorporates a weighted average cost of capital (WACC) of 8.4% and a growth rate of 3.0%. The optimistic outlook stems from PLANB’s increased media capacity through Hello LED and enhanced collaboration with VGI, which are expected to drive long-term earnings growth.

Key Share Price Catalysts

• Improved utilization rates and expansion in media capacity.
• Growth in engagement marketing initiatives.
• Higher operating leverage, contributing to better profit margins.

Environmental, Social, and Governance (ESG) Highlights

• Environmental: PLANB adheres to environmental management standards in compliance with laws and agreements.
• Social: The company enforces an Occupational Health and Safety policy for employees and stakeholders.
• Governance: PLANB follows good governance principles as outlined by the Stock Exchange of Thailand.

In conclusion, PLANB’s strategic acquisitions and exclusive agreements position it for sustained growth in the OOH advertising sector. With an optimistic financial outlook, robust market strategy, and strong ESG practices, PLANB remains a compelling investment opportunity for long-term growth.