Investment Highlights

• We maintain BUY on Media Prima (MPR) with a higher fair value (FV) of RM0.86/share based on FY22F PE ratio of 14x, in line with its regional peers. The FV also reflects a 3% premium to its 4-star ESG rating. We raise MPR’s FY22F net profit by 15.0% to account for higher advertising revenue.

• We continue to like MPR as a strong recovery play in the media sector given the synergistic effect arising from Omnia which positions the group for a stronger recovery from an industry-wide adex recovery and improvement in consumer sentiments.

• The downside risks include: (1) deterioration in consumer sentiment arising from an economic downturn; and (2) renewed restrictions affecting adex.

• MPR’s FY21 core net profit of RM50.7mil (excluding exceptional items amounting to RM4.5mil) is well above our expectations and consensus estimates by 24% and 32% respectively. This was underpinned by MPR’s creative and integrated marketing solution, Omnia, which outperformed, expectations leading to higher advertising revenue. MPR has declared a final gross DPS of 1.5 sen, translating to a decent dividend yield of 2.9%.

• YoY, MPR’s FY21’s revenue rose by 8% to RM1.12bil due to: (1) higher advertising revenue; and (2) improved newspaper printing and distribution, all of which were partly offset by lower contributions from other segments.

• Since it began in 2QFY20, Omnia has grown to be the largest segment by revenue, achieving a PAT of RM4.4mil in FY21 against a loss of RM12mil in FY20 due to the recognition of a full-year impact.

• The broadcasting segment’s PAT surged over 2x to RM80mil in FY21 from RM36mil in FY20 on the back of strong advertising revenue and content sales revenue.

• Its publishing segment’s bottom line improved to RM3mil in FY21 from losses of RM27mil in FY20 due to a more optimal cost structure.

• The home shopping segment, WOWSHOP’s PAT fell 70% to RM3mil in FY21 from RM10mil as more in-store options were made accessible following the easing of movement restrictions in 2H21.

• QoQ, MPR’s revenue grew by 6% mainly due to stronger advertising sales for Chinese New Year campaigns, whereas PAT climbed 55% due to higher revenue and lower operating costs.

Source: AmInvest Research - 24 Feb 2022