Despite a weaker revenue, Media Prima (MPR) posted a sequential growth in 4QFY24 normalised net profit to RM32.8m (3QFY24: RM2.5m) due to its cost-cutting effort which helped to reduce total operating cost. Due to the change in financial year end, YoY numbers were not disclosed. For full-year FY24, results came in below our estimate at 79% but beat consensus estimate at 159%. The lower-than-expected earnings was largely due to weaker advertising revenue. We slash our FY25-26F earnings forecasts by 26% to factor in lower advertising revenue for its traditional media platforms. TP is maintained at RM0.45 (based on an unchanged multiple of 0.7x PBR) as we rollover our valuation year to FY26F. Maintain Neutral on MPR.

• 4QFY24 revenue fell 9.4% QoQ, mainly due to lower advertisementspending as consumer confidence remained weak amid geopoliticaltensions. All segments posted lower advertising revenue, particularlyOmnia (-10.6%), digital (-15.7%) broadcasting (-13.4%) and out-ofhome (-3.9%) segments. Meanwhile, the publishing segment posted aflat revenue.

• 4QFY24 normalised net profit surged to RM32.8m, largely driven byprudent cost management initiatives. The group reported a headlinenet profit of RM60.4m but this inclusive of a reversal of accrual for siteoccupancy fee pursuant to the termination of an advertising agreementthat amounted to RM30.1m.

• Outlook. Based on Statista’s projection, Malaysia’s advertising 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 advertising 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. While MPR continues to deliver innovative solutions to advertisers and engaging content across its media platforms, we believe rising operational cost may post further challenges to the monetization of its investment in the near term.

Source: PublicInvest Research - 29 Aug 2024