Period   3Q12/9M12

Actual vs. Expectations     The 9M12 net profit of RM137m came in within expectations and accounted for 69.1% each of ours as well as the consensus' full year estimates, respectively. Note that the 4Q is traditionally the strongest quarter in the financial year and typically accounts for about 30%-40% of the full year earnings based on the historical trend. 

Dividends     Announced a 3.0 sen second interim dividend with an ex-date set on 7 December, bringing the YTD dividends to 6.0 sen. For the full financial year, we are expecting the group to declare a total dividends of 11.0 sen. 

Key Result Highlights     YoY, the 9M12 revenue increased by 2% to RM1.22b thanks to the higher contribution from the Print (+2%), Radio (+2%) and Outdoor (+10%) segments although this was partially offset by the muted performance of the TV (-1%) division. The group's PATAMI was up by 3% to RM137m as a result of a higher associate contribution and lower financial cost due to the earlier full MTN repayment of RM100m.  

QoQ, the 3Q12 revenue was lower by 2% to RM436m as a result of lower advertising revenues in the quarter. The Olympics event during the 3Q appeared to have squared off perfectly against the EUFA EURO 2012 event in the preceding quarter. The group's EBIT margin, meanwhile, managed to climb by 40 bps to 19.4% as a result of the more stringent cost controls. The PATAMI increased by 4% to RM59m  as  a  result  of  higher  margins  coupled with the higher associate contributions and lower effective tax rate. 

Outlook     Management continues to remain cautiously optimistic about the adex outlook, although advertisers are now more cautious on their adex spending due to the current external economic uncertainties.   

Change to Forecasts     Post the 9M12 results, we have raised our FY12, FY13 and FY14 net profits marginally by 0.6%, 0.5% and 0.7% to RM201m, RM213m and RM219m, respectively. 

Rating  Maintain MARKET PERFORM

  

Valuation      Our TP is maintained at RM2.34 based on an unchanged targeted FY13 PER of 13.4x (being the 5-year average forward PER). 

Risks      The CY13 gross adex growth coming in below our expectation of RM12.4b (+8% YoY).

Source: Kenanga