Thematic interviews
Written by: Jiajun Qu
2020-02-14 14:21
Last updated: 2020-02-14 14:23TV broadcasting (00511, TVB), which recorded its first loss in 30 years in 2018, issued a profit warning this morning. It is expected that the loss for 2019 will increase year-on-year, compared with a loss of 199 million yuan in the same period last year.
TVB said in a notice that since the social turmoil began in June last year, Hong Kong's economic and operating environment has fallen into adversity, and uncertain factors in the global market have led to a sharp decline in the Group's advertising revenue, which has also caused a "significant negative impact on the performance of the TV broadcasting segment. "It is initially estimated that its net profit in 2019 (without any impairment charges / losses deducted) will be modest.
Advertising segment expected to suffer heavy losses in the second half of the year
Looking at the 2019 interim results, the TV broadcasting segment is its largest source of revenue, accounting for 62%. Advertising revenue was still maintained in the first half of the year, falling by only 1% year-on-year to 1.136 billion yuan. In addition, the segment's profit in the first half of the year fell 43% year-on-year to 58 million yuan. If the segment's net profit in 2019 is only modest, it means that the segment will lose or close to 58 million yuan in the second half of the year.
It is worth noting that the storm of anti-revision in Hong Kong continued in the second half of last year. Some Internet users initiated an advertisement to urge advertisers to withdraw TVB ads. At that time, TVB also confirmed that a few individual advertisers wished to postpone their publicity plan or need to mobilize based on various factors Advertising time, also mentioned that "Wireless will deal with it according to individual circumstances and has no significant impact on the company's business." The profit warning notice indicates that since June last year, "advertising revenue has plummeted", which proves that the withdrawal of advertising storms or the overall anti-revision demonstrations have a greater impact on its advertising business.
Netizens earlier launched an "explosion of advertisers" action, and Caifeng Bank was one of the companies that withdrew advertising. Earlier after Facebook said that the contract with TVB was over, it would choose other platforms as a promotional channel. (Profile picture)
Chen Weicong: This year's macroeconomic deterioration is expected to cut advertising spending
Chen Weicong, director of the research department of Youxin Securities, believes that the withdrawal of advertising storms and demonstrations will undoubtedly have a negative impact on the company. Since July last year, we have seen different major brands decide to withdraw advertisements on TVB. But from the profit warning point of view it seems to be ineffective. If the customer advertising contract expires at the beginning of this year, I believe the business impact in the first half of this year will continue.
He also pointed out that the macroeconomic situation has deteriorated this year, and the pneumonia epidemic in Wuhan at the beginning of the year has caused a sharp drop in retail or luxury sales. Many companies have laid off employees and closed stores to reduce costs. Advertising expenditures should also be reduced. In addition, the overall TV advertising industry is under siege. Unless new management can launch new business or new reforms, there will not be much hope for TVB.
TVB's first-half results have announced that it will assess whether SMI bonds are impaired, and the market is expected to be prepared for this. (Profile picture)
TVB has announced in the first half of the year that it will assess the impairment of SMI bonds before the end of the year
In addition, TVB also stated in the notice that the special group and the board of directors believe that through the company's winding-up petition filed by SMI, it is unlikely that the book value of the remaining SMI bonds will be 330 million yuan. The recent outbreak of coronavirus disease has caused the suspension of Mainland cinema operations, which has caused a very significant adverse impact on the investment recovered from SMI bonds. Therefore, the Board considers that the fair value of the convertible bonds will be reduced to an extremely low level and will record a fair value loss in the year of 2019, which is subject to the consent of the group auditors.
However, as early as the first half of the company ’s performance, the company had already announced that it would assess whether SMI bonds were impaired before the end of the year. “The company and the special team will continue to evaluate all feasible options in the coming months and assess whether impairment is needed at the end of the year. It is expected that the market will already be mentally prepared for this.
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