INVESTMENT HIGHLIGHTS

• Expecting better products and services offerings by employing big data analytics

• Out-of-home segment will continue to serve as one of the group’s pillar of support

• Seeking oversea expansion to drive growth

• Maintain NEUTRAL with an unchanged target price of RM1.10 per share

Effective analytics. Via Media Prima Digital, the group is utilising big data analytic that will allow them to provide a much clearer picture on consumer behaviours. This will removes some elements of uncertainty on advertising effectiveness. Having effective analytics will enable them to, among others, customise media plans and optimise budget allocations of its clients.

Stable OOH segment. The out-of-home (OOH) segment currently commands the largest market share of 44% in Malaysia. The extensive networks of more than 8,000 panels will make them the preferred OOH solutions provider. In addition, we view that the segment will have a more stable income stream due to the 6 transit concessions it has secured. This will be further boosted by any acquisition of project extension. In our view, contribution from this segment will partially mitigate some of the group’s downside risk.

On a regional expansion drive. Due to the competitive local landscape, MPB is also seeking overseas expansion across its various media platforms. For instance, the group signed a strategic marketing partnership with Singtel to bring its OTT streaming service, tonton to Singapore. The OOH division is also seeking to establish a strong regional presence, by replicating its existing modus operandi.

Impact. Due to the challenging market environment, we do not view that there will be any significant changes in earnings contribution across all the various media platforms. As such, we are leaving our earnings estimates unchanged at this juncture.

Target price. We maintain MPB’s target price of RM1.10 per share. Our target price assumption is based on FY17EPS of 7.6sen against its 5-year historical average PER of 14.5x

Maintain NEUTRAL. Despite challenging market environment, the group has performed relatively well. The television network (TVN) segment, which we initially viewed to be loss making, has managed to remain profitable. In addition, we expect the OOH segment to perform better due to additional earnings contribution from the MRT projects. Coupled with the group’s on-going digital initiative, we expect these divisions to provide some support to the ailing print segment. On a different note, we view that the stock still command an attractive dividend yield of more than 7%. All factors considered, we maintain our NEUTRAL stance on the stock.

Source: MIDF Research - 18 May 2017