Media Prima (MPR)’s 1HFY13 earnings were in line with our and street’s estimates.  We  expect  the  numbers  to  improve  in  2H,  which  is traditionally  a  stronger  period  for  media  companies.  Its  core  business remained  solid  while  its  new  media  segment  is  capturing  a  larger market share. The company declared its first interim dividend of 3 sen. Maintain BUY, with our MYR3.60 FV unchanged. 
 
- Results in line. MPR’s 1HFY13 net earnings of MYR87.2m (+12.4% y-o-y)  were in line with our and street’s  estimates,  accounting  for  38.2% and  39.8%  of  the  respective  full-year  forecasts,  as  we  expect  stronger earnings in 2H. This compares favourably with 1HFY12 earnings, which made  up  only  37.1%  of  our  full-year  estimate.  MPR’s  adex  revenue continued  to  outperform  the  industry’s, mainly due  to  its  initiative  to  tap on non-traditional advertisers and new market segments.

- Overview  of  traditional  business  arms.  In  1HFY13,  MPR’s  free-to-air (FTA) TV segment posted net profit of MYR60.9m (+38% y-o-y), mainly driven by the general election (GE) ads as well as an inflow of ads from corporate/retails  post-GE.  Its  radio  networks  division  reported  profit growth  of  33%  y-o-y,  mainly  buoyed  by  One  FM  and  Hot  FM.  Outdoor media  profit  grew  by  12%  y-o-y,  as  MPR  rolled  out  the  new  digital outdoor  media  which  fetches  higher  margin.  However,  its  print  media arm’s net earnings declined 18% y-o-y, generally in line with the market trend.

- Expanding  its  wings.  Primeworks’ earnings  declined  42%  y-o-y  on higher  costs  incurred  from  content  creation.  Its  digital  media  segment reported  losses  this  quarter  mainly  due  to  higher  bandwidth  costs  as registered users for tonton had breached 3.1m. MPR is currently working on  producing  higher-quality  contents  for  tonton.  We  believe  this  is  a norm for new start-up business as MPR needs to capture a larger market share before generating profits.   

- Maintain  BUY.  All  in,  we  continue  to  like  MPR  for  its  integrated  media business  model  and  clear  growth  direction.  MPR  remains  our  top  pick. We make no changes to our valuations. Maintain BUY and MYR3.60 FV, based on a 15x FY14F P/E. 

Source: RHB