Media Prima (MPR) recorded a 6M19 core net loss of RM46.7m, widening from a core net loss of RM21.3m in 6M18. We deem the results to be broadly in line with our 2019 forecast for a core net loss of RM81.9m. We expect 2H19 to see a narrower loss as compared to 1H19, on continuous cost-management initiatives. We lift our fair valuation to 1.5x (1SD below 3-year average) 2020E NTA per share to better reflect the positive developments, especially the presence of a new major shareholder, which may lend some support to the share price on the back of possible restructuring exercises to improve longterm prospects of the group. We revise our TP higher to RM0.38. Given the 20% downside to our new TP, we maintain our SELL call as we think the subdued adex sentiment would continue to weigh in the near term.

Core Net Loss of RM46.7m in 6M19, Broadly Within Expectations

MPR posted lower 6M19 revenue of RM535.9m (-14% yoy), on the back of a yoy decline from the TV (-15%), print (-34%), out-of-home (-8.3%), radio (-34%), digital (-1%) and content divisions (-22%). This was partially mitigated by a higher contribution from the home-shopping division (+19%), which continued to grow partly on greater airtime driving higher sales of products. To note, adex spend in 6M18 was higher as compared to 6M19 as it was supported by the adex-friendly 14th General Election. Excluding one-off items (comprised of forex loss, impairments and gain on disposals), the 6M19 core net loss came in at RM46.7m vs RM21.3m in 6M18. We deem this to be broadly in line with our full-year expectation of a core net loss of RM81.9m as we expect 2H19 to see a narrower loss on continuous cost-management exercises.

Sequentially Better on Higher Festive Ad Spending

On a qoq basis, MPR’s revenue jumped by 24.1% to RM296.8m in 2Q19, in a seasonally stronger quarter driven by higher festive season ad spending. Higher contributions were seen across all segments with the highest qoq increases in revenue coming from the TV (+43%), digital (+49%) and content (60%) divisions. Meanwhile, the core net loss narrowed in 2Q19 to RM9.6m as compared to RM37.2m in 1Q19.

Source: Affin Hwang Research - 23 Aug 2019