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AS Stock, good value with continuous growth, in Y2010 plans to launch 8 new games in Thailand and has collaborated with Kingsoft Corporation, who is an online anti-virus software distributor of a product called "Kingsoft Internet Security 9+". This year the company plans to dump between 150 - 180 million baht of investment, expecting income of 1,661.13 million baht with the net profit growth of 211.80 million baht, which is higher than previously anticipated at 177.95 million baht. The target price is 9.50 baht. It is a recommended ‘buy' stock.
An analyst from Phillip Securities (Thailand) PLC recommends a ‘buy' option for AS at the target price of 9.50 baht, and assesses that in Y2010 AS has a plan to launch 8 new games in Thailand, 4 in Singapore, and 2 in Malaysia. Moreover, it is expected to expand to other softwares in addition of online games. In achieving this, AS has collaborated with Kingsoft Corporation, which is a security software company ranking third in China. AS will be a distributor of an online anti-virus software called "Kingsoft Internet Security 9+", with a service charge of 189 baht per year.
For Y2010, the company will invest 150 - 180 million baht, of which 80 - 100 million will be used to buy new games, and 70 - 80 million will invest in Vietnam earnestly. For the latter purpose, the feasibility study on shareholding proportion is currently being pursued and expected to complete within 2 months.
The trend of Internet usage in Vietnam is in a good prospect. Currently, there are 20 million Internet users out of the total population of 88 millions, and more than 20,000 Internet cafes, as compared to only more than 10,000 in Thailand. It is expected that in Y2010, the online game market will reach a value of 2,700 million baht, close to that of 2,720 million baht in Thailand.
Moreover, the business is expanding to the Philippines in the first half of Y2010, and Indonesia in the second half of the year. In these countries, the company has already found partners, who is initially granted a distributor, then acquiring a service provider license, and ultimately becoming an investor itself.
From the business expansion and investment, as well as the fact that executives observe recovery in foreign countries and more launching of new games, it is anticipated that in Y2010 the company will earn as much as 1,661.13 million baht with expected net profit of 211.80 million baht, instead of 177.95 million baht as previously forecast. Such profit could be achieved by a reduction of personnel expenses in Singapore and Malaysia by cutting 200 employees to 140, a control of marketing expenses with reference to P/E 14 times, and no One-Time cost. With the base price of 9.50 baht, it is on the recommended ‘buy'.
Khao Hoon
22 March 2010
