Period 3Q15/9M15
Actual vs. Expectations Media Chinese Int’l (MEDIAC)’s 9M15 net profit of USD28.9m (or RM101m) came in within expectations, accounted for 74.1% of our, and 79.6% of the street’s, FY15 full-year estimates.
Dividends As expected, no dividend was declared during the quarter.
Key Results Highlights YoY, 9M15 revenue declined by 7% to RM1.2b, no thanks to the lower revenue contribution from the publishing and printing segment (-8.6% to RM934m). PBT, meanwhile, slid by 25% as a result of lower revenue and higher administrative expenses.
QoQ, 3Q15 turnover dipped by 14% to RM368m as a result of the lower tour segments and Malaysian operations, partially cushioned by the better performance in both H.K. and North America print businesses. PBT, meanwhile, climbed by 12% mainly due to stringent cost control efforts.
Both MYR and Canadian Dollar weakened against the USD in 3Q15 and 9M15, resulting in negative currency impact on the group’s turnover and PBT of c.USD3.5m and USD0.7m, respectively, for the current quarter; and USD7.2m and USD1.1m respectively for the 9-month periods.
MEDIAC’s Malaysia publishing and printing segment revenue dipped by 6.8% YoY to RM217m in 3Q15 mainly due to: (i) weak adex sentiment as a result of slower retail spending, and (ii) impending implementation of GST, which caused advertisers to adopt a more cautious mode in its ad spends.
Outlook MEDIAC expects its business environment to remain challenging in the remaining quarters due to the economic uncertainties and lower consumer confidence. Although the weakening newsprint prices are expected to cushion its earnings, its advertising revenue remains cloudy as a result of cautious spending by both consumers and businesses.
Change to Forecasts Marginally tweak our FY15E/FY16E NPs by -0.1%/- 0.5% after fine-tuning.
Rating Maintained MARKET PERFORM
Valuation Our TP is maintained at RM0.68 based on unchanged targeted FY16 PER of 7.7x, representing a -1.0x below its 5-year mean.
Risks to Our Call Lower-than-expected adex growth
Source: Kenanga
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