RS Plc is nearing a joint venture deal with an unnamed international partner as part of the company’s business plan to ramp up its music business unit this year.
Chief executive Surachai Chetchotisak said the deal should generate significant value for the company as a whole and would become a crucial part of advancing RS Music’s potential and business growth domestically and internationally.
“With partners, we are setting up a new joint venture company to expand the integrated music business or allow our partners to invest in RS Group. This will strengthen the music business and has more funds to expand the business,” Mr Surachai said.
He said the deal would also provide a channel to bring RS’s artists or content to expand overseas more easily. A clearer picture would be seen in the second half of this year, said Mr Surachai, adding the firm expects revenue from the music business to be 700 million baht or 15% of its total revenue of 5-5.5 billion baht this year.
RS Music generates revenue via five main sources: digital monetisation or revenue from the musical works of new artists as well as legendary RS icons distributed via online channels; copyright revenue or revenue from the collection of royalties and the monetisation of intellectual property (IP) and other music licences under RS Music; and marketing projects and campaigns or revenue from related marketing campaigns and projects, such as the development of musical works with partners.
The other two sources of revenue are show business, activities, events, festivals and concerts, as well as talent management and artist development.
RS Music is scheduled to appoint a financial advisor by the end of May to help it to be listed on the Stock Exchange of Thailand next year.
According to Mr Surachai, as well as spinning off RS’s music business, the firm plans to spin off its pet business and list it on the SET within the next three years.
Boosted by the strong growth of its pet food business, RS also vows to expand pet food to cover downstream to upstream businesses. It plans to open the first flagship store for its pet shops in July this year, with 6-7 new pet shops to be opened shortly after. Each would require an investment of 10-15 million baht.
Mr Surachai said it would be possible to spin off other business units under RS if such businesses were able to grow independently and no longer be a burden for the parent company in terms of investment requirements. Moreover, such a company would have to have the potential to build value and be able to easily find partners both domestically and overseas, he said.
RS posted total revenue from sales and services for the first quarter of this year of 813 million baht, down 3.7% from the same quarter last year, with a net profit of 91.9 million, up 67.3% year-on-year.