Investment Highlights

• We maintain BUY call and forecasts on Media Prima (MPR) with unchanged fair value of RM0.75/share, pegged to FY22F PE ratio of 14x that is in line with its regional peers. This also reflects a 3% premium to its 4-star ESG rating as appraised by us (Exhibit 2).

• Following our recent engagement with the company, we understand that the announced Budget 2022 would not cause significant impact to the group’s earnings as MPR would not be affected by the one-off 2022 Prosperity Tax of 33% given that FY22F pretax profit of RM76mil is below the taxable profit threshold RM100mil.

• Meanwhile, government has allocated a total RM238mil to revive the creative industry of which RM188mil is provided to continue initiatives such as the Digital Content Fund, Digital Multimedia Content project, Film Incentive, Perkasa Modal Insan Program and SOCSO protection for artists.

• Additionally, an investment fund of RM20mil to match loans from financial institutions will be available to support Program Riuh Keluarga Malaysia while a RM30mil allocation for the National Animation Platform initiatives will be operated by MyCreative Ventures.

• We understand that those initiatives are mainly focused on the small and medium (SME) enterprises and content production houses. These do not benefit MPR earnings directly.

• For service tax to be charged on goods delivery services provided by service providers including E-Commerce platform (excludes food and beverages (F&B) delivery services and logistics services), MPR via its home shopping channel WOWSHOP has already been absorbing the service tax imposed by third party logistics players.

• Therefore, we think this would not cause further earnings deterioration. Currently, MPR’s WOWSHOP is providing free shipping to Peninsular Malaysia whereas certain delivery charges are imposed to East Malaysia.

• Pending the company’s 3QFY21F results to be announced in late November, we expect flat QoQ earnings given the status quo in adex spending (Exhibit 1).

• We continue to like MPR as a strong recovery play in the media sector. This is due to the synergistic transformation by Omnia which positions the group to better benefit from an industry-wide adex recovery together with enhanced monetisation prospects of its extensive omni-channel reach.

Source: AmInvest Research - 8 Nov 2021