Period     4QFY13/FY13

Actual vs.  Expectations    Media Chinese’s (“MEDIAC”) FY13 net profit of USD56.9m (or RM176.3m) came in within expectation and accounted for 101.4% and 99.7% of ours and the street’s FY13 full-year estimates.   

Dividends    It declared a final dividend of US1.015 cents (or RM0.03103), which is scheduled to go exentitlement on 10 July. On a full year basis, the group has declared a total DPS of US1.688 cents (or RM0.0515), translating to a dividend yield of 4.6% or a payout ratio of 50%.  

Key Result Highlights    YoY, MEDIAC’s FY13 revenue was marginally higher by 1% to RM1.47b while the PBT was lower by -9% as a result of higher operating costs due to the rising labour and finance charges. The depreciation of RM and CAD against USD has resulted in a negative currency impact of USD3.5m to the group’s total turnover and USD0.6m at the PBT level. All in, the net profit was also lower by 10% to RM176m alongside with a slightly higher effective tax rate (24.7% vs. 24.2%) as well. 

QoQ, the revenue was lower by 11% to RM341m as a result of the traditionally low season. The group’s PBT meanwhile was lower by 16% to RM56.7m due to the lower margins recorded in all the segments. 

Outlook    Management continued to remain cautiously optimistic on the Malaysian adex outlook but reiterated its cautious stands on its Hong Kong’s publishing and printing division due to the heightened competition led mainly by the free newspaper players. Meanwhile, the recent hike in property stamp duty has also dampened the HK’s property players’ appetite for adex spending. As of FY13, MEDIAC’s HK division contributed 17% and 11% to the group’s FY13 turnover and PBT respectively.    

Change to Forecasts      Post-result, we have fined-tuned our MEDIAC’s FY14 net profit forecast by 0.5% to RM175m and have also introduced our FY15 forecast, where we expect the group to record a lower net profit of RM172m in anticipation of an appreciation of RM against the USD (FY14: RM2.97, FY15: RM2.84).     

Rating    Downgraded to MARKET PERFORM

Valuation     Maintaining our MEDIAC’s TP at RM1.23 based on an unchanged targeted FY14 PER of 12.0x (+0.5x SD). 

Risks    The CY13 gross adex growth coming in below our expectation of RM12.3b (+8% YoY).

Source: Kenanga