Results

FY14 PATAMI fell 11% from RM176.3m to RM157.5m, accounting for 96% and 97% of HLIB and consensus full year estimates, respectively.

Deviations

In-line.

Dividends

2.19 sen/share declared, (4QFY13: 3.10 sen) Hence, bringing full year dividends to 4.61 sen/share.

Ex-date on 9 July 2014, payment on 1 August 2014.

Highlights

4Q yoy review. Revenue fell 4% YoY to RM325.3m. Domestic operations slowed due to prevailing weak sentiment following the effect of Government’s subsidies rationalisation plan. The decline was also added on by the weakening of RM against the US dollar. The print division in Malaysia was also affected by the MH370 incident.

The performance of Greater China division contracted due to economic slowdown coupled with intensified market competition. The decline in revenue for the North America segment was mainly caused by the negative currency impact.

On QoQ basis, revenue contracted 15% mainly due to seasonally weak quarter. PATAMI fell further on the back of higher effective tax rate of 31%.

FY14 review. Revenue grew 4% YoY to RM1.53bn from RM1.48bn thanks to the travel division which increased 20% YoY to RM288.7m. The increase in travel division was fuelled by the increase in demand for the group’s tour products and services.

The print division in Malaysia displayed a flattish revenue growth of 1% YoY. Whereas the Greater China and North America division posted flattish revenue. Advertising income also produced a flat revenue growth of 1% YoY.

Outlook. We expect the print division’s operating environment will continue to be challenging due to the online migration of traditional print advertisements as well as higher competition in the Group’s major markets. However, we believe that the business would still prevail in tough times albeit with lacklustre growth.

Risks

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

Forecasts

Unchanged, pending analyst briefing on 30 May 2014.

Rating

BUY

We continue to favour MCIL’s cash generative business and prudent management in containing overall costs to mitigate the Adex slowdown.

Valuation

TP of RM1.07 maintained based on unchanged P/E multiple of 11x FY14 earnings. Pending analysts briefing

Source: Hong Leong Investment Bank Research - 30 May 2014