Journey to Wealth
Media Prima - TV to drive FY12F earnings BUY
We re-iterate our BUY rating on Media Prima (MPrima) with a higherDCF-based fair value of RM3.10/share, vs. RM3.03/share previously. Our impliedforward PE of 13x is well within the stock's PE band of 13x-15x.
' MPrima posted a core net profit of RM205mil for FY11,which came in above our expectations. FY11 earnings was 10% ahead of ourforecast and by 6% above consensus ' the positive variance owing tostronger-than-expected adex volume in 4Q.
' Management has proposed a final single-tier dividend of 5 sen,bringing total dividends to 13 sen/share for this quarter (inclusive of asingle-tiered 2nd interim of 3 sen and a special 5 sen declared in November2011). FY11 dividends of 16 sen/share translate into a generous payout of 80% '6 sen higher than our DPS forecast.
' The group recorded solid earnings for 4Q which rose 36% QoQto RM73mil, despite a marginal 2% increase in turnover. The improvedperformance was attributed largely to:- 1) Accelerated adex spending in thefinal quarter as advertisers exhausted their ad-budgets and; 2) A 4ppt- EBITDAmargin boost from better cost management.
' On a YoY basis, turnover increased 5% mainly on the back ofhigher revenues from TV and print, which grew 5% each, and outdoor division at10%. Stripping out EIs of RM54mil (largely owing to negative goodwill fromacquisition of NSTP), FY11 core net profit was up 9% from the preceding year.
' Management has guided for increased content costs for FY13F,as the group invests in more local contents and quality TV programmes to ensure viewership market share (FY11: +1pptto 47%). Performance of the print division remains healthy via Harian Metropaper, in tandem with growing Malay language adex that grew 5ppts to 31% in 2011.
' The performance of radio stations, which was affected by stiffcompetition, should see some improvement moving forward with the launching ofHotTerengganu and HotKelantan radio stations soon. Outdoor media which saw flatgrowth should rebound over next few quarters given the tail-end of itsgestation period following outdoor mediaacquisitions.
' All in, we have raised our earnings forecast for FY12F-13Fby 3%-4%, post the group's full-year figures. No change to our industry adexgrowth forecast of 8%-9% for 2012-13. Adfriendly special world events such asthe Euro Cup 2012 and London Olympics this year are expected to boost adex spending,with further upside arising from a potential snap general election.
Source: AmeSecurities
Source: AmeSecurities
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