Period

4Q15/FY15

Actual vs. Expectations

Media Chinese Int’l (MEDIAC)’s FY15 core net profit of USD33.3m (or RM123m) came in within expectation, accounting for 96.5%/97.4% of our/the street’s full-year estimates.

Dividends

Declared a 1.825 sen (or US 0.50 cents) dividend with the ex-date set on 8 July. On a full-year basis, it has declared a total DPS of 3.44 sen (or US 0.93 cents), translating into a dividend yield of 5.6% or a payout ratio of 47.1% of its CNP.

Key Results Highlights

YoY, FY15 revenue declined by 8% to RM1.6b due to lower contribution from the publishing and printing segment. PBT, meanwhile, slid by 31% as a result of lower revenue and USD1.9m allowance for impairment loss of interest in an associate incurred in 4Q15. Excluding the impairment losses, the decrease in the group’s PBT would have been lower at 20%.

QoQ, 4Q15 turnover dipped by 18% to RM321m due to the lower contribution from all its key segments as a result of the seasonal factor. The group’s PBT plunged by 63% to RM21m due mainly to the RM7.0m allowance for impairment loss in its associate. Stripping off the exceptional item, its PBT would have dropped by 41% to RM28m.

Both MYR and Canadian Dollar weakened against the USD in 4Q15 and FY15, resulting in negative currency impact on the group’s turnover and PBT by c.USD6.2m and USD1.0m, for the current quarter and USD13.3m and USD2.1m respectively, for the full-year basis.

MEDIAC’s Malaysia publishing and printing segment revenue dipped by 15.3% YoY to RM207m in 4Q15, mainly due to the then market uncertainties over the impending implementation of GST, which caused advertisers to adopt a more cautious mode in their ad spends.

Outlook

Despite weakening newsprint prices which are expected to cushion its earnings, the group as well as the industry’s advertising revenue remains challenging as a result of cautious spending by both consumers and businesses due to the recent implementation of GST.

Change to Forecasts

Lowered FY16 CNP by 13% after factoring a lower turnover growth with higher distribution and administrative costs to reflect the latest run-rate. Meanwhile, we also introduce our FY17 forecast, where we expect MEDIAC’s NP to inch up by 2% YoY on the back of 1.6% YoY revenue growth.

Rating

Maintained MARKET PERFORM

Valuation

Reduced our MEDIAC TP to RM0.57 (from RM0.66 previously) based on unchanged targeted FY16 PER of 7.7x, representing a -1.0x below its 5-year mean, due to the sluggish adex outlook.

Risks to Our Call

Lower-than-expected adex growth

Source: Kenanga Research - 29 May 2015