Period    FY12/4Q12

Actual vs.  Expectations   The FY12 net profit of RM209m came in within expectations and accounted for 104% and 103% of ours and the consensus full year estimates respectively. 

Dividends   A 7.0 sen second interim dividend was declared, bringing the YTD dividends to 13.0 sen, which implies a 6% net dividend yield.

Key Result Highlights  YoY, the FY12 revenue increased by 5% to RM1.69b thanks to the better performance in the TV (+3%), Print (+3%) and Radio (+7%) segments, although this was partially offset by the weak performance in the corporate (-12%) division. However, at the group's EBIT level, the EBIT  dropped 1.0% to RM303m despite the decent growth in the top line, mainly dragged down by the higher content cost in the TV & radio segments (amid the group's aggressive activities in content investment) coupled with higher overhead cost in the radio segment (with the expansion of radio channels into Kelantan & Terengganu). 

 QoQ, the 4Q12 revenue increased by 9.0% to RM477m on the back of the rise in the TV (+14%), Print (+3%) and Radio (+33%) segments. This was due to advertisers' aggressive spending to meet their annual budgets towards the year-end coupled with the festive season events. Positively, the group's EBIT soared by 22%, mainly driven by the higher other income in the TV segment.

Outlook   Advertisers have continued to maintain their cautious stance on adex spending in light of the impending general election coupled with the prolonged global economic uncertainties. To mitigate the impact, the group said it would continue to exercise prudent financial and risk management while leveraging on its operating efficiency.

Change to Forecasts  Post FY12 result, our FY13 and FY14 net profits were marginally lowered by -1% and -1.7% respectively after taking into account for higher content cost assumption in the TV & radio segment and higher overhead cost in the radio segment. Meanwhile, we also lowered our FY13-FY14 newsprint cost assumption to USD630/MT and USD650/MT (from USD680/MT each), respectively.

Rating    Maintain MARKET PERFORM

Valuation    Our TP has been reduced to RM2.31 (from 2.34 previously) based on an unchanged targeted FY13 PER of 13.4x (being the 6-year average forward PER). 

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

Source: Kenanga