Period

4Q15/FY15

Actual vs. Expectations

Above Expectation. FY15 core PATAMI of RM133m (- 5% YoY) came in above expectations, accounting for 119.6% of our and 113.7% of the street’s full-year estimates.

On our end, the key positive deviation was mainly attributed to the higher-than-expected event revenue.

Dividends

Declared a second interim dividend of 9.0 sen (vs. our 6.0 sen forecast), bringing its full-year DPS to 18.0 sen (FY14: 18.0 sen) despite the group’s FY15 core PBT of RM170m failing to achieve management’s target (to sustain at FY14 level at c.RM190m). FY15 DPS of 18.0 sen translated into a 99.9% payout ratio, the highest payout since FY11.

Key Results Highlights

YoY, revenue in FY15 inched up marginally by 0.5% due to higher contribution from the event segment but largely offset by the lower turnover in the Print and Radio divisions. Its PBT, meanwhile, dipped by 11% to RM170m, no thanks to the higher direct costs (from Cityneon) and lower Print segment’s revenue.

Print and Digital revenue contracted by 9% mainly due to lower print revenue as a result of the poor consumer sentiment; cautious spending post GST implementation, and the weakening MYR. PBT, however, improved by 6% due to prudent cost management and absence of VSS expenses. Radio broadcasting segment’s revenue, meanwhile, declined by 5% (due to the uncertainties and challenging market environment) with small LBT of RM1.0m (FY14: -RM6m) as a result of the absence of amortisation cost on Capital FM’s radio license. Television division’s revenue improved by 11% but continued to suffer a LBT on the back of higher direct cost and weaker MYR. On the other hand, Event division’s revenue advanced by 28% (due to higher completion of projects) with lower PBT of RM8.0m as a result of lower profit margin and acquisition-related cost of Victory Hill Exhibitions in 2Q15.

QoQ, 4Q15 turnover improved by 10% as a result of higher revenue. Its PBT, however, surged by 107% to RM60m due to an absence of VSS expenses and impairment losses (RM37.5m recognised in 4Q14).

Outlook

Our gloomy adex outlook remains unchanged and we believe the adex sentiment remains overshadowed by: (i) the current rising cost of living, (ii) higher cost of doing business as a result of the weakening Ringgit, and (iii) the weak consumer sentiment caused by the GST implementation, where the market is still digesting.

Change to Forecasts

We raised our FY16E net profit by 1.8% after imputing higher event revenue assumption and the division’s margin.

Our FY16 DPS estimate is also raised to 18.0 sen (from 15.0 sen previously). Meanwhile, we also take this opportunity to introduce our FY17E numbers.

Rating

Maintained MARKET PERFORM

Valuation

Raised our TP to RM2.41 (from RM2.38 previously) based on targeted FY16E PER of 13.5x, representing an unchanged -1.0x SD below the 5-year mean. Risk to Our Call

Improvement in adex sentiment.

Source: Kenanga Research - 29 Feb 2016