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