Investment Highlights

• We maintain our HOLD recommendation on Media Chinese International (MCIL) with unchanged forecasts and fair value of RM0.18/share, pegged to a PB of 0.4x, in line with its one-year historical average PB.

• Key takeaways from MCIL’s FY20 briefing:

• Financial highlights: FY20 core profit of RM31mil improved marginally despite revenue declining 16% YoY due to the Covid-19 impact on operations being offset by substantial cost savings recognized.

• FY21F strategy:

• Managing print declines by delivering quality content, streamlining editorial workflows and sharing content among MCIL publications to improve offerings.

• Increasing digital audience and revenue via its one-stop advertising solution WAW Creations and better customer experience to drive engagement on digital assets. Digital advertising contributed 14% of total advertising revenue for the group in FY20.

• Continue cost optimization initiatives by adopting prudent practices such as trimming staff force and reduction in wages for its travel operations, and streamlining its overall processes.

• MCO highlights: The Covid-19 pandemic saw reduced adex revenues, a decline in circulation, postponement of events and cancellations of MCIL’s travel tours from March to June 2020 (1QFY21) due to travel restrictions imposed. On the bright side, the group saw significant growth in audience for its news portals and apps where monthly viewership for its Malaysian operations rose 46% YoY to 519mil viewers while monthly unique visitors surged 56% YoY to 25mil visitors in April 2020.

• New updates following the pandemic: (i) MCIL’s Hong Kong operations launched its Power Up Store ecommerce platform which covers health, food, parental/family and learning, and leverages MCIL’s existing media platforms to engage users; (ii) Ming Pao organized a virtual expo i.e. overseas education fair in March 2020 and paid webinars in April and May 2020.

• In anticipation of a challenging operating environment impacting both its publishing & printing and travel segments due to Covid-19, we maintain our HOLD call on as we believe its outlook has been fairly priced in.

Source: AmInvest Research - 26 Jun 2020