Another disappointing quarter due to print

Media Prima’s (MPR) 9M16 core net profit of RM43.5m (-61% yoy) was below expectations. The variance to our forecast was mainly due to lower-than-expected contribution from the print segment. We are still cautious on MPR given the soft consumer sentiment, continued market uncertainty coupled with the change in media consumption habits that have impacted MPR’s earnings. As such, we cut our 2016-18 EPS forecasts by 2-35%. Maintain our SELL rating on MPR with a lower TP of RM1.00.

Core net loss of RM2.3m in 3Q16

Sequentially, MPR’s 3Q16 revenue declined by 9.4% qoq to RM316.8m, attributable to lower contribution from all divisions except outdoor media. EBITDA margin was also lower at 6.1% as compared to 15.5% in 2Q16. MPR reported a net loss of RM109.4m in 3Q16 mainly due to the restructuring expenses under the print operations amounting to RM104.6m. After excluding the restructuring expenses and other one-off items, the group posted a core net loss of RM2.3m. MPR announced an interim DPS of 2 sen, bringing 9M16 total DPS to 4 sen (9M15 DPS: 5 sen).

9M16 core net profit declined 61% yoy to RM43.5m

MPR’s 9M16 revenue declined by 8.5% yoy to RM970.4m, mainly attributable to the soft consumer sentiment in view of the continual market uncertainties, the shift in advertisement to digital and broadcasting media as well as competition from other media players. MPR’s revenue contribution from its print media, digital media and content creation divisions fell by 21.7%, 89.7% and 7.1% yoy respectively to RM324.4m, RM1.1m and RM14.8m. On the other hand, TV network, radio network and outdoor media divisions’ revenue grew by 1.1%, 3.9% and 3.4% yoy respectively to RM465.6m, RM49.1m and RM115.4m. After excluding one-off items, 9M16 core net profit declined by 60.8% to RM43.5m, which was below expectations, accounting for 37% and 39% of our previous and consensus 2016 forecasts, respectively. The variance to our forecast was mainly due to lower-thanexpected contribution from the print division.

Source: Affin Hwang Research - 30 Nov 2016