Media Chinese (MCIL)'s 1HFY13 earnings fell short of expectations, representing only  45%/46%  of  our/consensus  full-year  estimates.  Despite  a  promising  start  in 1Q, the group's top- and bottom-line in 1H were flat y-o-y. Hence, we are trimming our  FY13/FY14  earnings  forecasts  by  13%/25%  in  response  to  the  lackluster  1H financial  performance.  Our  new  FV  of  RM1.17  is  based  on  unchanged  13x  CY13 PE. With little upside potential to the current share price, we are downgrading thestock to NEUTRAL.  

Missing expectations. MCIL's 1HFY13 earnings fell short of expectations, representing only 45%/46% of our/consensus full-year estimates. Despite a promising start in 1Q, the group's top-  and  bottom-line  in  1H  were  flat  y-o-y.  During the quarter, MCIL's revenue contracted by 5% q-o-q, pushing earnings down sharply (-18% q-o-q) after the company recognised  a  one-time  gain  of  RM5.4m  (sale  of  convertible  notes)  in  1Q.  Other takeaways were:

Downgrade  to  NEUTRAL,  FV  revised  to  RM1.17.  We  are  trimming  our  FY13/FY14 earnings forecasts by 13%/25% respectively in response to the company's lacklustre 1H financial performance. Going forward, we expect MCIL to book in higher interest charges after  committing  to  RM500m  worth  of  debts  to  partly  fund  its  bumper  dividend  on  28 Nov.  Hence,  we  arrive  at  our  new  FV  of  RM1.17  based  on  unchanged  13x  CY13  PE. With  little  upside  potential  to  the  current  share  price,  we  are  downgrading  the  stock  to NEUTRAL.  Nevertheless,  the  company  still  offers  a  commendable  dividend  yield  of 5.4%.

 Source: OSK