Media Chinese (MCIL) recorded a record high 9MFY12 earnings
of RM150m which were above both our and consensus estimates at 81% and 91%
of the full year forecasts respectively.
We continue to like its prospects going
forward and foresee 2012 to be another record breaking year for the group. While there were no dividends
declared for this quarter, we believe that it will declare its dividend in 4Q
considering its huge cash pile of RM384m as at Dec 2011. Reiterate BUY with our FV upgraded to RM1.54
from RM1.47 previously, based on an unchanged 13x CY12 PER.
The Best So Far.
In line with our previous guidance in our report titled “Another Record Year in
The Making” published 14 Feb 2012, MCIL posted its strongest YTD results ever with
its 9MFY12 top and bottom line standing at RM1.15bn (+8% y-o-y) and RM150m (+11%
y-o-y). It marked its best quarter ever in 3QFY12 with earnings coming in at RM61m
thanks to better showing from its Hong Kong operations which improved 20% y-oy
and 37% q-o-q to RM79m as well as sturdy contribution from its Malaysia core
business with growth being driven by its
core print business, with advertising revenue chalked up10% y-o-y and 13% q-o-q
growth. MCIL’s travel segment also grew 18% y-o-y and 19% YTD with a strong
surge in demand for its long-haul tours to destinations such as Europe and
Australia owing to the year-end festive season and Christmas holidays. Margins
for the group were sequentially higher q-o-q, with an expansion of 600bps at both PBT and EBIT level owing to management’s
excellent cost control efforts.
Positive trend to
persist. Moving into 4QFY12, we foresee that the group will continue to report
healthy growth, on the back of aggressive advertising and promotion activities among
hypermarkets and fast-moving consumer good companies during the Chinese New Year
period in Jan 2012. We expect the
positive trend to persist going into FY13 as management ramps up its efforts to
better manage overhead and operating expenses. In addition, newsprint
prices – which are currently hovering at
USD650-USD680/mt – are likely to remain stable and upcoming major events, such
as the nation’s impending General Election, the 2012 Olympics and Euro
2012 sports tournaments will provide a boost
to the sector’s adex growth.
BUY. We continue
to like MCIL which remains as the top
buy within our media sector coverage. With earnings beating our and consensus
estimates, we are upgrading our top and bottom line by 1%-5% for both FY12 and
FY13. Hence, our FV is now upgraded to RM1.54 (from RM1.47 previously) based on
an unchanged 13x CY12 PER. Though there were no declaration of dividends this
quarter, we believe the group will continue to reward its shareholders given
its mounting cash pile, which stood at RM384m as at Dec 2011. Thus, we continue
to impute a payout ratio of 60% for FY12 and FY13, which translates into an
appealing yield of 5.7% and 6.1%. Maintain BUY
Source: OSK188
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