Media Prima (MPR) reported a net profit of RM6m for 1QFY22, rising 14.9% YoY. This was mainly driven by higher advertising revenue and lower depreciation and amortization costs. However, the results only accounted for 12% and 8% of our and consensus full-year estimates respectively. We attribute this to lower-than-expected broadcasting profit. Nevertheless, we are keeping our earnings forecasts unchanged as we expect advertising spend to pick up in the remaining quarters of the year. We maintain our Trading Buy call and TP of RM0.60 sen.

• 1QFY22 revenue was down marginally by 2.8% YoY, as the increase in Omnia and Broadcasting revenue was offset by lower contribution from Home Shopping. Omnia grew 33% YoY as advertising revenue increased across all media platforms. Broadcasting recorded a 28% growth mainly attributed to higher television advertising and content licensing revenue. However, Home Shopping posted a 44% decline in revenue as consumers returned to brick-and-mortar shopping following the easing of movement restrictions.

• 1QFY22 net profit improved by 14.9% YoY. Despite posting a decline in revenue, MPR managed to chalk higher net profit mainly due to lower depreciation and amortization expenses. Only Broadcasting segment delivered meaningful increase in profit while Home Shopping segment was in the red, posting a loss of RM4.6m in 1QFY22 versus a profit of RM2.5m in 1QFY21.

• Outlook. We expect advertising spend to continue to improve as more economic sectors reopen and recover from the impact of the Covid-19 pandemic. There should also be greater opportunities for MPR to explore content production and event management in a larger scale. Also, with the 15th General Election expected to take place within the next one 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. On the non advertising front, MPR is looking to revamp its e-commerce capabilities, leveraging all its media platforms to generate demand while effectively harnessing the group’s data.

Source: PublicInvest Research - 31 May 2022