Media Prima’s (MPR) 1HFY12 revenue of RM783m was within our and consensus estimates but the core earnings of RM78m fell short, at only 33% and 39% of both projections despite our earlier earnings downgrade in 1QFY12. However, the group’s 2QFY12 numbers were commendable, with earnings soaring 174% q-o-q owing to the strong pick-up in FTA TV advertising revenue, which fetches lucrative margins. We are shaving our core earnings estimates by 3%-5% for FY12-13 respectively to reflect a more conservative stance. We maintain our BUY call, with a new FV of RM2.93 (RM2.98 previously), pegged at a FY13 PER of 14.5x. We are positive on the group’s 2HFY12 outlook in view of the just-concluded 2012 Olympics and the upcoming Hari Raya festivities. MPR has declared a single tier first interim dividend of 3.0 sen per share, to be paid on 3 Sept 2012. We are maintaining our DPS forecast of 10 sen based on a conservative 50% dividend payout ratio, which translates into a decent yield of 4%.
Strong pick-up in 2Q. MPR’s 1HFY12 earnings of RM78m were down marginally by 2% and below both our and consensus. On a quarterly basis, it saw commendable growth of 34% and 174% in revenue and core earnings, which expanded to RM448m and RM57m respectively, due to the lower base in 1Q (1Q is typically the slowest quarter owing to seasonal factors as well as advertisers’ tendency to adopt a wait-and-see attitude before finalizing their advertising budgets). The group’s most profitable FTA TV division, meanwhile, saw a respectable 58% surge in revenue q-o-q and 6% growth y-o-y. The printing segment, its largest revenue contributor, posted healthy revenue and profit growth of 20% and 32% respectively q-o-q
In the pink of health. Besides the strong growth in its FTA TV and printing segments propelled by high viewership, especially for TV3 and TV9 – which remained the leading market segment – and its flagship publication, Harian Metro (+14% adex y-o-y, +30% adex q-o-q), all other media platforms in the group saw healthy growth. Revenue from its 3rd largest contributor, radio, grew by a robust 8% q-o-q and 9% y-o-y respectively. We attribute this to the robust growth in listenership of its radio channels, especially OneFM, which emerged as the no.2 radio channel behind Astro’s MyFM, gaining ground at the expense of Star Publication’s (NEUTRAL, FV RM3.46) 98.8FM for the 15-24 age category. MPR’s outdoor media segment also registered healthy 3% q-o-q and 9% y-o-y revenue growth. The group is now the nation’s largest outdoor media company with more than 8,000 sites nationwide and a lion’s share of 44%. Management also said it has secured the advertising concession for the overhead walk-way linking KL Convention Centre to the Pavilion mall.
Valuations & Recommendations
Margins pinched. Finetuning earnings projections. On a y-o-y basis, both MPR’s EBIT and PBT margins shrank marginally by 1ppt, which we attribute mainly to higher content cost. In adopting a more conservative approach, we are lowering our earnings projections by 3%-5% for FY12-13 respectively in view of the higher site rental cost for its outdoor media segment and higher cost of content creation, which is now MPR’s main focus. Management has guided that MPR aims to reduce its dependence on the current adex-driven revenue by beefing up its content creation division, namely Primeworks Studios. Note that 90% of MPR’s current revenue is from adex. That said, MPR’s objective is to reduce this portion of adex-driven revenue to 75% in three to five years by selling its content to 3rd parties.
Open to M&As. As a media giant with comprehensive media platforms, the group has hinted it is open to M&As. The Financial Daily reported that MPR is eyeing Worldwide Broadcasting Channel (WBC), a provider of FTA news-only channels in Arabic, English and Malay. It is owned by four shareholders, namely Wan Johan Wan Ismail with 31.7% equity interest, Kamaruddin Yusof with 31.7%, Izman Ismail with 26.7% while the remaining 10% is owned by Rita Sarbanon. We will seek clarification from management on this development as details are sketchy.
Maintain BUY. After trimming our earnings projection, we arrive at a slightly lower FV of RM2.93, based on a 14.5x FY13 PER (previously RM2.98) The upcoming Hari Raya festive season, the highly anticipated General Election, the expansion of content creation and the new ruling governing the sharing of sports broadcasts between pay- and FTA-TV operators, remain as key catalysts for the stock. We are bullish on the group’s upcoming 3QFY12 numbers as we see strength in its creative bundled offerings, whereby MPR organizes crowd-pulling events for advertisers on its media platforms to enhance the brand visibility of their products through Hari Raya campaigns as well as the just concluded 2012 Olympics. Maintain BUY, with FV RM2.93.
Source: OSK
No comments:
Post a Comment