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Author: PublicInvest   |   Latest post: Thu, 2 Jul 2020, 10:24 AM

 

Media Prima Berhad- Narrowed Losses

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Media Prima (MPR) 1QFY20 revenue declined marginally to RM238.4m (-0.3% YoY), while headline net loss narrowed from RM40.4m to RM29.5m. The better set of results was mainly driven by its cost rationalization plans. After adjusting for exceptional items, core net loss came in at RM29m. Results were worse than-expected than both ours and consensus’ full year net loss forecasts of RM64m and RM38m respectively. We leave our earnings estimates unchanged at this juncture as we believe that the group’s cost optimisation initiatives as well as the higher contribution from the new revenue sources may help to improve its net loss position. We maintain our Neutral call on MPR with an unchanged TP of RM0.20 based on a 0.5x P/BV multiple on its 3-year average forward rolling book value of RM0.40.

  • 1QFY20 revenue declined marginally due to the lower advertising take up rate in TV (-8.6% YoY), Radio (-56% YoY) and Outdoor media (-3% YoY) segment. Print segment revenue (-9.7% YoY) was partly cushioned by the increase in newspaper circulation due to lesser competition in the Malay language segment. On the other hand, MPR’s new revenue streams, Digital (+50.3% YoY), Content Creation (+111.2% YoY) and Home Shopping (+18.3% YoY) segments are starting to gain traction. The growth in Home shopping segment was mainly due to the increase in sales volume as Malaysians embraced social distancing during MCO coupled by successful promotional activities and better slots planning.
  • 1QFY20 core net loss narrowed mainly attributed to the cost savings from the group’s on-going cost management initiatives. The group’s traditional media segment, TV, Radio, Print segment recorded losses after tax (LAT) of RM13.8m, RM4.9m, RM11.8m respectively. It is worth noting that the Home-shopping segment turned profitable for the first time on the back of greater sales volume.
  • Moving forward. In light of the absence of mega sporting events like Tokyo Olympics and Euro Premier League as well as the softer economic conditions due to Covid-19, we reckon that advertisers will remain prudent by reducing A&P budget. Nevertheless, we are of the view that this will be partially alleviated by the cost optimisation measures from the recent manpower rationalization exercise which could potentially provide an annual cost savings of RM80m. Going forward, MPR is looking to capitalize on its advantage as Malaysia’s only fully-integrated media group while continuing its focus on growing its digital and commerce segment.

Source: PublicInvest Research - 22 May 2020

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