MEDIA (4502) : Media Prima earnings below expectations: CIMB Research
KUALA LUMPUR: CIMB Equities Research maintained its Hold call for Media Prima with a lower target price of RM2 from the previous RM2.52 after its earnings were below estimates.
The research house said on Friday Media Prima’s annualised 9M14 core net profit came in below at 71% and 77% of its and consensus full-year estimates, respectively, due to overall weakness in adex (-9.5%) and print circulation (-20.6%).
“As such, we cut our FY14-16 EPS by 15-22%. Although the 2H has traditionally been stronger, we believe the negative consumer sentiment from the impending Goods and Services Tax (GST) and fuel subsidy rationalisation which has been dampening advertising spending, would continue to plague the industry until 1H15,” it said.
CIMB Research said hence it maintained its Hold call, with a lower target price, based on 11.4 CY16 P/E, a 30% discount to market P/E of 16.3 times (20% before) due to prolonged weakness in consumer sentiment.
Switch to Astro for exposure to the media sector, it said. - The Star
CIMB Research expects to see a modest increase in adex spending in 4Q due to year-end annual festivities, along with the advertisers’ usual strategy of spending their annual budgets prior to year-end.
“Still, we stay cautious on 2015 adex spending due to the pending implementation of GST and the government’s on-going subsidy rationalisation plan. We expect the weakness to continue until 1H15.
“Although the share price is down 27% YTD, we remain cautious given the weakness in consumer sentiment and strong competition from the digital platform.
“However, we see re-rating catalysts from a potential special dividend given its strong balance sheet position, which currently is in a RM100m net cash position. Management has indicated that the company can afford to pay a special dividend to reward shareholders given the strong balance sheet,” said CIMB Research.
KUALA LUMPUR: CIMB Equities Research maintained its Hold call for Media Prima with a lower target price of RM2 from the previous RM2.52 after its earnings were below estimates.
The research house said on Friday Media Prima’s annualised 9M14 core net profit came in below at 71% and 77% of its and consensus full-year estimates, respectively, due to overall weakness in adex (-9.5%) and print circulation (-20.6%).
“As such, we cut our FY14-16 EPS by 15-22%. Although the 2H has traditionally been stronger, we believe the negative consumer sentiment from the impending Goods and Services Tax (GST) and fuel subsidy rationalisation which has been dampening advertising spending, would continue to plague the industry until 1H15,” it said.
CIMB Research said hence it maintained its Hold call, with a lower target price, based on 11.4 CY16 P/E, a 30% discount to market P/E of 16.3 times (20% before) due to prolonged weakness in consumer sentiment.
Switch to Astro for exposure to the media sector, it said. - The Star
CIMB Research expects to see a modest increase in adex spending in 4Q due to year-end annual festivities, along with the advertisers’ usual strategy of spending their annual budgets prior to year-end.
“Still, we stay cautious on 2015 adex spending due to the pending implementation of GST and the government’s on-going subsidy rationalisation plan. We expect the weakness to continue until 1H15.
“Although the share price is down 27% YTD, we remain cautious given the weakness in consumer sentiment and strong competition from the digital platform.
“However, we see re-rating catalysts from a potential special dividend given its strong balance sheet position, which currently is in a RM100m net cash position. Management has indicated that the company can afford to pay a special dividend to reward shareholders given the strong balance sheet,” said CIMB Research.
