Robust 4QCY21 adex data. According to Nielsen report, 4QCY21 total gross adex data registered a substantial 27% QoQ growth from RM1.4bn in 3QCY21 to RM1.8bn, driven by strength across the board (FTA Television, Newspaper, Magazine etc.), due to recovery of economic activities and seasonally higher advertising demand from year end sales. The remarkable adex improvement in 4QCY21 is expected to benefit MEDIA as the data serves as a leading indicator for its upcoming 4QFY21 results, given that 63% of its revenue comes from advertising while having 71% adex market shares in the FTA-TV platform. Going into FY22, we expect a better adex outlook following the easing of COVID-19 movement restrictions, which is reflected by the improved consumer sentiment index and business condition index (Figure#1).

Undemanding valuation After tumbling 43% from a 52-week high of RM 0.75 to RM0.425 yesterday, MEDIA is currently trading at an undemanding valuation of 8.1x FY22 P/E (64% and 37% discount against its 5-year average 23.1x and peers of 12.8x, respectively), supported by an attractive projected FY22 dividend yield of 7.1%. Besides, MEDIA's strong cash piles of RM 263.7m or NCPS of 24sen (end Sep 21), which makes up 56% of its current market capitalization, would serve as a cushion for further slide in share price.

Worst is over; better times ahead. In the wake of further recovery in the Malaysian economy (real GDP for 2022f: +5.5%), we reckon MEDIA will recover strongly in 2022 in anticipation of expanding corporate marketing budgets due to the aggressive reopening domestic activities, benefiting MEDIA's advertising segment. Therefore, we continue to like MEDIA as we believe its future growth is multi-pronged, underpinned by the improved performance from its advertising revenue, the positive contribution from its home shopping segment, and the increase in content sales and distribution.

Double bottom. Technically, we expect MEDIA to stage a downtrend reversal soon, pending a double bottom formation as indicators are showing uptick bias. A successful breakout above its neckline of RM0.46 will spur the price toward RM0.48-0.50-0.54 territory. Cut lost at RM0.395.

Source: Hong Leong Investment Bank Research - 15 Feb 2022