Media Prima (MPR) posted a net profit of RM3.9m for the quarter ended 31  March 2023. As the financial year end of the group has been changed from  31 December to 30 June, we compare the current quarter results against the  immediate preceding quarter ended 31 December 2022. Revenue was down  16.6% mainly due to lower advertising revenue across the group’s media  platforms. Results came in below expectations and as such, we cut our FY23- 25F earnings forecasts by 7-11%. Consequently, our TP is reduced to  RM0.48, based on 0.7x PBR. Maintain Neutral on MPR.

• Revenue was down 16.6% to RM210.8m, mainly due to lower revenue  from all its media platforms i.e. Omnia, broadcasting, outdoor media,  publishing and home shopping segments. Generally, performance was  impacted by the soft advertising market conditions as well as intense  competition in the e-commerce segment. However, we are expecting a  seasonal uptick in the final financial quarter due to the festive period.

• Net profit dropped 82.8%, in tandem with the decline in advertising  revenue. Publishing delivered better performance but this was offset by  lower profit contribution from the other platforms. Meanwhile, losses at  home shopping have widened given the heightened competition from ecommerce and social commerce platforms.

• Outlook. Based on Statista’s projection, Malaysia’s advertising market is  expected to hit USD1.53bn in 2023 with TV & radio advertising  accounting for the bulk of market volume at about 26%. However, growth  in this segment is projected to be stagnant though digital and search  advertising should dominate and chalk a more significant growth going  forward. Some industry data are suggesting that the size of digital  advertising is estimated to be three times the size of traditional  advertising in the future. As such, it is vital for local broadcasters and  media companies to reinvent as well as invest in digitization to maintain  their competitiveness and relevance in the advertising industry.

Source: PublicInvest Research - 25 May 2023