Investment Highlights

• We downgrade Media Prima (MPR) to HOLD from BUY with a limited upside of only 7% based on a lower fair value (FV) of RM0.48/share (vs RM0.61/share previously).

• We cut our FY23F target PE for MPR to 8.0x from 9.5x originally, in line with the PE valuation of regional peers, which experienced an average share price decline of 12% YTD. Our FV also reflects a 3% premium to MPR’s 4-star ESG rating.

• MPR’s 9MFY22 core net profit (CNP) of RM22mil was below expectations as it made up only 36% of our FY22F earnings and 42% of consensus.

• The deviation is due to a wider-than-expected loss in the home shopping segment, WOWSHOP, as consumers returned to physical shopping activities. Hence, we reduce our earnings estimates for FY22F by 11%, FY23F by 7%, and FY24F by 3%.

• MPR’s CNP slipped 4% YoY to RM22mil in 9MFY22 due to lower revenue from home shopping (-46% YoY) and newspaper circulation/printing revenue (-28% YoY). This was cushioned by increased content sales (+58% YoY) and higher advertising revenue (+7% YoY).

• MPR’s CNP plunged 41% QoQ to RM7mil in 3QFY22 dragged by weak advertising revenue (-11% QoQ) and lower sales of home shopping goods (-22% QoQ). These were partly mitigated by improved content sales (+62% QoQ).

• Home shopping loss also widened 39% QoQ to RM6mil while Out-of-Home segment swung into the black with a PAT of RM2mil in 3QFY22.

• In spite of the poor 3QFY22 results, we expect MPR to perform better in 4Q underpinned by higher year-end utilisation of marketing budgets by advertisers, as well as festive campaigns.

• MPR currently trades at a fair 7.7x FY23F PE, near regional peers’ 8.0x with decent dividend yields of 5%- 6%.

Source: AmInvest Research - 30 Nov 2022