Investment Highlights

• We maintain our BUY recommendation on Media Prima (MPR) with unchanged forecasts and fair value of RM0.80/share, pegged to an FY22F PE ratio of 14x, in line with its regional peers. We have reflected a 3% premium to its 4-star ESG rating as appraised by us (Exhibit 3). MPR is a constituent of the FTSE4Good Bursa Malaysia Index.

KEY ESG METRICS

o Energy efficiency: MPR uses pages per kg of newsprint as a measure of paper use efficiency. In 2019, 419 pages per kg of newsprint were used and this indicator has been stable since 2017. In 2019, total energy consumption of MPR’s printing plants was reduced by 4.3% YoY to 16.98 GWh while overall electricity consumption declined 4.8% YoY to 18.34 GWh. Its energy efficiency initiatives include replacing out-of-home (OOH) static panel lighting to low consumption LEDs and using minimum screen brightness on OOH panels to optimize electricity consumption. The group also monitors its greenhouse gas emissions to reduce its footprint by measuring carbon dioxide emissions from company-owned vehicles and from purchased electricity.

o Recycling and waste management: MPR employs the Reduce, Reuse and Recycle (3R) concept to reduce the amount of waste discarded. The group sends 100% of its paper waste for recycling to Malaysian Newsprint Industries. Other waste such as aluminum and cores are put to tender while unsellable waste are disposed according to environmental regulations. The group also manages its scheduled waste at its printing plants consisting of contaminated rags, drums, waste ink and chemical waste.

o Content management: As part of its efforts to ensure a sustainable supply chain, the group continues to integrate best practices with regards to providing responsible content for both its traditional and digital distribution channels.

o Digital transformation: MPR’s learning & development team has prioritized digital literacy and digital leadership to support its digital transformation journey via: (i) digital literacy initiatives, which include making the best use of digital software, tools (e.g. Google Suite) and techniques to communicate and collaborate, applications to carry out tasks and improve productivity, as well as encouraging practices relating to digital security, risk, and governance; and (ii) digital leadership, which is implemented for senior management, managers, and executives to receive the relevant training overcome digital disruption.

o Customer reach and experience: The group has an extensive reach across its various platforms with notable segment highlights including: (i) free-to-air (FTA) TV: MPR’s four stations i.e. TV3, 8TV, TV9 and ntv7 (now DidikTV) commanded 36% of Malaysia’s TV audience in 2020; (ii) #1 choice in mobile content with 15.4mil total monthly unique mobile visitors in Malaysia and 83% of Malaysians reached on mobile per month; and (iii) more than 5.3mil weekly listeners in 2020 for Ripple radio with over 95.3mil digital listens in the same period.

o Corporate social responsibility (CSR): MPR has engaged in many CSR initiatives, which include humanitarian, community, environment, and education initiatives. For example, the group has adopted adopted Sekolah Kebangsaan Cherating school adoption programme, where the group organizes activities and provides financial support. In 2019, MPR also collaborated with the Pahang state’s Road Safety Department on a road safety campaign, and organized various educational activities for UPSR students.

MPR also has its MP-NSTP Humanitarian Fund which has been established since 1991, where they work with contributors and technical partners to assist those affected by poverty, war, disaster, political conflicts and in need of medical assistance. The fund has extended assistance to those in Malaysia and abroad. In 2019, the MP-NSTP Humanitarian Fund made RM1.2mil in donations for 18 patients to undergo life-saving surgeries and other critical medical procedures while 42 individuals received financial assistance for their medical conditions. MPR also has its Bantuan Metro Prihatin (BMP) where donations from Harian Metro and Metro Ahad readers are made in response to cases highlighted in the Metro Prihatin column. As at 31 Dec 2019, BMP had amassed RM120K for nine cases. The group additionally launched its Bantuan Kemanusiaan Covid-19 fundraising campaign to appeal for public donations to help treat Covid-19 patients and assist lives that have been affected by the virus, benefitting over 20 hospitals nationally.

o Human capital development: In its 2019 Sustainability Report, the group invested an average of RM463 per employee on training, where each employee has an average of 17 hours of training (~2 man-days). In 2019, RM1.6mil was invested in staff training activities.

o Board composition: MPR’s board is comprised of seven independent directors, one non-independent director and two executive directors (one group managing director and group executive director). The group’s board composition as per its 2019 annual report is as follows:

o Accessibility and transparency: Management and the group’s investor relations team are accessible and respond in a timely manner. The group usually provides a quarterly update and details of its financial performance on their presentation slides.

• Overall, we are optimistic on MPR being a stronger recovery play in the media sector, given its: (i) strategies in home shopping and digital initiatives; and (ii) potential for Omnia to benefit strongly from adex recovery, as well as potential benefits from better monetization of its extensive reach across different segments.

Source: AmInvest Research - 19 May 2021