Investment Highlights

• We maintain BUY call on Media Prima (MPR) with unchanged forecasts and 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.

• Stripping off exceptional items mostly derived from net impairment reversal of financial instruments amounting RM4mil, the company’s 9MFY21 core net profit (CNP) of RM23mil was within expectations, accounting for 56% of our FY21F earnings and 60% of consensus.

• We believe MPR’s 4QFY21 would be the strongest quarter for the year or at least on par with its 2QFY21 performance. This is underpinned by higher year-end utilisation of marketing budgets by advertisers as well as more activities following the easing of movement restrictions.

• YoY, MPR’s 9MFY21 revenue rose 8% mainly driven by: 1) 2x surge in Omnia’s integrated creative and marketing solutions; 2) 32% increase in broadcasting; and 3) 10% improvement in the digital media division. This was partly offset by lower contribution from other segments.

• Omnia, which accounted for 37% of 9MFY21 group revenue, managed to break even in 9MFY21 from advertising income vs. a RM6mil loss in 9MFY20. Meanwhile, the second largest 9MFY21 contributor to profit after tax (PAT) was broadcasting (26%), driven by stronger television advertising revenue.

• On a negative note, home shopping’s PAT fell 46% YoY to RM5mil in 9MFY21 from a 6% decline in its online sales attributed to lower consumer spending. As for the publishing division, lower newspaper sales were offset by a 49% growth in newspaper printing and distribution revenue, which led to a mild PAT of RM0.5mil in 9MFY21 from a RM30mil loss in 9MFY20.

• QoQ, MPR’s CNP plunged by 81% in 3QFY21 to RM3mil from RM15mil in 2QFY21, which seasonally benefited from higher advertising and home shopping revenue during the Hari Raya festive period.

• We continue to like MPR as a strong recovery play in the media sector. This is given 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 - 26 Nov 2021