Media Chinese International Ltd (Feb 14, RM1.19)
Maintain buy with fair value RM1.47: According to AC Nielsen’s latest published figures, newspaper advertising expenditure (adex) registered a commendable year-on-year (y-o-y) growth of 12.1% in 2011.
Other than Malay dailies which continued to make adex market share gains (33.4% y-o-y), Chinese dailies too chalked up a commendable y-o-y growth of 6.8%.
For 9MFY12, MCIL’s share of adex improved y-o-y by 8.8%, driven by its flagship Sin Chew Jit Poh publication where adex share went up by 7.14% y-o-y for 3QFY12 alone. On the other hand, management guided that its Hong Kong operation is likely to see improvements by leveraging on higher ad-dollars from the property segment.
As such, we believe the group is likely to record its best quarter ever in 3QFY12. Net profit is expected to come in at RM60 million, which represents a y-o-y growth of 10%.
Stepping into 4QFY12, we foresee that the group will continue to report healthy growth, on the back of aggressive advertising and promotion activities among hypermarkets and fast-moving consumer good companies during the Chinese New Year period in January 2012.
We expect the positive trend to persist going into FY13 as it pursues continuous efforts to better manage overhead and operating expenses.
In addition, newsprint prices, which are currently hovering at US$650 (RM1,982.50) to US$660 per tonne, are likely to remain stable. Upcoming major events, such as the impending general election, the 2012 Olympics and Euro 2012 football tournament will provide a potential boost.
We also see strength in its creatively bundled offerings, where MCIL organises crowd-pulling events for customers that advertise in its publications to increase the brand visibility of their products.
We feel positive that its 9MFY12 results will be at least in line with our forecasts in light of its resilient adex share in Malaysia and improvements in its Hong Kong operations, which made up 15% of the group’s earnings before interest and tax (Ebit).
We also believe the group will continue to reward its shareholders given its mounting cash pile, which stood at RM390.7 million as at September 2011.
Thus, we continue to impute a payout ratio of 60% for FY12, which translates into an appealing yield of 5.5%. Hence we maintain our “buy” call at an unchanged fair value of RM1.47, based on 13 times CY12 price-earnings ratio. We make no changes to our forecasts at this juncture, though an upside bias could likely be confirmed by its upcoming 3QFY12 results. — OSK Research, Feb 14
This article appeared in The Edge Financial Daily, February 15, 2012.
Maintain buy with fair value RM1.47: According to AC Nielsen’s latest published figures, newspaper advertising expenditure (adex) registered a commendable year-on-year (y-o-y) growth of 12.1% in 2011.
Other than Malay dailies which continued to make adex market share gains (33.4% y-o-y), Chinese dailies too chalked up a commendable y-o-y growth of 6.8%.
For 9MFY12, MCIL’s share of adex improved y-o-y by 8.8%, driven by its flagship Sin Chew Jit Poh publication where adex share went up by 7.14% y-o-y for 3QFY12 alone. On the other hand, management guided that its Hong Kong operation is likely to see improvements by leveraging on higher ad-dollars from the property segment.
As such, we believe the group is likely to record its best quarter ever in 3QFY12. Net profit is expected to come in at RM60 million, which represents a y-o-y growth of 10%.
Stepping into 4QFY12, we foresee that the group will continue to report healthy growth, on the back of aggressive advertising and promotion activities among hypermarkets and fast-moving consumer good companies during the Chinese New Year period in January 2012.
We expect the positive trend to persist going into FY13 as it pursues continuous efforts to better manage overhead and operating expenses.
In addition, newsprint prices, which are currently hovering at US$650 (RM1,982.50) to US$660 per tonne, are likely to remain stable. Upcoming major events, such as the impending general election, the 2012 Olympics and Euro 2012 football tournament will provide a potential boost.
We also see strength in its creatively bundled offerings, where MCIL organises crowd-pulling events for customers that advertise in its publications to increase the brand visibility of their products.
We feel positive that its 9MFY12 results will be at least in line with our forecasts in light of its resilient adex share in Malaysia and improvements in its Hong Kong operations, which made up 15% of the group’s earnings before interest and tax (Ebit).
We also believe the group will continue to reward its shareholders given its mounting cash pile, which stood at RM390.7 million as at September 2011.
Thus, we continue to impute a payout ratio of 60% for FY12, which translates into an appealing yield of 5.5%. Hence we maintain our “buy” call at an unchanged fair value of RM1.47, based on 13 times CY12 price-earnings ratio. We make no changes to our forecasts at this juncture, though an upside bias could likely be confirmed by its upcoming 3QFY12 results. — OSK Research, Feb 14
This article appeared in The Edge Financial Daily, February 15, 2012.
