Media Prima (MPR) reported a net profit of RM13.4m in 2QFY21 compared to a net loss of RM20.1m in 2QFY20. This was mainly driven by stronger advertising revenue in the current quarter while the previous year’s performance was significantly affected by MCO 1.0. Cumulative 1HFY21 beat our and market expectations, mainly due to lower-than-expected operating costs. While we reckon that the strong 2QFY21 performance was partly attributed to stronger adex during the festive period, we raise our FY21-23F earnings forecasts by 21-50% to account for lower operating cost due to its cost optimization initiatives. Consequently, our TP is revised up to RM0.55 (from RM0.52 previously). Maintain Neutral on MPR.

• 2QFY21 revenue increased by 23.8% YoY, mainly lifted by stronger contribution from Omnia that delivered a 78% revenue growth due to higher adex. Broadcasting also posted stronger revenue (+75% YoY) led by higher television advertising revenue. Both Omnia and Broadcasting accounted for 97% of group’s revenue. Meanwhile, Content Creation and Home Shopping segments posted lower revenue. The decline in Content Creation’s contribution was mainly due to the transfer of programme production services to the Broadcasting segment. As for Home Shopping, we believe the drop in revenue was due to the surge in online shopping during the initial phase of lockdown period in 2QFY20.
• Turned profitable from a net loss position, delivering a net profit of RM13.4m in 2QFY21 from a net loss of RM20.1m in 2QFY20. This was mainly due to the increase in revenue, which was partially driven by the Hari Raya festive period.
• Outlook. We expect advertising spend to gradually improve with economic activities picking up following the ramp up in the country’s National Covid-19 Immunisation Programme. However, in the longer run, margins are not likely to revert to its heyday given the structural challenges facing the media industry. While we are positive on the declaration by the Intellectual Property Court regarding the sale and distribution of TV boxes/illicit streaming devices as this should help with the media industry’s long battle against piracy, enforcement remains our key concern.

Source: PublicInvest Research - 27 Aug 2021