Media Prima (MPR) reported a net profit of RM7.6m in 3QFY21, falling by 38.6% YoY due to lower contribution from outdoor media, print and home shopping. Stripping out non-operating items which include impairment reversal on financial instruments, cumulative 9MFY21 core net profit stood at RM22.7m. This came in slightly below our forecast at 69% of full-year estimate though making up of 80% of consensus forecast. We retain our earnings forecasts as we expect better performance in 4QFY21 on higher adex due to the reopening of the economy and seasonal uptick in spending during the festive period. Our TP remains unchanged at RM0.55. We maintain our Neutral call on MPR.
- 3QFY21 revenue was down 4.3% YoY, mainly due to lower contribution from outdoor media, print and home shopping, despite Omnia and broadcasting segment posting higher revenue. Home shopping and outdoor media saw a decline of 17% and 25% respectively and we attribute this to the impact of the movement restriction order on outdoor display advertising while greater competition from other online platforms may have led to lower sales chalked by WOWSHOP.
- Remaining profitable, though 3QFY21 core net profit fell sharply by about 60%. The current quarter was mainly dragged by lower consumer spending as the nationwide lockdown was introduced during this period.
- Outlook. We expect advertising spend to gradually improve with economic activities picking up following the removal of the restriction order and the achievement of high inoculation rate with almost 80% of the country’s population having been fully vaccinated. This should translate to higher adex for the coming quarter. However, in the longer run, we believe competition in digital advertorial would remain stiff and margins for MPR are not likely to revert to its historical levels.
Source: PublicInvest Research - 26 Nov 2021