18 March 2016 | Corporate Update
Maintain BUY
Media Prima Berhad
Strengthening its earnings base
Unchanged Target Price (TP): RM1.69
INVESTMENT HIGHLIGHTS
•
On the lookout for English and/or Chinese radio stations to
RETURN STATS
expand its listenership
•
Tapping into the consumer market to diversify its income
stream
•
Digitising the outdoor billboard
•
Maintain BUY with an unchanged target price of RM1.69
Expanding its radio portfolio. Media Prima Bhd (MPB)
predominantly has three radio stations namely Hot FM, Fly FM and One
FM. These stations cater to young audiences under the age of 30 years
old. To create a more diverse portfolio of listeners, MPB is targeting
listeners aged 30 and above. This is exhibited in the recent launch of
Kool FM which is targeting the Malay-speaking segment. The radio
station was created, following the revamp of Ultra FM and Pi Mai FM.
Recall that MPB acquired both the radio stations in October 2015 for a
total cash consideration of RM20m. We are expecting further
acquisition within the radio realm to complement Fly FM and one FM,
the group’s English and Chinese-speaking radio station.
Targeting at non-adex revenue. The group is tapping into the
consumer market to reduce its dependency on adex-based revenue.
Recall that the MPB entered into a tie-up with a CJ O Shopping Ltd
(CJO), which is owned by CJ Group (CJ) to launch a home shopping
business in Malaysia. However, unlike Astro which launched dedicated
home shopping channel, MPB plans to leverage on its existing TV
channels. Management guided that the home shopping business is
expected to contribute to the group’s earnings in two years’ time. On
another note, we view that MPB could also explore further collaboration
opportunities with CJ which also has an entertainment and media arm.
Digital billboard to provide better earnings. The group’s outdoor
media segment has been well supported by the conversion of
traditional billboards to digital billboards. This is despite the fact that
only 20 out of the 8,000 advertising panels have been converted into
digital billboards. Digital billboards command better yields as it provides
better product innovation as well as better creativity. The group will
continue to improve its digital inventory networks of billboards at
various key and premium sites. Within the next three years,
contribution from the digital billboard is expected to account for
approximately 20% of the segment revenue.
Price (17th March 2016)
RM1.44
Target Price
RM1.69
Expected Share Price Return
+17.4%
Expected Dividend Yield
+7.6%
Expected Total Return
+25.0%
STOCK INFO
KLCI
Bursa / Bloomberg
Board / Sector
1,703.2
4502 / MPR MK
Main/ Media
Syariah Compliant
No
Issued shares (mil)
1,109.2
Par Value (RM)
1.00
Market cap. (RM’m)
1,597.2
Price over NA
0.9x
52-wk price Range
RM1.04 – RM1.76
Beta (against KLCI)
0.85
3-mth Avg Daily Vol
0.5m
3-mth Avg Daily Value
RM0.7m
Major Shareholders (%)
EPF
13.86
Amanah Raya Bhd
11.09
Altima Inc
7.96
MIDF RESEARCH is a unit of MIDF AMANAH INVESTMENT BANK
Kindly refer to the last page of this publication for important disclosures
MIDF RESEARCH
Friday, 18 March 2016
Maintain BUY. The group has managed to perform considerably well in difficult times through various cost-cutting
exercises such as production cost-savings and mutual separation scheme (MSS). Currently, MPB is looking at
strengthening its diverse business segments through organic means as well as merger and acquisition activities.
Moreover, the group possesses a strong balance sheet which would also support the group’s ability to distribute
attractive dividend. We view that the current level of share price provides a good opportunity for investors to further
increase exposure in the stock. All factors considered, we are maintaining our BUY recommendation on the stock with
an unchanged target price of RM1.69 per share. Our target price assumption is based on FY16EPS of 13.4sen against
its 3-year historical average PER of 12.6x.
INVESTMENT STATISTICS
FYE 31st Dec
FY14
FY15
FY16F
FY17F
Revenue (RM’m)
1510.0
1427.7
1620.5
1697.1
Reported EBIT (RM’m)
113.8
209.1
181.0
191.0
Reported Pretax Profit (RM’m)
101.4
200.1
177.7
189.4
Reported Net Profit after MI (RM’m)
75.5
138.7
151.2
162.1
Normalised Net Profit after MI (RM'm)
141.0
140.2
151.2
162.1
Normalised EPS (sen)
12.6
12.6
13.4
14.4
Normalised EPS growth (%)
-34.5
0.6
6.2
7.2
PER(x)
11.5
11.4
10.7
10.0
Net Dividend (sen)
11
10
11
12
Net Dividend Yield (%)
7.6
6.9
7.6
8.3
Source: Company, MIDFR
DAILY PRICE CHART
Syed Muhammed Kifni |
Martin Foo Chuan Loong
[email protected]
+603 2173 8354
Source: MIDFR, Company
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MIDF RESEARCH
Friday, 18 March 2016
MIDF RESEARCH is part of MIDF Amanah Investment Bank Berhad (23878 - X).
(Bank Pelaburan)
(A Participating Organisation of Bursa Malaysia Securities Berhad)
DISCLOSURES AND DISCLAIMER
This report has been prepared by MIDF AMANAH INVESTMENT BANK BERHAD (23878-X). It is for
distribution only under such circumstances as may be permitted by applicable law.
Readers should be fully aware that this report is for information purposes only. The opinions contained
in this report are based on information obtained or derived from sources that we believe are reliable.
MIDF AMANAH INVESTMENT BANK BERHAD makes no representation or warranty, expressed or
implied, as to the accuracy, completeness or reliability of the information contained therein and it should
not be relied upon as such.
This report is not, and should not be construed as, an offer to buy or sell any securities or other
financial instruments. The analysis contained herein is based on numerous assumptions. Different
assumptions could result in materially different results. All opinions and estimates are subject to change
without notice. The research analysts will initiate, update and cease coverage solely at the discretion of
MIDF AMANAH INVESTMENT BANK BERHAD.
The directors, employees and representatives of MIDF AMANAH INVESTMENT BANK BERHAD may have
interest in any of the securities mentioned and may benefit from the information herein. Members of the
MIDF Group and their affiliates may provide services to any company and affiliates of such companies
whose securities are mentioned herein This document may not be reproduced, distributed or published
in any form or for any purpose.
MIDF AMANAH INVESTMENT BANK : GUIDE TO RECOMMENDATIONS
STOCK RECOMMENDATIONS
BUY
TRADING BUY
NEUTRAL
SELL
TRADING SELL
Total return is expected to be >15% over the next 12 months.
Stock price is expected to rise by >15% within 3-months after a Trading Buy rating has been
assigned due to positive newsflow.
Total return is expected to be between -15% and +15% over the next 12 months.
Total return is expected to be <-15% over the next 12 months.
Stock price is expected to fall by >15% within 3-months after a Trading Sell rating has been
assigned due to negative newsflow.
SECTOR RECOMMENDATIONS
POSITIVE
The sector is expected to outperform the overall market over the next 12 months.
NEUTRAL
The sector is to perform in line with the overall market over the next 12 months.
NEGATIVE
The sector is expected to underperform the overall market over the next 12 months.
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