HLBank Research Highlights

Technical Tracker - MEDIAC: Supported by its strong netcash/share

HLInvest
Publish date: Tue, 05 Jul 2022, 10:58 AM
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This blog publishes research reports from Hong Leong Investment Bank

A Chinese-language media group. Being the first entity dual-listed on HKSE and Bursa Malaysia, Media Chinese International Limited (MEDIAC) is a leading Chinese-language media group formed by the successful merger of Ming Pao Enterprise Corporation Limited, Sin Chew Media Corporation Berhad and Nanyang Press Holdings Berhad. With serving the global Chinese readers as the mission of MEDIAC, its product portfolio comprises newspapers, magazines and books with a strong presence in Southeast Asia, Greater China and North America. In addition, the group is involved in the travel agency business in Hong Kong and North America.

Scrapping the bottom of the barrel? Despite anticipating a rocky recovery path in the near term due to elevated paper cost and the fluidity of Hong Kong's economic reopening, we believe MEDIAC’s share price has already reflected this challenging environment and we envisage a recovery ahead. Our optimism is supported by Malaysia's strong adex recovery, which jumped 10.5% YoY in 1Q22 and is expected to improve further in 2H22. Also, the potential reopening of Hong Kong's international border in 2H22 will be a major catalyst for MEDIAC, reviving its travel agency business that used to contribute 25-32% of the group revenue pre-pandemic (vs FY21: almost nil).

Range bound trading opportunity. At current price of RM0.17, MEDIAC is trading 57% below its NTA of RM0.40 and 5.6% lower than its net cash per share of RM0.18, providing some downside support. As MEDIAC is currently trading near its support line, we suggest traders to adopt a range-bound trading strategy – buy at trendline support at RM0.16- 0.17 and take profit near trendline resistance at RM0.195 (52-week high). A successful breakout above this hurdle will indicate a new uptrend leg has evolved, lifting the prices toward RM 0.21-0.22 territories. Cut lost at RM0.15.

Source: Hong Leong Investment Bank Research - 5 Jul 2022

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