TVB stock players not looking at big picture
TELEVISION Broadcasting (TVB) cut a lonely figure on the stock market yesterday. As everything about it - almost - was bounding forward, its shares drifted forlornly down, losing $1.20 to $23.80.
If this move was in anticipation of lower-than-previously expected interim results it was a puzzling one. For since the withdrawal on July 28 of News Corp's proposal to take a 22 per cent stake in the company, its shares had surged from $19.40 to $25 atthe close of business on last Friday.
Strange then that the nerves should have gripped the market in the last few hours before the figures were unveiled.
The fall was stranger still, given that the half-year results were actually ahead of expectations.
The bears look to have been wrong-footed by the 27.4 per cent jump in interim profits to $163.5 million, which puts the company well on course for its expected 24 per cent climb to $452 million for the whole year.
The argument from some observers was that the half-time figures were actually disappointing because much of the improvement stemmed from cost-cutting rather than increased revenue.
Penalising a company for being more efficient, and providing an opportunity to improve its margins would be illogical, unless revenues were set to plunge faster than profitability rose.
This is obviously not the case with TVB.
It has a very wide wave-band of options for improving its market penetration and revenues in the future.
Analysts are particularly excited about the potential in Taiwan, where business has been haemorrhaging thanks to the activities of the cable pirates.
Now, courtesy of the United States and its demands on the defence of intellectual property, TVB is about to find itself with a serious market once more, and has its own plans for keeping strict controls on who has their hands on the buttons of the decoders that will feed the cables.
These will be strictly limited to legitimate operators, not cowboys, and will enable TVB to participate strongly in a market that some estimate to be worth a minimum of $2.9 billion.
This, according to NRI (HK) could add between $195 million and $568 million to the group's 1995 earnings.