Media Prima Bhd (Nov 21, RM2.95)
Maintain sell at RM2.60 with target price of RM2.25: Results for 9MFY11 were within expectations but it is evident that 3QFY11 revenue and earnings growth year-on-year (y-o-y) ground to a halt. In addition, we are disturbed to notice that 3QFY11 revenue actually eased 1% quarter-on-quarter when we had expected it to exhibit strong q-o-q growth on Hari Raya Aidilfitri ad spend. Maintain “sell” and RM2.25 target price. Only a special single-tier dividend per share (DPS) of five sen (in addition to three sen second interim) provided some cheer.
Core net profit for 3QFY11 of RM53.3 million (+4% y-o-y, +20% q-o-q) brought 9MFY11 core net profit to RM132.7 million (+20% y-o-y), meeting 72% of our full-year estimate but 70% of consensus estimate. Revenue of RM1.2 billion for 9MFY11 (+5% y-o-y) was at 73% of our 2011 estimate.
Although 3QFY11 core net profit was 4% higher y-o-y, revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) were little changed y-o-y. Due to weakening consumer sentiment, TV advertising revenue eased 3% y-o-y, the first time since 4QFY09. Radio ad revenue contracted 15% y-o-y on stiff competition. Although outdoor and print recorded revenue growth y-o-y, their Ebitda were subdued on higher site rental and newsprint costs.
Although 3QFY11 Ebitda and core net profit was 18% and 20% higher q-o-q respectively, we were disturbed to notice that revenue actually eased 1% q-o-q.
Historically, quarters with Hari Raya Aidilfitri tend to exhibit strong revenue growth q-o-q on festive ad spend. We gather that the earnings growth q-o-q was only due to content cost management at the TV networks.
A second interim single-tier DPS of three sen was declared bringing 9MFY11 recurring single-tier DPS to six sen. In addition, a special single-tier DPS of five sen was declared. Year-to-date, total single tier DPS declared is 11 sen or 87% net dividend per ratio (DPR), above our expectation of 60% net DPR for the full-year.
As industry gross TV adex contracted 6% y-o-y in October 2011, we concede that there is likely to be further downside risk to our earnings estimates. We maintain our earnings estimates for now pending a meeting with management but reiterate our “sell” call and RM2.25 target price on 13.5 times one-year forward PER. — Maybank IB Research, Nov 21
This article appeared in The Edge Financial Daily, November 22, 2011.
Maintain sell at RM2.60 with target price of RM2.25: Results for 9MFY11 were within expectations but it is evident that 3QFY11 revenue and earnings growth year-on-year (y-o-y) ground to a halt. In addition, we are disturbed to notice that 3QFY11 revenue actually eased 1% quarter-on-quarter when we had expected it to exhibit strong q-o-q growth on Hari Raya Aidilfitri ad spend. Maintain “sell” and RM2.25 target price. Only a special single-tier dividend per share (DPS) of five sen (in addition to three sen second interim) provided some cheer.
Core net profit for 3QFY11 of RM53.3 million (+4% y-o-y, +20% q-o-q) brought 9MFY11 core net profit to RM132.7 million (+20% y-o-y), meeting 72% of our full-year estimate but 70% of consensus estimate. Revenue of RM1.2 billion for 9MFY11 (+5% y-o-y) was at 73% of our 2011 estimate.
Although 3QFY11 core net profit was 4% higher y-o-y, revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) were little changed y-o-y. Due to weakening consumer sentiment, TV advertising revenue eased 3% y-o-y, the first time since 4QFY09. Radio ad revenue contracted 15% y-o-y on stiff competition. Although outdoor and print recorded revenue growth y-o-y, their Ebitda were subdued on higher site rental and newsprint costs.
Although 3QFY11 Ebitda and core net profit was 18% and 20% higher q-o-q respectively, we were disturbed to notice that revenue actually eased 1% q-o-q.
Historically, quarters with Hari Raya Aidilfitri tend to exhibit strong revenue growth q-o-q on festive ad spend. We gather that the earnings growth q-o-q was only due to content cost management at the TV networks.
A second interim single-tier DPS of three sen was declared bringing 9MFY11 recurring single-tier DPS to six sen. In addition, a special single-tier DPS of five sen was declared. Year-to-date, total single tier DPS declared is 11 sen or 87% net dividend per ratio (DPR), above our expectation of 60% net DPR for the full-year.
As industry gross TV adex contracted 6% y-o-y in October 2011, we concede that there is likely to be further downside risk to our earnings estimates. We maintain our earnings estimates for now pending a meeting with management but reiterate our “sell” call and RM2.25 target price on 13.5 times one-year forward PER. — Maybank IB Research, Nov 21
This article appeared in The Edge Financial Daily, November 22, 2011.
