Investment Highlights

• We maintain HOLD on Media Prima (MPR) with a lower fair value (FV) of RM0.41/share (vs RM0.48/share previously). Our FV also reflects a 3% premium for MPR’s 4-star ESG rating.

• MPR’s FY22 core net profit (CNP) of RM32.6mil (after adjusting for exceptional items, mainly Covid-19- related rent concession of RM10mil) was substantively below expectations, coming in 40% below our forecast and 46% of consensus.

• The deviation was due to a weaker-than-expected recovery in advertising revenue amidst uncertainties surrounding GE-15 in late-FY22. We reduce MPR’s earnings estimates for FY23F by 15% and FY24F by 24% to account for lower adex assumptions.

• MPR’s FY22 CNP slipped 48% YoY to RM32.6mil mainly due to declines in revenue in home shopping (-46%) and newspaper circulation/printing segments (-26%). On a positive note, content sales grew by 25% YoY in FY22.

• On a QoQ basis, MPR’s 4QFY22 CNP increased 67% to RM10.9mil, backed by advertising revenue (+16%). However, content sales (-52%) and sale of home shopping goods (-15%) dropped in 4QFY22.

• Over the longer term, MPR will focus on producing quality content to command top viewership ratings for their own and other major streaming platforms. They also plan to invest in digital billboards to further boost its out-of-home segment, which returned to the black in FY22. Meanwhile, they will re-launch tonton this year.

• We view MPR as fairly valued as it is currently trading at a reasonable 9x FY23F PE, against its regional peers’ 8x.

Source: AmInvest Research - 23 Feb 2023