Media Chinese (MCIL)’s 1HFY13 earnings fell short of expectations, representing only 45%/46% of our/consensus full-year estimates. Despite a promising start in 1Q, the group’s top- and bottom-line in 1H were flat y-o-y. Hence, we are trimming our FY13/FY14 earnings forecasts by 13%/25% in response to the lackluster 1H financial performance. Our new FV of RM1.17 is based on unchanged 13x CY13 PE. With little upside potential to the current share price, we are downgrading thestock to NEUTRAL.
Missing expectations. MCIL’s 1HFY13 earnings fell short of expectations, representing only 45%/46% of our/consensus full-year estimates. Despite a promising start in 1Q, the group’s top- and bottom-line in 1H were flat y-o-y. During the quarter, MCIL’s revenue contracted by 5% q-o-q, pushing earnings down sharply (-18% q-o-q) after the company recognised a one-time gain of RM5.4m (sale of convertible notes) in 1Q. Other takeaways were:
Missing expectations. MCIL’s 1HFY13 earnings fell short of expectations, representing only 45%/46% of our/consensus full-year estimates. Despite a promising start in 1Q, the group’s top- and bottom-line in 1H were flat y-o-y. During the quarter, MCIL’s revenue contracted by 5% q-o-q, pushing earnings down sharply (-18% q-o-q) after the company recognised a one-time gain of RM5.4m (sale of convertible notes) in 1Q. Other takeaways were:
- Advertising revenue slid 6% q-o-q (-4% y-o-y) amid a lethargic adex environment in Malaysia and Hong Kong. Meanwhile, its Chinese newspaper segment posted only a tepid 1% q-o-q revenue growth (+0.3% y-o-y), based on the recent 3QCY12 adex numbers from Nielsen Co.
- The seasonally strong travel division also saw a revenue decline in 2Q (-6% q-o-q,-21% y-o-y). Management claimed that there was a shift in customers’ preference to travel in early summer to avoid the typically peak season in 2Q.
- After forking out a huge bumper dividend of 41 sen/share on 28 Nov, MCILdeclared its first interim dividend of 2 sen/share during the quarter, payable on 15 Jan 2013.
Downgrade to NEUTRAL, FV revised to RM1.17. We are trimming our FY13/FY14 earnings forecasts by 13%/25% respectively in response to the company’s lacklustre 1H financial performance. Going forward, we expect MCIL to book in higher interest charges after committing to RM500m worth of debts to partly fund its bumper dividend on 28 Nov. Hence, we arrive at our new FV of RM1.17 based on unchanged 13x CY13 PE. With little upside potential to the current share price, we are downgrading the stock to NEUTRAL. Nevertheless, the company still offers a commendable dividend yield of 5.4%.
Source: OSK
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