Media Prima (MPR) posted a 2019 core net loss of RM62.9m, which was narrower than our and street expectations. The variance was largely from lower-than-expected operational costs. In view of potential savings from the recent staff rationalisation exercise, we now project smaller core net losses of RM36.5m for 2020 and RM11.6m for 2021. Nevertheless, our TP is revised lower to RM0.19 based on a target 2020E P/NTA of 1.1x (from 1.5x previously). We maintain our HOLD rating on MPR.

2019 Core Net Loss Narrowed to RM62.9m

MPR’s posted a lower 2019 revenue of RM1.1bn (-6.7% yoy), on the back of declines seen in TV (-7.6%) and print (-18.7%). Meanwhile, better performance from digital (+6%), home shopping (+9%) and content (+69%) partially cushioned the group revenue’s contraction. Excluding one-offs (including impairments and termination benefits), MPR posted a narrower core net loss of RM62.9m vs. a RM101m core net loss in 2018, narrower than our and the consensus 2019 core net loss forecasts of RM103m and RM96m, respectively. The variance to our forecast was mainly on lowerthan-expected opex, partly on staff-related costs.

Slight Uptick Yoy Seen for TV and Print Revenue

Importantly, we noticed the TV & print segments saw upticks in revenue yoy in 4Q19 for the first time since 2016. The latter’s better performance was underpinned by circulation growth of its flagship newspapers, which we believe was partly owing to less competition as a close competitor exited the industry. While there are signs of recovery in the ailing TV & print segments, we remain sceptical that the performance can be sustained given the structural issues facing the industry. The group made a further provision of RM75m for staff termination costs which saw the workforce reduced by c.25%.

Maintain HOLD With a Lower TP of RM0.19

In view of potential cost savings from the recent staff rationalisation exercise, we now project core net losses of RM36.5m for 2020 and RM11.6m for 2021. Nevertheless, our 12-month TP is revised lower to RM0.19 based on a target P/NTA of 1.1x (from 1.5x previously) to reflect the latest 3-year mean P/NTA, but we maintain our HOLD rating. We continue to be cautious as the operating environment remains challenging for media players.

Source: Affin Hwang Research - 27 Feb 2020