Media  Chinese  International  (MCIL)  reported  weaker  3QFY15  (Mar) results  on  the  back  of  weaker  adex  appetite.  As  we  see  few  re-ratingcatalysts for the stock in the near term, we are ceasing coverage  on it.Our most recent recommendation was NEUTRAL, with a TP of MYR0.90.

Weak 3QFY15 results.  MCIL’s earnings for  the  quarter fell 23.7% YoY on  the  back  of  weaker  advertising  expenditure  (adex).  Its  Malaysian operations suffered from  the effects of weak  consumer sentiment due to the  impending  GST  implementation  and  the  triple  aviation  disasterswhich translated into softer adex. The media group  also reported weak magazine advertising revenue in Hong Kong and lower turnover from its North American operation,  due to the weakening of the Canadian dollar. The group  also saw lower turnover in its  tour business segment due to increasing competitive pricing pressure in China.

Cease  coverage.  MCIL  expects  the  tough  operating  environment  to persist  going  forward  as  it  anticipates  consumer  sentiment  to  be negatively  impacted by the upcoming  implementation  of the goods and services tax (GST), the rising  cost  of living  as well as the weaker MYR. As we  see few  re-rating catalysts for the stock in the near term and as part of a coverage  rationalisation  exercise, we are ceasing coverage on MCIL.  Our  most  recent  call  was  NEUTRAL,  while  our  TP  of  MYR0.90 was pegged to 10x FY16F P/E.

Source: RHB