MEDIAC (5090) : Media Chinese Int'l - Another challenging quarter
Target RM0.88 (Stock Rating: HOLD)
MCIL’s 1HFY3/15 core net profit came in below expectations, forming 41% of our full-year estimate and 42% of consensus. Core EPS fell by 27.8% yoy due to sluggish sales in the Malaysian printing and publishing segment. It declared a lower interim dividend of 1.4 sen in 2QFY15 (vs. 2.4 sen in 2Q14), which was below our expectation of 6 sen for FY15. MCIL expects the outlook in 2HFY15 to remain challenging due to economic uncertainty that could prolong the ongoing weakness in consumer sentiment. Hence, we cut our FY15-17 forecasts by 7-12%. We keep our Hold call with a slightly lower target price of RM0.88, based on 10.6x CY16 EPS, still a 35% discount to our target market P/E of 16.3x. Switch to Astro for better exposure to the media sector.
More woes from printing and publishing
Revenue from the printing and publishing segment fell by 3.4% yoy in 2QFY15 from RM302.3m to RM292.1m, mainly due to lower contribution from its Malaysian operation. Management attributes the decline to lower spending by advertisers in the wake of slower retail spending and weak sentiment following the MH17 incident. Meanwhile, the group’s travel segment is showing better traction as sales grew by 26.5% qoq from RM84.6m to RM107m. Nevertheless, we think that this may not be sustainable given that its tour operation in Hong Kong is facing intense competition and pricing pressure.
Embarking on a new digital journey
MCIL launched its first e-commerce platform called “logon”, and a digital multimedia platform called “Pocketimes” yesterday. We understand that it plans to monetise its e-commerce platform through advertising and transaction fees to merchants. Apart from that, the company is planning to grow its digital reach through Pocketimes, an online portal with digital and video content that covers various topics like news, entertainment, sports and lifestyle. Overall, this is a positive move by the company to address the structural shift in adex spending, while also leveraging the growth in online retail spending. We expect to gather further information in today’s analyst briefing.
We maintain Hold
We estimate that adex spending could stay weak, at least until 1H15 due to poor consumer sentiment given the pending implementation of the Goods and Services Tax (GST) in Apr 15. It offers a decent FY15/16 yield of 4.5%/5.2%.
Source: CIMB Daybreak - 27 November 2014
Target RM0.88 (Stock Rating: HOLD)
MCIL’s 1HFY3/15 core net profit came in below expectations, forming 41% of our full-year estimate and 42% of consensus. Core EPS fell by 27.8% yoy due to sluggish sales in the Malaysian printing and publishing segment. It declared a lower interim dividend of 1.4 sen in 2QFY15 (vs. 2.4 sen in 2Q14), which was below our expectation of 6 sen for FY15. MCIL expects the outlook in 2HFY15 to remain challenging due to economic uncertainty that could prolong the ongoing weakness in consumer sentiment. Hence, we cut our FY15-17 forecasts by 7-12%. We keep our Hold call with a slightly lower target price of RM0.88, based on 10.6x CY16 EPS, still a 35% discount to our target market P/E of 16.3x. Switch to Astro for better exposure to the media sector.
More woes from printing and publishing
Revenue from the printing and publishing segment fell by 3.4% yoy in 2QFY15 from RM302.3m to RM292.1m, mainly due to lower contribution from its Malaysian operation. Management attributes the decline to lower spending by advertisers in the wake of slower retail spending and weak sentiment following the MH17 incident. Meanwhile, the group’s travel segment is showing better traction as sales grew by 26.5% qoq from RM84.6m to RM107m. Nevertheless, we think that this may not be sustainable given that its tour operation in Hong Kong is facing intense competition and pricing pressure.
Embarking on a new digital journey
MCIL launched its first e-commerce platform called “logon”, and a digital multimedia platform called “Pocketimes” yesterday. We understand that it plans to monetise its e-commerce platform through advertising and transaction fees to merchants. Apart from that, the company is planning to grow its digital reach through Pocketimes, an online portal with digital and video content that covers various topics like news, entertainment, sports and lifestyle. Overall, this is a positive move by the company to address the structural shift in adex spending, while also leveraging the growth in online retail spending. We expect to gather further information in today’s analyst briefing.
We maintain Hold
We estimate that adex spending could stay weak, at least until 1H15 due to poor consumer sentiment given the pending implementation of the Goods and Services Tax (GST) in Apr 15. It offers a decent FY15/16 yield of 4.5%/5.2%.
Source: CIMB Daybreak - 27 November 2014
