The 11-year old entertainment channel, HUM Network (KSE symbol: HUMNL), enjoys the reputation of being the first ever listed company in electronic media in Pakistan. It started its operations in January 2005, and subsequently the acquisition of its up-linking equipment, it started up-linking directly from the head office in Karachi.
In 2005, HUMNL shares were offered via an Initial Public Offering (IPO). Its authorised and the paid-up capital is Rs 700M and Rs 500M, respectively. Of this, Rs 270 million were raised from sponsors, Rs 80 million from private placements and Rs 150 million from the general public.
Within the television medium, HUMNL offers HUM TV, HUM Sitaray and Masala TV under its belt. Besides, its publications include Masala TV Food magazine, Humsay, Catalogue (a Bridal Couture Week Magazine), and Style G.L.A.M. Just recently, the company has acquired Newsline magazine which is among the leading social political magazine in Pakistan.
However, the good point is that despite strengthening top line, the company has successfully worked on moderating its production costs during the last three years. From a level of as high as 56.6 percent in FY12, its production cost tanked to 48 percent in FY14.
Thanks to strong top line growth coupled with cost rationalisation, gross margins have improved to 48 percent from as low as 37 percent in FY12. However, this is still low when compared to a gross margin level of 58.8 percent in FY09. But with the company growing by leaps and bounds, gross margins can be expected to escalate further in coming times. Besides, its deleveraged balance sheet is another interesting feature that alleviates the financial servicing burden from the income statement.
Top line marked a rise of 33 percent year-on-year with HUMNL's growing market share of its satellite channels. Owing to management's successful cost rationalisation efforts, gross margin improved by 200bps. Net margin, on the other hand, inched down a tad owing to rising distribution costs.
Besides, on the technological front too, the company has managed to keep up the pace and the launch of 3G and 4G networks in recent times speaks volumes that the company is gearing up its digital media division. Hence, increased revenues from this segment can be expected to buttress bottom line growth in years to come. With HUM TV's increasing global presence, the management is mulling over to bump the global outreach of Masala TV. HUMNL's unfurling horizons make it well-equipped to cope up with the competition given by news channels in recent times.