Media Prima (MPR) reported a net profit of RM28.9m for 4QFY21, a sharp improvement from a loss of RM18.8m in 4QFY20. This was largely due to stronger advertising sales and lower operating cost. For FY21, normalised earnings of RM52.5m was above expectations, accounting for 159% and 136% of our and consensus full-year estimates, respectively. This was mainly due to stronger-than-expected recovery in 4QFY21 advertising expenditure (adex) and lower operating cost. We raise our FY22-23F earnings forecasts by 11- 13% to account for higher adex growth and lower cost, particularly direct cost and overhead expenses. As a result, our TP is revised to RM0.60, based on 0.9x 3-year forward P/BV. Given a 17% upside to our TP, we upgrade MPR to Trading Buy. A first and final dividend of 1.5sen per share was declared (FY20: nil).

• 4QFY21 revenue rose 6% YoY, mainly due to stronger contribution from Omnia, broadcasting and digital media. Omnia reported a 35% growth, driven by early marketing campaigns for the Chinese New Year festive period while broadcasting revenue jumped 51% due to stronger television advertising. Both segments accounted for over 70% of group’s revenue. Digital media remained a relatively small revenue contributor (~6%) though delivering a decent growth of 11%. However, this was partly offset by lower revenue from publishing (-6%), out-of-home (-8%), home shopping (-34%) and content creation (-93%). The sharp decline in content creation was due to the effect of the transfer of television programme production unit and content distribution business to the broadcasting segment.

• Headline 4QFY21 net profit jumped 54% YoY, while normalised net profit grew 18% YoY with net margin improving from 8.5% to 9.2% due to lower operating expenses (-11.7% YoY). Omnia delivered a pretax profit of RM4.2m compared to a loss of RM6m in 4QFY20. Broadcasting remained the largest earnings contributor with pretax profit growing from RM18.9m to RM39.4m in the current quarter.

• Outlook. We expect advertising spend to continue to improve with economic activities picking up following the removal of movement restriction orders in 4Q last year. Despite the risk of a new Covid-19 waves hitting Malaysia, we believe there is a low possibility of the government re-introducing lockdown measures given the high inoculation rate achieved. Also, as the 15th General Election is expected to take place this year, we reckon advertising spend, particularly TV adex, should see an uptick (note that TV adex expanded 7-16% during the previous general election). Operating the most extensive free-to-air television network in Malaysia, we believe MPR is likely to benefit from this.

Source: PublicInvest Research - 24 Feb 2022