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Resilient earnings for integrated media and entertainment group GHY Culture & Media

Emelia Tan
Emelia Tan3/12/2021 06:30 AM GMT+08  • 7 min read
Resilient earnings for integrated media and entertainment group GHY Culture & Media
Positive outlook ahead for GHY Culture & Media.
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1. GHY Culture & Media (GHY) is an entertainment and content provider of films, drama and concerts. How does the group source for projects and what are some key criteria when selecting them?

GHY is an entertainment and content provider specialising in the production and distribution of films and dramas, and presentation of live entertainment. The group is headquartered in Singapore with over 200 employees across Singapore, Malaysia, China and Australia. Other than the core businesses, it also engages in artiste management, asset rental, post-production and visual effects services thus providing diversified business structure solutions.

Given our end-to-end production capabilities as a leading player in the media and entertainment industry, most of our drama and film series are created in-house. We also purchase intellectual property rights to curated scripts and receive film investment funds from our working partners for selected projects.

In selecting our projects, we ensure that these conditions are met: To have a positive influence on social values and suit our audience’s demands; strong market interest and reception to ensure successful production uptake by our platform partners; contributes to our growth while adding value to our artistes, production teams and low risk of exceeding budgets.

2. Many physical concerts have been paused or delayed due to Covid-19. How has this affected the group’s performance and how do you plan to mitigate this?

Our earnings have remained resilient, underpinned by two of our growth engines, namely TV program and film production and concert production. Our core TV program and film production business contributed to 85.4% of our FY2020 revenue. This has mitigated the financial impact brought about by the pandemic on our business as seen with our FY2020 financial performance.

While we were unable to carry out all the planned concerts but two shows of the Jay Chou Carnival World Tour were successfully held in Singapore in early 2020. We were also able to continue operations in Singapore, Malaysia and China, while complying with Covid-19 measures. We will continue to build on the strengths of each business segment and create synergies for sustainable growth.

3. How does the group plan to grow its concert production business?

We will collaborate with renowned and experienced artistes while focusing on creating exceptional concert content. We aim to continue attracting more talent who are committed to growing with the GHY family dramas and films.

4. How does the group intend to leverage on technology to expand and diversify your portfolio of entertainment content and products?

We believe in staying ahead of technological developments, in order to capture growth opportunities from the shift to 5G mobile networks and viewership trends that drive consumer growth.

In 2019, we established a special project team to develop new product offerings such as interactive dramas and short-form videos. While interactive dramas remain in the preliminary planning and development phase, we have successfully launched our first online short drama series Whimsical World, a collection of 20 short drama series with 12 to 24 episodes per series, ranging from five to 15 minutes per episode. We have also invested and set up a post-production special effects team in Singapore. This has supported all the special effects for one of our dramas, The Ferryman: Legends of Nanyang.

We are fully committed to becoming an integrated entertainment player and will continue to monitor growth opportunities and trends in the market to capture growth across the value chain. This is anchored on our pledge to ensure high-quality content and to keep up with technological advancements via sustainable innovation.

5. A strong talent pool is an important asset to the entertainment industry and to GHY. How do you plan to grow your talent pool?

We conduct talent searches regionally as part of our expansion plans. This is carried out through organisations such as the Youth Working Committee of the China TV Drama Production Industry Association and through events such as the one held with Ngee Ann Polytechnic for submission to the Asia TV Forum Chinese Pitch 2020.

We are committed to providing growth opportunities to our existing talent pool across the production team, which includes our scriptwriters, directors and producers. In order to attract and retain talent, we have also designed incentive programs to sustain the growth of our human capital.

6. What are some key drivers in the entertainment industry and how will these shape GHY’s growth?

High-quality content is a core driver for our industry. In that regard, a good storyline and script are essential for the success of dramas and films.

GHY is supported by established and award-winning production teams with deep expertise and knowledge of the industry. This has empowered us to establish a track record of commercial success.

Other than having strong management and production teams, the deep network of business relationships and partnerships with distributors is also a key competitive strength of GHY. We plan to leverage on these competitive strengths to forge more partnerships and accelerate our growth across the business value chain.

7. What do you think differentiates yourself from your competitors?

GHY is more than just a film production company, we are an integrated media and entertainment group. Our end-to-end capabilities across the production value chain allow us to have better oversight and control over our productions. Therefore, we can maximise production capabilities to increase operational efficiencies and enjoy overall cost savings. This has allowed us to outperform peers on performance metrics such as profit margin expansion and returns on equity.

High quality content is our hallmark, and the importance of continuous innovation is reflected in our company’s slogan. Our drive for sustainable innovation has led us to stay ahead of the curve, where we are well-positioned to anticipate and capture opportunities brought about by new industry and consumer trends.

8. What is the group’s value proposition to its shareholders and potential investors?

We aim to achieve progressive and sustainable growth, underpinned by resiliency in earnings of both our growth engines as highlighted earlier, namely TV program and film production and concert production. We will continue to explore growth opportunities that create and maximise value for our shareholders.

9. Describe GHY’s recent financial performance for FY2020.

Despite the global impact of the Covid-19 pandemic, GHY’s net profit more than tripled y-o-y to $42.7 million in FY2020 (vs. $12.4 million in FY2019). Our revenue grew 92.6% y-o-y to $127.1 million, mainly contributed by our core TV program and film production segment.

GHY’s end-to-end production capabilities has translated to overall cost savings and an enhanced gross profit margin. Our gross profit margin expanded 15.3% points y-o-y to 43.8% in FY2020, while ROE similarly climbed 19.1% points to 26.9%.

With a strong balance sheet comprising net cash of approximately $104.8 million, we believe that we are well positioned for growth. Therefore, we have proposed a final dividend of 1.07 Singapore cents per ordinary share, representing a 30% payout ratio to reward shareholders.

10. Finally, what are some developments shareholders can look forward to from GHY?

We intend to create synergies across three of our existing core businesses — TV program and film production, concert production and talent management.

Leveraging on our business network and presence across the industry, we are committed to expanding our footprint into other business adjacencies. We will also expand our human capital pool with more artistes to collectively chart our international growth roadmap.

Emelia Tan is a research analyst with the Singapore Exchange

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