Friday, 1 March 2013

Media Chinese Int'l - Still Cautious On Macro Outlook

Media Chinese’ (MCIL) 3QFY13 results were within our but below street’s estimates as the stronger performance of its Malaysian publishing and printing divisions was offset  by  weaker  Hong  Kong  and  North  America  operations  while  Its  tour segment was  comparable  to  the  prior  year.  MCIL’s  finance  charges  has  increased substantially  due  to  the  RM500m  debt  raised  to  partly  fund  its  bumper  dividend  of RM0.41/share. We maintain NEUTRAL on MCIL, with our FV RM1.17 derived from 9x FY14f PE, as we remain cautious on the media sector as a whole.
9M  earnings  in  line. MCIL’s 9MFY13 results were in-line with our and street’s estimates, with its core net profit of RM129.5m representing 77% of our full-year forecast. The group’s top line of RM376.3m was also in line with our forecast. Without converting USD to MYR, its  3Q  revenue  in  terms  of  USD  had  grown  by  1.2%  q-o-q,  mainly  attributed  to  the festivities in the quarter. MCIL’s 3Q PBT expanded 30.1% q-o-q from RM51.4 to RM66.9m though 9M PBT declined by 10.6%, mainly due to costs hikes, particularly in labour costs. Other key takeaways are:
- Publishing  and  printing  segment  revenue  grew  by  13.0%  q-o-q,  with  the Malaysian  operation  reporting  a  marginal  growth  backed  by  stronger  advertising sales,  but  declined  3.3%  on  a  y-o-y  basis  as  its  Hong  Kong  and  North  America operations  were  negatively  affected  by  the  tightened  government  policies  on  the respective  local  property  markets,  which  led  to  advertisers  cutting  back  on spending.
- On  y-o-y  basis,  its  tour  revenue  was  on  par  with  the  prior  year  as  the  North America  remained  one of Asia’s favorite places  to  visit.  In  addition,  European tours and long haul deluxe tours remained as the segment’s most popular tour products.  

- MCIL  has  booked  in  higher  interest  charges  (>100%  q-o-q)  after  committing  to RM500m worth of debt to partly fund its  bumper dividend of 41 sen/share  on 28 Nov 2012. 
Source: OSK

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