We expect Media Prima (“MEDIA”) to report a lower than
expected 1Q12 result (scheduled for release on 16 May) due to lower contributions
from its TV and newspaper segments. We expect the group to report an
approximately 7% lower in revenue and net profit in contrast to our 1Q12
forecast of RM363m and RM44m, respectively. The recently announced new ruling
on sport event contents sharing among
the FTA TV and Pay TV players is likely to benefit MEDIA in the mid-to-long
term given that enable broadcasters to
share the contents cost. We understand that such an agreement will only be
subject to reasonable commercial terms being agreed between both parties. We
are keeping our FY12-FY14 earnings forecasts at this juncture pending the
upcoming 1Q12 result but are likely to trim our earnings forecasts post result based
on our preliminary estimate at this point. Our current target price of MEDIA
is, however, maintained at RM2.72 based on a targeted FY12 PER of 13.6x (5-year
average forward PER). Our MARKET PERFORM
call is also retained.
1Q12 result likely
below expectations. We expect
MEDIA’s 1Q12 turnover and net profit to come in about 7% below our estimates of
RM363m and RM44m respectively. The group, which dominates 88% of the FTA TV
market share, gross adex (before discount) dipped by 11.2% YoY to RM509m in
1QCY12 as a result of the poor performance of its 8TV and NTV7 channels,
according to Nielsen. We expect the discount rate to stand at 67.5% in 1Q12, in
line with the average discount rate recorded in FY11. The newspaper segments,
on the other hand, gross adex rose by 3.3% YoY in 1Q12 to RM282m, thanks to a
higher single digit growth in Harian Metro but partially offset by negative
growth in NST and Berita Harian. Despite the higher gross adex growth, we
expect the segment’s 1Q12 discount rate to go back to normal at 36.0% vs. 31.8%
a year ago, thus translating into a 1.7% YoY drop in the net adex level. Note
that both the TV and newspaper segment revenues normally contribute to an
approximately 85% of the group’s total turnover.
YTD adex slipped 1.4%
to RM2.27b according to Nielsen due
to lower contribution from FTA TV and Newspaper segment to RM583.6m (-10.6% YoY)
and RM974.2m (-1.1% YoY) respectively. To recap, YTD TV gross adex was down by
2.7% YoY to RM1.09b as a result of sluggish performance in the FTA TV segment
but partially offset by a better performance in the Pay TV (+8.4% YoY).
Newspaper segment, on the other hand, was led by negative growth in both the
English (-7.1% YoY) and Chinese (-1.8% YoY) segments, partially offset by
higher contribution from the Malay (+5.9% YoY) segment.
New ruling could
benefit MEDIA in the mid-to-long term. The recently announced new ruling
that mandated the sharing of broadcasting rights on certain sporting events
with FTA TV stations could benefit FTA TV operators (i.e. MEDIA and RTM) at the
expense of pay TV operator, Astro. While we concur with management’s view that
the news is positive for FTA TV players (as it would enable broadcasters to
share the costs of acquiring those rights), this is still very much at its
preliminary stage given that the new framework structure has yet to pan out by
either party. We understand
that MEDIA is still evaluating the full implications of the
policy at this juncture and thus, there is no capex allocation for this issue
yet as it is still too early to determine which sport event MEDIA is likely to
bid for.
Source: Kenanga
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