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Author: PublicInvest   |   Latest post: Thu, 14 Nov 2019, 9:44 AM

 

Media Prima Berhad - Not Out of the Woods Yet

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Media Prima (MPR) posted a 2Q19 revenue of RM296.8m (-13.3% YoY), as most of its segments recorded lower revenue especially in the traditional business segment. Cumulative 1H core net loss of RM49.2m was worse than our and consensus expectations as we were forecasting a FY19 core net loss of RM52.9m while consensus full-year core net loss forecast was at RM56m. We raise our net loss forecast to RM70.2m for FY19 given the challenging outlook that is affecting the media industry due to softer economic conditions and competition from digital advertising. We downgrade our call to Underperform with a lower TP of RM0.38 (0.6x FY20F P/BV) after rolling forward our valuation year to FY20.

  • 2QFY19 revenue fell 13.3% YoY due lower adex spending in the traditional segment; TV(-15.8% YoY), Radio (-34.2% YoY), Outdoor Media (-13.1% YoY), Print (-27.2% YoY), Digital (-1.3% YoY) coupled with a lower contribution from the publishing segment as newspaper circulation continued to decline. Nevertheless, content creation (+4.4% YoY) and the home shopping segment continued to show promising growth (+15% YoY) as a result of more air time for home shopping slots, managed to partially mitigate the decline in revenue from traditional segments.
  • On Aurora Mulia. Based on the latest shareholding figures, Aurora Mulia Sdn Bhd owns 20.5% of MPR’s shares and is unlikely to trigger a Mandatory General Offer (MGO) in the near future. However, the management is generally positive towards being associated with a larger group which could potentially provide better synergies and connections. Aurora Mulia is a company linked to billionaire Tan Sri Syed Mokhtar.
  • Moving forward, MPR continues to emphasize on its Odyssey transformation plan to focus on the digital and commerce segments to mitigate the decline in traditional revenue. Besides, we expect the losses to narrow down with the on-going cost management initiatives. However, the turnaround for MPR may be difficult given the cloudy outlook of the media industry and weaker adex spending.

Source: PublicInvest Research - 23 Aug 2019

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