Weak ads environment clouds prospect for Phoenix quarter returns
Further weakening in the mainland advertising market is expected to take a toll on Phoenix Satellite Television Holdings, with analysts expecting it to post a widening fourth-quarter loss today.
Analysts forecast that the Chinese satellite television operator will post a net loss of between HK$12 million and HK$41.8 million for the quarter to June 30.
In the third quarter to March 31, Phoenix TV recorded a net loss of HK$9.7 million on HK$152 million turnover.
The expected worsening in the fourth quarter will be coupled with the implementation of a cap of 2 per cent of turnover as tax-deductible advertising expenditure and the heavy start-up costs of two new channels, according to analysts.
Credit Suisse First Boston, among the most bearish of the analysts, forecast that Phoenix TV would record a HK$41.8 million fourth quarter net loss.
'We forecast the losses in the latter half of the year to eat away profit growth made in the first half,' it said.
On a full-year basis, analysts were forecasting that Phoenix TV would post a profit of between HK$46 million and HK$79 million.
The satellite TV operator earned HK$87.8 million net profit on HK$542.8 million revenue in the nine months to March 31. DBS Securities said an estimated 43 per cent rise in operational expenditure to HK$675 million was behind the profit eclipse.
The anticipated cost surge was caused by the launch of Phoenix Weekly magazine and roll-out of the Phoenix North America Chinese Channel at the end of last year and the Phoenix InfoNews Channel earlier this year, DBS said.
Analysts also expected Phoenix TV to post a slowdown in revenue in the fourth quarter.
DBS Securities is forecasting that Phoenix TV's advertising revenue will dip by 4.5 per cent from the previous quarter.
The five brokerage firms surveyed by Business Post forecast Phoenix TV to record full-year revenue of between HK$683 million and HK$751 million, representing a growth rate of between 33.5 per cent and 46.8 per cent.
Last year, Phoenix TV's revenue grew 62.4 per cent. Morgan Stanley said Phoenix TV was more expensive than its global peers as it was trading at 44 times 2002 earnings per share.
Phoenix TV shares yesterday rose one HK cent to finish at 94 HK cents.