We are optimistic after meeting up with MEDIA’s investor relations. Key highlights include: (i) recent partnerships with WeTV and iQiYi will positively impact digital ad sales and content distribution, (ii) rebranding of ntv7 to Didik TV may spur higher viewership, and (iii) the performance of its home-shopping segment has been stable thus far. BUY with a TP of RM0.755 based on higher earnings estimate on a higher FY22E P/NTA of 2.4x. Our rich valuation is due to the bright outlook on its ad sales, content distribution and home-shopping couple with cost optimization (EBITDA margin in FY19: -4% vs. FY20: 11%)

MEDIA recently teamed up with leading OTTs (over the top), WeTV (26 November 2020) and iQiYi (23 March 2021), to offer local content to viewers across Asia which is in line with their digital expansion strategy. Both partnerships entail the group (i) to license out their programmes to the OTTs enabling them to stream these contents on their respective platforms, and (ii) allow the group to sell advertising slots in the digital space solely on their licensed contents.

By rebranding ntv7 to an educational channel, Didik TV, which is a collaboration with the Ministry of Education (MoE), we believe MEDIA’s lowest viewing channel may gain traction, thus, bumping up its viewership. Hence the channel will be able to secure more ad sales thus increasing ad revenue for the group. In addition, the revenue gained via the production fees charged to the MoE will be parked under Omnia and as the collaboration began in February 2021 this will further bump up Omnia’s revenue from 1QFY21 onwards.

Based on Nielson’s 4QCY20 adex data, we see adex gradually recovering with FTA TV (free to air) being the only traditional adex platform seeing an uptick of 1.35% YoY whereas other traditional platforms plunged YoY (e.g. newspapers (-42%), radio (-26%)). The group command a lion’s share of FTA TV adex at 77%; thus, we believe MEDIA will benefit the most from adex recovery moving forward.

With their e-commerce and mobile commerce (ECMC) multiplatform strategy showing positive results (2016: sales contribution came solely from TV vs. 4QFY20: 46% from TV and 54% from ECMC), we expect WOWSHOP to remain sustainable post pandemic as consumers are adapting and becoming more dependent on digital shopping.

Source: Rakuten Research - 16 Apr 2021