Media Chinese’s FY18 revenue of RM1.1bn was translated into a disappointing core PATAMI of RM33.9m (-48.8% YoY), accounting for 69% and 75% of HLIB and streets’ full year estimates, respectively. Earnings were dragged by weaker performance from publishing and printing and travel segment. The group recorded a core loss of RM7.3m in 4QFY18. We leave our forecast unchanged pending analyst briefing later today. Maintain SELL with unchanged TP of RM0.27 based on unchanged P/E multiple of 9.5x on FY19 EPS.

Below Expectations. Media Chinese’s FY18 revenue of RM1.1bn was translated into a core PATAMI of RM33.9m (-48.8% YoY), accounting for only 69% and 75% of HLIB and streets’ full year estimates, respectively.

Deviations. Higher-than-expected cost structure. Dividends. Declare interim dividend of USD0.18 cents (~0.74 sen) per share (4QFY17: 1.6sen). For the full year MCIL declared a total of 2.0 sen DPS translating to a dividend yield of 7% (FY17:8.5%).

QoQ. 4QFY18 recorded a core loss of RM7.3m from a core profit of RM10.7m. The plunge in earnings was mainly due to lower contribution from group’s printing and publishing segment in Greater China and North America. On the other hand, revenue from the travel segment similarly declined by 31.2%.

YoY. Despite the slight increase in revenue, 4QFY18 earnings turned red as the group was impacted by lower sales as advertisers remained cautious with their spending. Such cautious sentiment had affected adex especially in the traditional media platform. The travel segment was also hit by increased competition from airlines.

YTD. FY18 revenue and core earnings declined by 5.8% and 48.8%, respectively. Travel segment showed a 7.9% growth in revenue, it was however weighed down by the weaker publishing and printing segments. The publishing and printing segments continued to disappoint due to the structural shift to digital media while total publishing and printing segments revenue fell by 9.9% YoY.

Outlook: Traditional media is currently facing the digital disruption and the travel business will be slow moving as fully independent travellers are on the rise. Moving forward, we expect the group to experience more challenges due to soft adex revenue and weak consumer sentiments.

Forecast. We leave our forecast unchanged, pending analyst briefing later today. Maintain SELL, unchanged TP: RM0.27 based on unchanged P/E multiple of 9.5x on FY19 EPS.

Source: Hong Leong Investment Bank Research - 31 May 2018