Media Chinese (MCIL) recorded a record high 9MFY12 earningsof RM150m which were above both our and consensus estimates at 81% and 91%of the full year forecasts respectively.We continue to like its prospects goingforward and foresee 2012 to be another record breaking year for the group. While there were no dividendsdeclared for this quarter, we believe that it will declare its dividend in 4Qconsidering its huge cash pile of RM384m as at Dec 2011. Reiterate BUY with our FV upgraded to RM1.54from RM1.47 previously, based on an unchanged 13x CY12 PER.
The Best So Far.In line with our previous guidance in our report titled 'Another Record Year inThe Making' published 14 Feb 2012, MCIL posted its strongest YTD results ever withits 9MFY12 top and bottom line standing at RM1.15bn (+8% y-o-y) and RM150m (+11%y-o-y). It marked its best quarter ever in 3QFY12 with earnings coming in at RM61mthanks to better showing from its Hong Kong operations which improved 20% y-oyand 37% q-o-q to RM79m as well as sturdy contribution from its Malaysia corebusiness with growth being driven by itscore print business, with advertising revenue chalked up10% y-o-y and 13% q-o-qgrowth. MCIL's travel segment also grew 18% y-o-y and 19% YTD with a strongsurge in demand for its long-haul tours to destinations such as Europe andAustralia owing to the year-end festive season and Christmas holidays. Marginsfor the group were sequentially higher q-o-q, with an expansion of 600bps at both PBT and EBIT level owing to management'sexcellent cost control efforts.
Positive trend topersist. Moving into 4QFY12, we foresee that the group will continue to reporthealthy growth, on the back of aggressive advertising and promotion activities amonghypermarkets and fast-moving consumer good companies during the Chinese New Yearperiod in Jan 2012. We expect thepositive trend to persist going into FY13 as management ramps up its efforts tobetter manage overhead and operating expenses. In addition, newsprintprices ' which are currently hovering atUSD650-USD680/mt ' are likely to remain stable and upcoming major events, suchas the nation's impending General Election, the 2012 Olympics and Euro2012 sports tournaments will provide a boostto the sector's adex growth.
BUY. We continueto like MCIL which remains as the topbuy within our media sector coverage. With earnings beating our and consensusestimates, we are upgrading our top and bottom line by 1%-5% for both FY12 andFY13. Hence, our FV is now upgraded to RM1.54 (from RM1.47 previously) based onan unchanged 13x CY12 PER. Though there were no declaration of dividends thisquarter, we believe the group will continue to reward its shareholders givenits mounting cash pile, which stood at RM384m as at Dec 2011. Thus, we continueto impute a payout ratio of 60% for FY12 and FY13, which translates into anappealing yield of 5.7% and 6.1%. Maintain BUY