HUM Network

The 10-year old HUM Network has grown by leaps and bound. Its stock price has been rallying as if there is no tomorrow. No wonder then its the most wished-for stock on local bourse. Its robust financial performance has also continued to cement investors likeliness. Recall that last two years have been very impressive for the company with its profitability boasting a growth of 98 percent and 53 percent in FY13 and FY14, respectively.
The start of FY15 has further consolidated the companys financial standing with its profitability ballooning by a healthy 31 percent year-on-year in 1HFY15. Revenue generation stayed strong as the market share of its satellite channels keeps on growing. Besides, although the recently developed digital media division is in its infancy stages, it carries great potential in terms of revenue and market share. The company believes that video on demand and direct sales will be the star performers of this segment in coming years.
Mind you, the company derives bulk of its revenues from advertisements. Taking a clue from FY14 financials, advertisements contributed over 90 percent to the top line, followed by subscriptions (7 percent) and production (2 percent).
Thanks to the managements successful endeavours to rationalize costs, gross margins improved by about 165 bps to 47.5 percent. Distribution and administrative expenses, on the other hand, continued to soar rising by nearly Rs117 million during 1HFY15. Yet, handsome profitability growth is to be cherished along with the interim dividend announcement of 17.5 percent.
The companys future prospects look rosy. With HUM TVs expanding footprints in Middle East and North Africa (MENA) region, healthy revenues and blooming bottom line would just be the outcomes. The management is also mulling over to augment Masala TVs global outreach. The acquisition of News line magazine last year is also considered to be another great addition to HUM Networks well-grounded portfolio. With the broadening horizons, HUM network seems well-equipped to face the stiff competition given by news channels in recent times.

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Hum Network - Financial Highlights

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Rs (mn)                   1HFY15   1HFY14     chg

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Net revenue                1,797    1,349     33%

Cost of production         (902)    (665)     36%

Transmission cost           (41)     (65)    -37%

Gross profit                 854      619     38%

Distribution costs         (223)    (153)     46%

Administrative expenses    (196)    (149)     32%

Other operating income        60       61     -2%

Profit before taxation       478      364     31%

Taxation                   (110)     (83)     33%

Profit after taxation        368      281     31%

EPS (Rs)                    0.39    0.30

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