Period

1Q15

Actual vs. Expectations

MEDIA’s 1Q15 core PATAMI of RM18.9m (-30% YoY) came in within expectation at 12.7% of our and 11.3% of the street’s full-year estimates. Note that 1Q is a seasonally weak quarter where advertisers tend to conserve their A&P budget in the first two months of the year to renegotiate new advert rates.

Financial-performance-wise, the 1Q normally made up c.10-c.19% of the full-year NP, based on the past three years.

Dividends

No dividend was declared as expected. Key Result

Highlights

YoY, 1Q15 net revenue came in lower at RM329m (-7%) as the growth in Outdoor segment (+2%) was erased by the weak TV (-8%) and Print segment (-6%) due to market uncertainties and consumers generally adopting a more cautious approach closer to the GST implementation. Meanwhile, the circulation revenue by print media was also lower by 11% due to weak adspend. Despite the single-digit drop in revenue, the group’s NP dipped by 30% due to the persistence higher direct cost and lower contribution from its associate companies (i.e. MNI, where MPR has 21% stake).

QoQ, the group registered a seasonally weaker 1Q15 at the net revenue level (-14%) with lower revenues seen across all the segments. The group’s NP, however, soared 164% from a low base due to the Mutual Separation Scheme (MSS) expenses of RM79.8m incurred in the previous corresponding quarter.

Outlook

The adex sentiment is expected to remain weak, in view of the current rising cost of living and implementation of GST. Adex will remain flat in 2015 as consumers slowly adjust to the new tax system while consumer sentiment is expected to gradually normalise.

Moving forward, MEDIA is aiming to continue to focus on: (i) growing its non-traditional revenue while consolidating its market share in core advertising revenue, (ii) optimizing manpower and increase staff productivity, (iii) expanding its multi-platform content production for market beyond its TV network.

Change to Forecasts

Our FY15E/FY16E NPs forecasts have been marginally increased by 0.8%/0.7% after fine-tuning.

Rating

Maintain MARKET PERFORM While the group’s outlook appears gloomy, its high dividend yield could provide some cushions to its share price.

Valuation

Our TP stay at RM1.74 based on unchanged targeted FY15E PER of 13.0x, representing a 6-year average forward PER.

Risks to Our Call

Upside risk - Improvement in adex sentiment.

Source: Kenanga Research - 15 May 2015