Journey to Wealth
Media Prima - 1Q12 below expectation
Period 1Q12
Actual vs. Expectations
The 1Q12 core net profit of RM20.8m came in below our expectation and accounted for just 9.4% and 10.4% of ours and the consensus' fullyear estimates respectively.
The group's 1Q12 turnover of RM335m was, however, in line with our number even as the net profit above was substantially below our estimate. The main reason for the lower than anticipated profit was due to the higher than expected direct and operating costs for 1Q.
Dividends No dividend was announced in the quarter.
Key Result Highlights
YoY, the revenue contracted by 5.3% to RM335m due to a drop of 11% in TV advertisement revenue. Operating profit meanwhile fell 39% to RM33.5m due mainly to the higher operational costs in the TV and Print segments as well as due to the lower turnover as well. As a result of the lower EBIT, the group's PAT fell accordingly thus by 40.2% to RM20.8m.
QoQ, the revenue declined by 21.6% due mainly to lower advertising spending, which is likely due to seasonal factors. Net profit, however, plunged by 72.3%, no thanks to the higher direct cost in the TV and Print segment, where its ratio as a percentage of sales for the two segments increased to 36.8% (vs. 17.3%) and 33.9% (vs. 30.8%) respectively.
Outlook Cautiously optimistic. We expect adex sentiment to improve from 2Q12 onwards, driven by some scheduled major sport events and a potential General Election.
Change to Forecasts
We have reduced our FY12, FY13 and FY14 net profit forecasts by 6.7%, 5.0% and 3.5% to RM206m, RM225 and RM235m respectively after adjusting for mainly higher direct costs in the TV segment and imputing in a lower effective tax rate of 25.9% vs. 26.1% previously.
Rating Maintain MARKET PERFORM
Valuation Lowering our TP to RM2.62 (from RM2.72 previously) based on an unchanged targeted PER of 13.6x (5-year average forward PER). We have rolled over our base-year valuation to FY13.
Risks CY12 gross adex growth coming in below our expectation of RM11.9b (+11.1% YoY).
Source: Kenanga
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