1Q18: A Wider-than-expected Loss

Media Prima (MPR) posted a 1Q18 core net loss of RM21.8m, which is below our previous projected full-year core net loss forecast of RM17m for 2018E. The variance against our forecast was largely due to higher-than-expected costs associated with the TV and print segments. In view of the still-downbeat quarter, we now project a 2018E core net loss of RM33.2m whilst keeping our 2019-20E forecasts unchanged. We reaffirm our SELL call with a slightly lower TP at RM0.24 based on 0.9x (2SD below 3-year average) 2019E NTA per share of RM0.27.

TV and Print Media Segments Still Loss-making

MPR’s 1Q18 revenue increased marginally by 3% yoy to RM281m, mainly due to the higher revenue contribution coming from the digital media (+98%), home shopping (+63%) and radio divisions (+20%). The revenue contribution was lower yoy from the print media (-1%), TV network (-14%) and content creation (-6%) divisions. MPR reported a LBT of RM21.8m in 1Q18 vs LBT of RM38.5m in 1Q17, partly attributed to narrowing losses in the print segment driven by lower production costs and administrative expenses as well as higher profit coming from the radio, digital media and content creation segments.

Looking Ahead in 2018

Management is committed to its transformational journey towards reinventing the group as a digital-first content and commerce firm, anchoring on key aspects such as market leadership in broadcasting, strong OTT content and digital publishing. Continuous cost management and increasing productivity are also key in the transformational initiatives.

Maintain SELL With TP of RM0.24

In view of the larger-than-expected losses in 1Q18, we are revising downward our 2018E core net loss to RM33.2m from RM17.2m previously. Our revised TP of RM0.24 (from RM0.25) is based on an unchanged 0.9x (2SD below 3-year average) 2019E NTA per share of RM0.27 after taking into account the subdued outlook in MPR’s key segments.

Source: Affin Hwang Research - 25 May 2018