INVESTMENT HIGHLIGHTS

• 1QFY18 normalised loss narrow down to –RM21.1m

• Better performance across all business platforms with the exception of television networks and outdoor media

• Gradually reducing its reliance on advertising income

• Upgrade to TRADING BUY with a revised target price of RM0.41

Improvement seen in 1QFY18 results. Media Prima Bhd (MPB) 1QFY18 normalised loss narrowed down to –RM21.1m. This was an improvement from a loss of –RM39.0 observed in 1QFY17. The recovery in the financial performance was mainly supported by higher contributions from almost all the business platforms with the exception of television networks and outdoor media (refer to table 1).

Target price. We are rolling forward our valuation base year to FY19 and derive a new target price of RM0.41 (previously RM0.52) based on forward price-to-book ratio of 0.75x. This is the three year historical rolling average.

Upgrade to TRADING BUY. MPB’s traditional core businesses continue to impact the group’s overall financial performance which has severely impact its retained earnings position. This has led the company to rethink about its business models in entirety via the execution of its “odyssey strategy”. The group is now aiming to grow its revenue in non-advertising, non-TV/print, international and digital segments. Coupled with continuous cost management, notable improvement has been seen in the latest quarterly earnings. Premised on this, we are expecting the losses to narrow down further in the coming quarters. All factors considered, we are upgrading our recommendation to TRADING BUY from SELL previously.

Source: MIDF Research - 25 May 2018