Media Prima (MPR) posted a net profit of RM10.7m for 2QFY24, down 23.8% YoY mainly due to higher tax cost. Owing to the change in financial year end, we compare 2QFY24 against performance of the October to December 2022 quarter. At pretax profit level, 2QFY24 improved marginally by 1.7% QoQ on higher advertising revenue. The increase in revenue was due to stronger contribution from Omnia and Broadcasting segments. For 1HFY24, results were below our expectations, accounting for 43% of our full-year forecasts due to lower-than-expected advertising revenue. However, as we see improvement on a QoQ basis, we retain our earnings forecast, anticipating further improvement in 2HFY24. Maintain Neutral on MPR with an unchanged TP of RM0.48 based on 0.7x PBR.

• 2QFY24 revenue improved by 4.6% QoQ to RM223.8m, mainly dueto higher contribution from Omnia and Broadcasting segments. Omniarevenue increased by 7% attributed to improved advertising revenueon the Group’s broadcasting, out-of-home and digital platforms whileBroadcasting improved by 4% on higher television and audioadvertising revenue, though partly offset by lower content distributionrevenue.

• 2QFY24 net profit dropped 23.8% QoQ. Profit before tax wasmarginally higher, up 1.7% QoQ due to higher revenue while costremained relatively flattish. However, the increase in tax cost fromRM3.6m to RM5.7m in the current quarter has led to a 23.8% declinein headline net profit.

• Outlook. Based on Statista’s projection, Malaysia’s advertising (ad) spending in the digital market is expected to reach USD1,044m in 2024. By 2028, mobile advertising is estimated to account for 48% of total ad spending. Some industry data is suggesting that the size of digital advertising is projected 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 - 29 Feb 2024