Asia Plus Securities stated that MAJOR announced a reduction in its registered and paid-up capital by canceling 75.67 million treasury shares, or 9.98% of registered capital, after failing to sell the repurchased shares within the specified period. This reduces the number of shares from 757.92 million to 682.25 million. The company has conducted three share buyback programs during 2023-2026 and has chosen to reduce capital by canceling repurchased shares each time, reflecting a capital management approach that prioritizes creating value for shareholders and management's view that the share price remains below fundamental value. Meanwhile, the core business trend is showing clear recovery, with revenue from the Top 5 films in July-August alone, over just two months, being 24% higher than the Top 5 films in 3Q68, which included a full three months. This was led by Spider-Man, Odyssey, and The Confession of a Shaman. Additionally, the remaining part of the quarter will see a continuous rollout of major Thai films, including The Legend of Wanthong, Jib Sra Sra Henry Jum Mai Dai, and Thee Yod: Saming Kha Kwang, which will support both Box Office and Concession revenue. Although 1H69 net profit accounts for only 23% of the full-year 2026 profit estimate, the research team maintains its forecast, believing that the significant Box Office recovery from a continuous lineup of major films through year-end will drive 2H69 profit to accelerate notably, with potential to hit the year's peak in 4Q69. The research team expects to see increasing positive effects from cost reduction measures, including the Concession business switching from plastic cups to paper cups, as well as negotiations with suppliers to lower costs. Further upside will come from the recovery of advertising revenue following a new team, the expansion of IMAX theaters, and operational efficiency improvements through Digital Transformation, which will enhance profitability and support a gradual earnings recovery over the next 1-2 years. The recommendation remains BUY with a fair value based on a PER of 11 times at 9.20 baht. Following the capital reduction, the theoretical fair value increases to 10.22 baht, representing a 45% upside from the current price. The current share price does not yet fully reflect the benefits of the share reduction, while MAJOR's profit potential improves with the recovery of Box Office revenue, advertising revenue, and ongoing cost reduction measures.
Major Cineplex Group Public Company LimitedCapital reduction via share cancellation and raised target reflect value creation and undervaluation.
