GMA Networks: Leading Free-to-Air Broadcaster in Duopolistic Market

Ayaz Motiwala of Amala Emerging Asia Fund presented his in-depth investment thesis on GMA Networks (Philippines: GMAP) at Asian Investing Summit 2019.

Thesis summary:

GMA Networks is the No.1 Free to Air TV broadcast network with a 49% market share in a duopolistic market structure. The industry has clearly put behind the phase of aggressive competition during 2010-2014. Ayaz, however, thinks the market has been slow to recognise the sharp change in fundamentals. GMAP doubled its profits in CY 15 and Ayaz expects its CY 18 profit would report 3.2x its profit made in CY 14. Business profitability returned with the company making 18-20% ROE in the last 3 years. With limited capital commitments, the company has been paying out 85% of its profits as dividend.

This further demonstrates the quality of the turnaround and the associated cash flows. The stock trades at an attractive 9 P/E, with a nearly 9% dividend yield and a 10% FCF yield. Another notable company news is its recent tie up with PLDT (largest telecom and mobile operator) to offer its channels via a digital access. The founders who own a majority have indicated in the last few years their desire to sell their stake at an appropriate valuation. Ayaz feels this is another soft catalyst built into this investment thesis.

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About the instructor:

Ayaz Motiwala is an investment professional with two decades years of experience. He manages the Amala Emerging Asia Fund as part of Hong Kong investment firm Nivalis Partners. Previously, he served as an advisor to Motiwala Capital, a registered investment advisor founded by his brother Adib Motiwala in Dallas, Texas. Ayaz? previous experience includes roles with Samena Capital, a special situations fund based in Hong Kong, as well as Highbridge Capital, where he ran a portfolio for India and ASEAN markets while also contributing ideas to the Asia Opportunities Fund.