MEDIA (4502) - Media Prima Bhd - Back on track
Target RM1.80 (Stock Rating: HOLD)
Media Prima’s FY14 core net profit was in line with expectations, forming 105% of our and 104% of consensus full-year estimates. The company declared a final dividend of 5 sen, bringing the total dividend to 11 sen, which was in line with our expectation. We largely maintain our FY15-16 EPS forecasts and Hold rating on the stock, with an unchanged target price of RM1.80, based on 9.8x CY16 P/E, still at a 35% discount to our revised target market P/E of 15x. We expect the outlook for Media Prima to remain challenging due to uncertainty in the domestic economy and prolonged weakness in consumer sentiment following the GST implementation in Apr 15. While the stock offers a 6.7% FY15 yield, we prefer Astro for better exposure to the media sector.
Weakness across multiple platforms
Media Prima’s FY14 core net profit fell by 26% yoy from RM218.3m to RM162.7m due to lower earnings contribution from the TV segment (-17% yoy) which fell from RM138.1m to RM114.4m. In addition, the shift in consumer preference away from print continues to hurt Media Prima as the print segment’s earnings fell by 60% yoy from RM56.2m to RM22.3m, partly due to lower adex and circulation volume. Nevertheless, the group’s digital segment continued to gain traction with over 4.3m registered users as at Dec 14, but it remains a long-term driver given that it is still loss-making.
Cautiously optimistic in FY15
We expect Media Prima to perform better in FY15 following the recent cost savings exercises and newsprint price hike in Jan 15. It completed its mutual separations scheme (MSS) exercise at the end of FY14 as part of its strategy to improve operating efficiency. Following this exercise, management expects to save about RM38m or 10% of its annual headcount expense. Nonetheless, management remains cautiously optimistic on the outlook for FY15 despite the uncertainty in the domestic economy from the prevailing crude oil price and upcoming implementation of the Goods and Services Tax in Apr.
We maintain a Hold rating
While Media Prima offers an attractive FY15-16 yield of 6.8-7.7%, we still prefer Astro for exposure in media sector due to its less reliance on adex volatility and defensive operating model. We maintain Hold rating on the stock and expect to get more information following today’s analyst briefing.
Source: CIMB Daybreak - 26 February 2015
Target RM1.80 (Stock Rating: HOLD)
Media Prima’s FY14 core net profit was in line with expectations, forming 105% of our and 104% of consensus full-year estimates. The company declared a final dividend of 5 sen, bringing the total dividend to 11 sen, which was in line with our expectation. We largely maintain our FY15-16 EPS forecasts and Hold rating on the stock, with an unchanged target price of RM1.80, based on 9.8x CY16 P/E, still at a 35% discount to our revised target market P/E of 15x. We expect the outlook for Media Prima to remain challenging due to uncertainty in the domestic economy and prolonged weakness in consumer sentiment following the GST implementation in Apr 15. While the stock offers a 6.7% FY15 yield, we prefer Astro for better exposure to the media sector.
Weakness across multiple platforms
Media Prima’s FY14 core net profit fell by 26% yoy from RM218.3m to RM162.7m due to lower earnings contribution from the TV segment (-17% yoy) which fell from RM138.1m to RM114.4m. In addition, the shift in consumer preference away from print continues to hurt Media Prima as the print segment’s earnings fell by 60% yoy from RM56.2m to RM22.3m, partly due to lower adex and circulation volume. Nevertheless, the group’s digital segment continued to gain traction with over 4.3m registered users as at Dec 14, but it remains a long-term driver given that it is still loss-making.
Cautiously optimistic in FY15
We expect Media Prima to perform better in FY15 following the recent cost savings exercises and newsprint price hike in Jan 15. It completed its mutual separations scheme (MSS) exercise at the end of FY14 as part of its strategy to improve operating efficiency. Following this exercise, management expects to save about RM38m or 10% of its annual headcount expense. Nonetheless, management remains cautiously optimistic on the outlook for FY15 despite the uncertainty in the domestic economy from the prevailing crude oil price and upcoming implementation of the Goods and Services Tax in Apr.
We maintain a Hold rating
While Media Prima offers an attractive FY15-16 yield of 6.8-7.7%, we still prefer Astro for exposure in media sector due to its less reliance on adex volatility and defensive operating model. We maintain Hold rating on the stock and expect to get more information following today’s analyst briefing.
Source: CIMB Daybreak - 26 February 2015
