HKET earnings up as its listing nears

Chinese-language newspaper listing candidate Hong Kong Economic Times Holdings (HKET) more than doubled its net profit last year.

For the 12 months to March, HKET reported a net profit of $65 million, a sharp jump from the $26 million it made in the previous Sars-affected year, according to a report issued by listing sponsor BNP Paribas Peregrine. For the year to March 2003, net profit was $38 million.

HKET, which plans to list early next month in a $200 million offer, owns flagship newspaper Hong Kong Economic Times, real-time financial information provider ET Net, personal computer-focused magazine e-Zone, and recruitment paper Career Times.

At present, HKET derives about 20 per cent of its revenue from non-publishing businesses such as ET Net and ET Business College.

However, the media firm is expected to face new challenges from competing free newspapers and increasing newsprint costs.

Last year, the average daily circulation of Hong Kong Economic Times was 80,704 copies. Oriental Daily has an average daily circulation of 445,000 copies, Apple Daily has 350,000, Ming Pao 130,000 and South China Morning Post 100,000, according to Hong Kong Audit Bureau of Circulation.

BNP Paribas Peregrine said competition among paid publications and free circulars, such as Metro and Headline Daily, 'could depress yield and increase costs' for the company. It said rising newsprint costs 'perhaps [are] the Achilles' heel of print media'.

In the past three financial years, newsprint costs at HKET - 16 per cent of total costs - were $87 million, $67 million and $60 million, respectively. HKET plans to launch two magazines and extend its business, from advertising to electronic information, into China.

BNP Paribas Peregrine said global publishers traded at about 26 times historical price-earnings ratios, or 17 times their forward price-earnings ratio, with a dividend of 2 per cent to 3 per cent. The brokerage values HKET at $1.26 billion.