Investment Highlights

• We maintain HOLD on Media Prima (MPR) with an unchanged fair value of RM0.22/share, pegged to a PB ratio of 0.4x. We have forecasted narrower FY20F–FY2FF losses to account for the higher contribution of the home shopping segment to MPR’s earnings.

• MPR has acquired the remaining stake of 51% in its home shopping segment, CJ Wow Shop, from South Korean entertainment company CJ ENM Co Ltd. Previously, the group held a 49% stake in MP CJ ENM Sdn Bhd. This makes CJ Wow Shop a wholly-owned subsidiary of the group. MPR did not provide details on the acquisition costs.

• CJ Wow Shop recorded a 1H20 revenue of RM152.8mil and net profit of RM6.3mil. Meanwhile, 52% of its sales are from web and mobile platforms, with the remainder being completed via TV. MPR’s home shopping segment has been a key part of MPR’s previous Odyssey transformation to grow its digital and commerce revenues, leveraging the group’s overall mass reach across its platforms.

• We are positive on this development as the performance of its home shopping segment, which contributed 32% of the group’s revenue in 1HFY20, as it has helped to slightly offset declines in overall revenue dragged by weakening traditional media earnings.

• Maintain HOLD on MPR as we believe its lacklustre outlook, despite improvements in home shopping, digital and cost rationalization initiatives, has been priced in.

Source: AmInvest Research - 2 Sept 2020