Review

• Media Prima reported an 18MFY23 core net profit of RM53.0mn, which beat ours and consensus full-year estimates at 108.3% and 151.5%, respectively. Core earnings exclude: i) impairment of financial instruments (RM8.8mn), ii) COVID-19 related rent concessions (RM10.6mn), and iii) gain on disposal of non-current assets held for sale (RM13.4mn). On our end, the positive variance was due to stronger-than-expected adex in 6QFY23.

• In line with our expectations, Media Prima declared a first and final dividend of 1.5sen. At the current level, this implies a dividend yield of 3.4%.

• Media Prima’s 18MFY23 core net profit of RM53.0mn was on the back of revenue of RM1,431.7mn. While macroeconomic headwinds and weak sentiment dampened adex, adapt cost management helped keep the group profitable. Most segments, including broadcasting, out-of-home, publishing, and digital media, anchored the bottom line. They more than offset losses from the home shopping segment which faced competition from in-store retail options as well as e-commerce and social commerce platforms.

• 6QFY23’s (2QCY23) core net profit stood at RM15.5mn on revenue of RM223.0mn (+5.8% QoQ, -14.4% YoY). QoQ earnings turned around from 5QFY23’s (1QCY23) core net loss of RM6.3mn, driven by the outof-home segment’s post pandemic recovery and higher adex amid the Hari Raya Aidilfitri festivities. YoY, earnings eased 2.1% due to weaker adex amid soft economic conditions and higher depreciation and amortisation.

• Media Prima maintained a robust balance sheet with a net cash position of RM184.4mn or 16.6sen/share (+12.2% QoQ, +3.2% YoY).

Impact

• We maintain our earnings forecasts. We introduce our FY26F estimates of RM34.5mn.

Outlook

• Management is cautious in the near term, citing that ongoing macroeconomic headwinds, including inflationary pressures and interest rate hikes, continue to pose a downside risk to adex. On a brighter note, management acknowledged that the decline in adex is unlikely structural. From communication with advertisers, management gathered that spending is only being held back transitorily until macroeconomic conditions improve.

• To that end, Media Prima will prioritise safeguarding its position within the broadcasting and publishing market. On top of that, the group is also committed to investments in digital and out-of-home businesses, which offer high growth prospects.

• Meanwhile, Media Prima remains guided by its 3-year business plan to drive long-term sustainable growth. Leveraging on its strength as an integrated media group, the plan is focused on 3 key pillars, including: i) enhancing content, ii) inventory premiumisation, and iii) exploration of new revenue streams.

Valuation & Recommendation

• In all, we maintain our Sell recommendation on Media Prima with an unchanged TP of RM0.37 based on P/BV of 0.60x CY24F BV. Maintain Sell. We view stronger-than-expected adex as a key rerating catalyst for the stock

Source: TA Research - 1 Sept 2023