MBC集团（MBCGROUP AB）上调至买入评级：2025年第一季度表现出色

Disclosures &DisclaimerThis report must be read with the disclosures and the analyst certifications inthe Disclosure appendix, and with the Disclaimer, which forms part of it.◆Shahidreportedits firsteverprofitable quarter;expected tobreakeven in 2027withhighermedium-term profitability◆Solid performance from BOCA amidstadvertising strengthduring Ramadan and contribution from large media projects◆Upgrade to Buy (from Hold)as valuation is attractive afterrecent underperformance; raise TP to SAR56 (vs SAR55)Strongperformance in 1Q25:MBCreported strongrevenueandearnings growth of65%and117%y-y, respectively,even if we account for more days of Ramadan in 1Q2025 versus lastyear. Overall,the results of this seasonally strong quarter are trendingsignificantlyahead ofthe company’s full-year guidance.Revenues of the broadcastingand other commercial activities (BOCA) segmentwereup55.5%y-y(vslowdouble-digit guidance for 2025) due to strongadvertising momentumleading to TV revenuegrowth of 45.1%.Resilience in the advertising segment was supplemented by strongrevenues from broadcasting and technical services revenues (up82.9%y-yin1Q2025) related tomajor media projects in Saudi Arabia,including service agreementswith the Saudi Sport Company (SSC), whichisduefor renewal in July,theMinistry ofCulture (MOC),theGeneral Entertainment Authority (GEA),and other key clients.Shahidregisters its first profitable quarter:Shahid’s strongadvertisingvideo ondemand(AVOD)performance (revenue up 55.8%y-y) was underpinned byinnovative advertising formats and improved fill rates during the Ramadan peakseason, whilesubscription video on demand(SVOD)growth (20.3%y-y) benefitedfromthe new password-sharing policy (restricting each account to a single IPaddress),which boosted subscriptionuptake.The segmentrecorded its first everprofitable quarter, and the company expects the segmentto achieve annualnetprofitbreakeven by 2027.Furthermore,the company indicated that therewillbe greaterfocus on profitability over subscriber market share alone in this segment.Upgrade to Buy (fromHold), valuation attractiveafter the underperformance:Acombination ofearningsestimateupgrades after the better-than-expected2024/1Q25andshare price underperformanceof-21.1% in the past three months(TASI wasdown 6.9%)drives our upgrade to Buy (from Hold),for what we believeisa high-quality business. Our revisedTP ofSAR56.00(from SAR55.00)isbasedonour sum-of-the-parts valuation and implies upsideof 28.9%. We believe that atEV/Sales of 2.3x FY25e, the risk/reward is compelling,particularly in the context of2024-27eearningsCAGR of 27%, as wepencil inbreakevenfor Shahidin 2027.MBC Group’s medium-term prospectscontinuetohinge on the attractivedemographics and ongoing socioeconomicchanges in the region.MBC Group(MBCGROUP AB)Upgrade to Buy:Blockbusterperformancein 1Q25 Find out more12/2024a PREVIOUS TARGET(SAR)55.00UPSIDE/DOWNSIDE+28.9%14,447Free float3,852BBG6RIC12/2025e1.201.331.251.21-3.69.51.011.0936.132.70.00.054.826.010.712.511/24High: 59.00 Low: 37.00 Current: 43.45 10%MBCGROUP AB4072.SE12/2026e12/2027e1.842.501.52n/a20.8n/a1.421.6023.717.40.00.017.512.118.425.034.0048.0062.0005/25 2Financial statementsYear to12/2024a12/2025e12/2026e12/2027eProfit & loss summary(SARm)Revenue4,1965,1365,8286,444EBITDA216463680942Depreciation & amortisation-99-110-121-131Operating profit/EBIT117353559811Net interest56735555PBT4365537551,019HSBC PBT4365537551,019Taxation-10-83-113-153Net profit400441610831HSBC net profit400441610831Cash flow summary(SARm)Cash flow from operations567-59328667Capex-230-142-152-160Cash flow from investment-343-142-152-160Dividends0000Change in net debt-855228-150-482FCF equity300-228150482Balance sheet summary(SARm)Intangible fixed assets7488105123Tangible fixed assets438483523559Current assets6,9497,8048,7149,814Cash &others1,4941,2661,4161,898Total assets8,5589,49010,47811,651Operating liabilities2,3622,8253,1703,478Gross debt0000Net debt-1,494-1,266-1,416-1,898Shareholders' funds3,7503,3253,3253,325Invested capital3,6054,2854,7575,120Ratio, growth and per share analysisYear to12/2024a12/2025e12/2026e12/2027eY-y% changeRevenue13.322.413.510.6EBITDA114.146.838.6Operating profit201.058.545.1PBT486.326.936.534.9HSBC EPS512.610.438.236.2Ratios (%)Revenue/IC (x)1.11.31.31.3ROIC3.78.111.014.5ROE10.712.518.425.0ROA4.44.56.07.4EBITDA margin5.29.011.714.6Operating profit margin2.86.99.612.6EBITDA/net interest (x)Netdebt/equity-39.7-37.6-41.6-55.2Net debt/EBITDA (x)-6.9-2.7-2.1-2.0CF from operations/net debtPer share data(SAR)EPS Rep (diluted)1.201.331.842.50HSBC EPS (diluted)1.201.331.842.50DPS0.000.000.000.00Bookvalue11.2810.0010.0010.00Financials & valuation:MBC Group Company Source: HSBCNote:Priced at close of 14 May 2025 Investment thesisWe believethat MBC’s investment case, aleadingmedia and entertainment business,isdrivenbyattractive demographics and ongoing socioeconomic changesin the MENA region. Since itsinception in 1991, the company has delivered high-qualit