Thai's Major keen to raise India PVR stake

Cinema operator expects quarterly, full-year revenue jump

BANGKOK -- Major Cineplex, Thailand's largest cinema chain operator, expects a jump in revenue in the first quarter and full year due to better advertising sales and the public's appetite for 3-D films.

Major holds about 11% of Indian cinema operator PVR Ltd. and is keen to raise its stake.

Major, which controls 75% of the Thai market, has seen "exciting" growth in movie ticket sales this year as Southeast Asia's second-largest economy recovers from recession, chief executive Vicha Poolvoraluck said in an interview.

"We are really kicking off with a good start," Vicha said.

The company, which competes with unlisted SF Cinema, attracts 25-30 million viewers each year. In 2009 it pulled in 1.2 billion baht ($37.1 million) in first-quarter revenue. Full-year revenue totalled 5.6 billion baht, up just 0.2% from 2008.

"Admission sales for the first two months have been amazing. This year's line-up is going to bring back a lot more people to the cinema," he said, although he expressed caution about the effect of Thailand's continuing political crisis.

The government has extended a tough security law after opposition leaders threatened to paralyze Bangkok with street protests in a bid to force new elections.

Vicha said the anti-government protest was not keeping people away from the cinema for the time being and forecast that sales would rise 10 to 15% in 2010, when it plans to raise ticket prices by 3-5% from an average 135 baht in 2009.

"India is our long-term focus and of course we want to invest more in the long run," Vicha said.

"In the longer term, we would love to increase the stake but this would depend on timing and the regulations of both countries. PVR in itself is such a good brand and we're seeing a growth opportunity there," he added.

PVR shares jumped in Mumbai by the maximum allowed 10% in response to the comment but then slipped back.

The stock has lagged the market over the past year, rising 31.2% against a 79.5% gain in the benchmark index.

Major is seeing strong momentum from the popularity of 3-D films after the huge audiences for James Cameron's three-dimensional blockbuster "Avatar," Vicha said.

"People are willing to pay more for quality, which is very interesting to see now that the economy has started to recover," he said.

According to Nielsen Research, Thai advertising spending jumped 10.7% in February to 7.2 billion baht, the highest in three years.

Major's 46-year-old chief executive is excited by the transformation in the film industry.

Hollywood is moving from conventional 35 mm film to digital products, even though costs are about three times higher, as it allows operators to increase margins on tickets, he said.

"People are screaming for anything that can leap off the screen and over the next three years, 35 mm film should become obsolete," he said, adding Major would meet with giant-screen movie operator IMAX Corp next month to discuss business opportunities.

Major, which operates 353 screens in 47 locations around the country, planned to invest 600 million baht in 2010, excluding possible overseas investment, Vicha said.

That would mainly be spent on opening 30 new screens and bowling lanes.

It plans to increase assets in its Major Lifestyle Property Fund to 4 billion baht ($124 million) in the second quarter from about 2 billion baht now, Vicha said.

The company plans to sell rental space at one of its malls to the fund, probably using the proceeds to expand other businesses.
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