Period 1Q12
Actual vs. Expectations
The 1Q12 core net
profit of RM20.8m came in below our expectation and accounted for just 9.4% and
10.4% of ours and the consensus’ fullyear estimates respectively.
The group’s 1Q12
turnover of RM335m was, however, in line with our number even as the net profit
above was substantially below our estimate. The main reason for the lower than anticipated
profit was due to the higher than expected direct and operating costs for 1Q.
Dividends No
dividend was announced in the quarter.
Key Result Highlights
YoY, the revenue
contracted by 5.3% to RM335m due to a drop of 11% in TV advertisement revenue.
Operating profit meanwhile fell 39% to RM33.5m due mainly to the higher
operational costs in the TV and Print segments as well as due to the lower
turnover as well. As a result of the lower EBIT, the group’s PAT fell
accordingly thus by 40.2% to RM20.8m.
QoQ, the revenue
declined by 21.6% due mainly to lower advertising spending, which is likely due
to seasonal factors. Net profit, however, plunged by 72.3%, no thanks to the
higher direct cost in the TV and Print segment, where its ratio as a percentage
of sales for the two segments increased to 36.8% (vs. 17.3%) and 33.9% (vs. 30.8%)
respectively.
Outlook Cautiously optimistic. We expect adex
sentiment to improve from 2Q12 onwards, driven by some scheduled major sport
events and a potential General Election.
Change to Forecasts
We have reduced our
FY12, FY13 and FY14 net profit forecasts by 6.7%, 5.0% and 3.5% to RM206m,
RM225 and RM235m respectively after adjusting for mainly higher direct costs in
the TV segment and imputing in a lower effective tax rate of 25.9% vs. 26.1%
previously.
Rating Maintain MARKET PERFORM
Valuation Lowering our TP to RM2.62 (from RM2.72 previously)
based on an unchanged targeted PER of 13.6x (5-year average forward PER). We
have rolled over our base-year valuation
to FY13.
Risks CY12
gross adex growth coming in below our expectation of RM11.9b (+11.1% YoY).
Source: Kenanga
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