• Still NEUTRAL, new MYR0.49 TP (from MYR0.45), 2% upside. Media Prima’s FY24 (Jun) results beat our and consensus’ expectations. The deviation was mainly attributed to improved operational efficiencies that drove margin expansion. We keep our cautious stance on MPR’s medium- term prospects, given the fundamental changes to the business, which the group is gradually adapting to. With valuation slightly ahead of the historical 5-year P/BV mean, we see the risk-reward as largely balanced.

• Results beat. 4QFY24 core earnings of MYR25.7m brought FY24 core earnings to MYR38.6m, exceeding our and Street’s full-year estimates by >100%. The quarter made up 67% of full-year earnings, thanks to better- than-expected margins from prudent costs initiatives. Full-year revenue fell 8.6% YoY from 12MFY23 (Jun 2022-Jun 2023), with adex sales down 3.3% YoY due to the soft advertising market and weak home shopping performance (-25% YoY). The impact was offset by net margin expansion of 2.1%, driven by better operational efficiencies and lower operating costs, coupled with lower tax expenses. QoQ, revenue was down 9.4% as weaker sentiment on large global brands (due to geopolitical tensions) continues to impact ad spending. A MYR0.015 DPS was declared (43% payout ratio).

• Segmental view. MPR’s integrated adex platform, Omnia saw a 9.7% YoY revenue decline during the quarter, impacted by economic headwinds and the widespread boycott of several major companies. Home shopping remains under pressure, with revenue down 16.9% YoY. We believe the shift to Tiktok Shop and introduction of home-branded products will take some time to bear fruit, as the segment is still in the red. On a positive note, while out- of-home (OOH) topline fell due to softer adex demand, 4QFY24 PAT margin improved significantly to 90.3% (from 22.6% in 2QCY23) due to the one-off reversal of accruals. This reflects better profitability in the digital format compared to traditional. Consequently, MPR plans to upgrade more of its static billboards to digital formats.

• MPR will continue to execute its 3-year business plan, focusing on content boost, inventory premiumisation, and new revenue streams. We remain cautious on the initiatives, given the intense competition and boycotts that continue to dampen adex.

• As earnings exceeded expectations, we bump up FY25F-26F earnings by 29% and 20% after imputing better margin assumptions while lowering revenue. An FY27F estimate of MYR39m has been introduced. Our new MYR0.49 TP is pegged to an unchanged 0.7x P/BV and 14x FY26F EPS, with a 4% ESG premium baked in. Upside/downside risks: Stronger/weaker-than- expected advertising spend and non-advertising income growth/declines.

Source: RHB Research - 30 Aug 2024