Brokers' take: DBS downgrades GHY Culture & Media; cuts FY22 estimates by 71%

DBS Group Research has downgraded its call on production company, GHY Culture & Media, to "hold" from "buy" as it projects a challenging outlook for the company.

In a research report on Friday (Mar 4), analyst Ling Lee Keng lowered the target price on the stock to S$0.45 from S$0.87 previously.

Ling noted that GHY's FY2021 results were "drastically" below expectations due to production delays caused by Covid-19.

With various movement restriction measures still in place, she believes the outlook is challenging and thus, slashed FY2022 earnings estimates by 71 per cent.

Gross margin assumptions have been lowered to 30 per cent for FY2022 and 32 per cent for FY2023, from 35 per cent for FY2022 previously.

The analyst highlighted the company's efforts to ramp up the planning, preparation work and productions of drama and film projects and said there is a "healthy production pipeline" but pointed out that "execution is still key".

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"The successful roll-out of the productions in the pipeline would be the key to seeing an improvement in the group's financial performance," she said.

In the report, Ling introduced FY2023 estimates as well. Instead of the original projection of 8 dramas in FY2022, she now projects 4 dramas for FY2022 and 6 dramas for FY2023.

Concert production is expected to resume only in 2023, she added. With the gradual reopening of economies in Singapore, Malaysia, China and Australia, GHY can look to hold previously postponed concerts and gradually roll out film and drama productions that are in its pipeline, Ling said.

Shares of GHY Culture & Media were trading flat at S$0.425 as at 9.59 am on Friday.