Major Cineplex Group Public Company Limited (MAJOR TB)

Thailand's largest cinema chain selling at > 40% discount. Guest count does not need to return to pre-COVID levels to make this investment attractive

Disclaimer: This is a record of my investment decisions, not financial advice. I may change my decisions without notice. Use this only for education and entertainment. Do not rely on this for your investment decisions.

About:

1. Largest cinema chain in Thailand

2. Date: 17 Jun 2025

3. Share price: THB 8.25

4. Market cap.: THB 6,000 mn (~USD 185 mn)

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My decision: Buy @ THB 9.70 and below

Estimated fair value: THB 13.80 per share

Conviction: +4 (1 to 5, 5 being highest)

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Future free cash flow > share price because:

1. MAJOR is a good business

   1. In the past 5 years, return on asset (ROA) averaged 4%. This is much higher than the -1% average in the industry worldwide. Between 2014 – 2019, MAJOR achieved 8% ROA vs industry’s 5%

   2. Strong bargaining power and economies of scale

      1. In 2024, MAJOR holds 70% revenue market share, up from 67% in 2020

      2. Without MAJOR, it is difficult for movie distributors to access enough audience¹

      3. Since 2020, closest competitor has been making losses. MAJOR made a loss in 2020 and has been profitable ever since

   3. Vertical integration

      1. Also the largest producer and distributor of Thai films

      2. Thai films offset the volatility of Hollywood films. In 2024, revenue from Hollywood movies declined 28% because of strikes. This was partially offset by 4% increase in revenue from Thai films

2. MAJOR’s management is competent and incentivised

   1. CEO Poolvaraluk founded MAJOR in 1995 and built it into the largest cinema chain in Thailand²

   2. CEO Poolvaraluk owns 36% of shares outstanding. His family owns another 10%

3. Valuation is cheap

   1. Discounted cash flow (DCF) suggests IRR > 10% p.a. with >40% margin of safety

   2. Over the next 5 years, I forecast revenue to increase 2.8% p.a., mainly driven by 3.8% p.a. increase in guest count and 1% p.a. decline in average ticket price

      1. MAJOR is expanding upcountry

      2. Long growth runway: In Thailand, there are 57,000 persons for every screen. Singapore: 21,000 and Malaysia: 29,000

   3. I forecast operating profit margin to improve from 7% in 2024 to 10% by 2029

      1. Improving guest count drives operating leverage

   4. In its peer group, MAJOR appears cheapest

Risks:

1. Streaming services may replace cinemas

   1. Why do people still go to concerts when they can just stream it?

   2. In 2020, Warner Bros decided to concurrently release movies in cinemas and its streaming service.³ In 2023, it reversed this decision⁴

   3. Releasing movies in cinemas first is more profitable⁵

2. Hollywood movies may never recover

   1. MAJOR underperformed in Q1’25. Hollywood movies flopped

   2. However, after -13% YoY in Q1’25, the US box office grew 81% YoY in the first 10 weeks of Q2’25⁶

   3. MAJOR is the largest producer and distributor of Thai films

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DCF model

If you want a copy of my DCF model, comment below

Using my model, you can analyze the 10-year trends in guest counts, average ticket prices, screen count, etc. You can input your own assumptions and forecasts

If there’s sufficient demand, I will prepare my model for publication

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Appendix

MAJOR is the largest cinema chain in Thailand. It increased its market share from 67% in 2020 to 70% in 2024⁷

MAJOR looks attractive. It has the second lowest P/E, despite good growth prospects. Debt level is below-average

1. Khaosod English (2016)

2. Bangkok Post (2015)

3. Reuters (2020)

4. The Hollywood Reporter (2023)

5. Entertainment Strategy Guy (2023)

6. The Numbers (2025)

7. Data for SF Corporation is extracted from Thailand’s Department of Business Development