Results

FY13 core PATAMI inched up by 2% to RM214.2m (19.6 sen/share), only exceeding our forecast slightly by 1% while making up 98% of streets’ estimates.

Deviations

Largely in line.

Dividends

Net dividend of 8 sen/share declared, as compared to 7 sen declared during 4QFY12. Hence, bringing full year dividends to 14 sen/share (2Q: 3 sen; 3Q: 3 sen), matching our dividend estimate and translating to ~71% payout ratio. Exdate on 6 Mar-14, payment on 28 Mar-14.

Highlights

4QFY13 review… Although 4Q tend to be seasonally stronger, revenue dropped by 5% YoY (QoQ: +3%) to RM451.6m. The drop in revenue was due largely to weakness in the TV and Print division. 4Q PATAMI fell further by 13% YoY (QoQ: 0%) to RM63.4m (5.81 sen/share).

FY13 review… Due to poor 1Q and 4Q results, FY13 revenue inched up by 1% to RM1.72bn. TV posted flattish revenue growth while Print division saw slight revenue decline. On the other hand, Radio and Outdoor division posted healthy growth. Overall, PATAMI inched up by 2% to RM214.2m (19.6 sen/share).

Cautious outlook… Management remained cautious on CY14 Adex outlook. Historically, Adex growth in the World Cup years tend to be strong, hence it is expected to expand in line with GDP growth of 4-5%.

Digital effect… Despite higher Digital revenue, losses grew due to higher bandwidth costs and should breakeven by CY14 and contribute positively in CY15. Launched tontonmusic, Malaysia’s online radio version of Spotify.

Dividend play… MPR has upped its payout ratio to a minimum of 60% to 80% max from 25% to 75% payout ratio previously. We believe that MPR is able to do so given that it has turned into a net cash company of RM119m (10.8 sen/share) with strong recurring annual free cashflow of RM200-250m (18-22 sen/share). At our FY14 forecasted dividend of 16 sen/share, MPR is trading at a decent yield of 6.2% based on the current share price.

Risks

Weak Adex growth; High content and newsprint cost; Threat of new players; Depreciation of RM vs US$; and Regulatory risk.

Forecasts

Unchanged.

Rating

HOLD 

We continue to favour MPR’s integrated media business model and also its latest dividend policy which better optimises its capital structure. However, sentiment is still weak and will lead to a soft Adex environment. Hence, we are maintaining our HOLD call on MPR.

Valuation

Target Price maintained at RM2.58 based on unchanged 12.9x FY14 earnings.

Source: Hong Leong Investment Bank Research - 21 Feb 2014