-  We re-affirm our BUY recommendation on Media Prima (MPR) with an unchanged fair value of RM3.17/share, based on our DCF value.

-  MPR recorded a 3Q net profit of RM63.5mil (+6% QoQ, +8% YoY), bringing the total to RM150.7mil for 9MFY13 (+10% YoY). This accounts for 67% of our estimates, and 70% of consensus.

-  We deem this to be in line as we think MPR will finish off the year with a stronger set of quarterly earnings due to the year-end seasonality effect. This is comparable to 9MFY12 earnings, which accounted for only 66% of our full year estimate.

-  MPR declared an interim dividend of 3.0 sen/share, bringing the total to 6 sen/share to date, which is within our expectations.

-  Its FTA TV segment continues to outperform the industry in the first nine months, with its TV adex growing by 5%, while the overall FTA adex only grew by 1% during the same period.

-  Its radio segment also performed favourably, resulting in an increase in revenue of 22% and profit after tax growth of 42%. This is mainly attributed to higher sponsorship by advertisers and government-related spending.

-  Its print segment saw an adex growth of 2% vs. the industry adex growth of 4%, despite having a strong readership within the Malay market. This is due to the dominance of the English print adex in the industry, while this only constitutes 24% of MPR’s total print adex revenue.

-  We continue to be positive on MPR due to:- (i) its dominance in the FTA TV segment with a market share of more than 85%; and (ii) its fully diversified and integrated media platform.

-  Furthermore, we are more optimistic on FY14 as adex is poised for a recovery, supported by major adex-friendly events such as the FIFA World Cup and the Commonwealth Games.

-  We maintain our DPS assumption of 14.5 sen/share, equivalent to a payout of 70%. Given its net cash position of RM51mil and a strong projected free cash flow of ~RM200mil, we think its attractive dividend yield of 5%-6% can be sustained.

-  At the current level, the stock is currently trading at an undemanding PE of 12x of FY13 earnings.

Source: AmeSecurities