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.