Media Prima (MPR) posted a net profit of RM8.8m for the quarter ended 30 June 2023. As the financial year end of the group has been changed from 31 December to 30 June, we compare the current quarter’s results against the immediate preceding quarter ended 31 March 2023. Revenue rose 5.8% due to higher contribution from all segments except the Digital and Home Shopping segments. However, profit before tax was down 10.7% as the Broadcasting and Publishing segments suffered losses, though partly offset by stronger earnings contribution from Out-of-Home segment. Net profit jumped from RM3.9m in the previous quarter mainly due to lower tax cost. We make no changes to our FY24-25F earnings forecasts, with our TP remaining unchanged at RM0.48, based on 0.7x PBR. Maintain Neutral on MPR.

• Revenue rose 5.8% to RM223m, mainly due to higher advertising revenue for all segments except the Digital and Home Shopping segments, amid intense competition in the digital, social media and ecommerce space.

• Net profit jumped on lower tax cost. Pretax profit was lower as the gain from the Out-of-Home segment was offset by losses incurred by Broadcasting and Publishing segments. Due to lower tax expense, net profit jumped from RM3.9m to RM8.8m.

• 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 - 1 Sept 2023