INVESTMENT HIGHLIGHTS

• 1Q17 financial performance mainly impacted by the lossmaking TVN (television networks) and print segments

• Dividend yield remains attractive at approximately 6%

• Expecting business conditions to improve in 2H17

• Maintain NEUTRAL with a revised target price of RM0.91

Weaker performance across all media platform. Media Prima Bhd’s (MPB) 1Q17 normalised loss amounted to RM38.8m in comparison to 1Q16 normalised earnings of RM17.3m. The dismal quarterly performance was mainly attributable to lower advertising and newspaper sales as traditional media faced ongoing challenges of subdued adex and the shift to digital media. As a result, both the TVN and print segments are loss-makings (refer to Table 1). Fortunately, the out-of-home media (OOHM) segment remained resilient at above RM7.0m. All in, the results came in below ours and consensus estimates.

Impact. We are factoring lower FY17 and FY18 revenue contributions from the TVN and print segments. As such, we are reducing FY17 and FY18 earnings estimates by -38.8% and -29.8% respectively.

Dividend. In view of lower earnings performance, we are assuming a more conservative dividend assumption of 7sen per share for both FY17 and FY18.

Target price. We roll forward our valuation based year to FY18 and derive a new target price of RM0.91 per share (previously RM1.10 per share). This is premised on FY18EPS of 6.3sen per share against its 5- year historical average PER of 14.5x.

Maintain NEUTRAL. Our primary concern lies with the performance of TVN and print segments which used to be the group’s main income generators. Moving forward, we are expecting the OOHM segments to be one of the main earnings generators as it continues to benefit from the rapid transit concession. We do not see much meaningful contribution stemming from the group’s digital initiative as it still in its infancy stage. On another note, based on the group’s financial position, we view that it is still able to provide an attractive dividend yield of at least 6% in the near term. Given the lack of strong positive catalysts, we are keeping our NEUTRAL recommendation at this juncture.

Source: MIDF Research - 30 May 2017