MEDIA PRIMA (HOLD, EPS )

Transcription

1 MEDIA PRIMA (HOLD, EPS ) INDUSTRY: NEUTRAL EARNINGS EVALUATION 3Q results: Cost control lift earnings Results 9MFY13 core PATAMI grew by 11% to RM150.7m (13.81 sen/share), making up 75% and 70% of ours and streets estimates respectively. Deviations Dividends Highlights Risks Forecasts Rating Valuation We consider earnings to be above expectations as 4Q earnings made up 35% of full year profits in the last 2 years. Net dividend of 3 sen/share declared, matching last year s corresponding payout, hence bringing full year divdiends to 6 sen/share (3 sen/share declared in 2Q). Ex-date on 11 Dec-13, payment on 30 Dec-13. Quarter review. Posted 3Q revenue of RM439.3m, whereby QoQ contracted by 6% but flattish on a YoY basis. Bucking the trend was the Radio division, whereby revenue (RM19.7m) grew by 6%/35% QoQ/YoY, due to nontraditional advertisers. Despite flattish revenue, EBITDA (RM113.9m) managed to post growth of 2%/4% QoQ/YoY due to prudent cost control. Quarterly earnings of RM63.5m were further lifted by 6%/8% QoQ/YoY due to lower depreciation and financing charges. 9MFY13 review 9M revenue grew by 4% to RM1.27bn, lifted by strong performance in all divisions. Likewise, EBITDA grew by 6% to RM293.1m. However, Print division s EBITDA (RM84.8m) contracted by 9% despite revenue growth as it incurred higher expenses to capture the growing Malay readership. As overall expenses were well contained, core PATAMI grew by 11% to RM150.7m. Strong 4Q expected 3Q performance was muted as advertisers are still cautious despite the elections being over. However, 4Q is anticipated to be strong, driven by the year end annual festivities. We are expecting sequentially stronger earnings in 4Q, but YoY quarterly earnings growth will remain challenging. Weak Adex growth; High content and newsprint cost; Threat of new players; Depreciation of RM vs US$; and Regulatory risk. We have tweaked our earning for FY13 by +4.6% and FY14 by -4.4%, and introduced FY15 earnings at RM243m (+18.5% YoY). HOLD ( ) Despite the absence of key sporting events, Media Prima s efforts to explore innovative way to grow its revenue is a commendable effort in the current challenging Adex environment. We continue to favour its integrated complete media platform. However, in view of less than 10% potential total return from our new Target Price, we are maintaining our HOLD call. We have raised our Target Price to RM2.58 (from RM2.44) based on 12.9x FY14 P/E. HLIB Research PP 9484/12/2012 (031413) 19 November 2013 Price Target: RM2.58( ) Share price: RM2.67 Jarod Soon smsoon@hlib.hongleong.com.my (603) KLCI 1,792.4 Expected share price return -3.4% Expected dividend return 6.0% Expected total return 2.6% Share price (RM) MPR (LHS) KLCI (RHS) Nov-12 Jan-13 Mar-13 May-13 Jul-13 Sep-13 (%) Information Bloomberg Ticker MPR MK Bursa Code 4502 Issued Shares (m) 1,100 Market cap (RM m) 2,936 3-mth avg. volume ( 000) 1,398 Price Performance 1M 3M 12M Absolute Relative Major shareholders EPF 16.9% Amanah Raya 11.2% KWAP 5.1% Free Float 66.8% Summary Earnings Table FYE Dec (RM m) 2012A 2013E 2014E 2015E Revenue 1,698 1,780 1,941 2,078 EBITDA EBIT Profit Before Tax PATAMI Core Earnings Core EPS (sen) FD EPS (sen) Net DPS (sen) Net DY (%) P/E (x) FD P/E (x) P/B (x) Net Gearing (%) (0.3) (7.6) (18.0) (20.6) ROE (%) ROA (%) HLIB 95 Page 1 of 5 19 November 2013

2 Figure #1 Quarterly results comparison FYE Dec (RM m) 3QFY12 2QFY13 3QFY13 QoQ (%) YoY (%) Comments Revenue Made up 26% and 25% of ours and streets estimates respectively. Refer to segmental. TV YoY: Absence of Olympic event which lifted Adex in 3QFY12. QoQ: Advertisers still cautious despite post-election. Radio YoY/QoQ: Driven by non-traditional advertisers. Outdoor YoY/QoQ: Flattish growth. Print YoY/QoQ: Affected by shifting Adex trend from print to TV. Expenses (330.8) (360.4) (332.5) -8 1 EBITDA Refer to segmental. TV YoY/QoQ: Due to lower revenue and EBITDA margin. Radio YoY: Higher EBITDA growth due to better economies of scale. Outdoor Print YoY/QoQ: Hit by higher expenses due to investment in new market to sustain readership. EBIT Finance Costs (7.3) (6.0) (5.9) Net cash position inched up to RM51.2m (4.7 sen/share) from RM50.5m (4.6 sen/share) in 2QFY13. Associates Contribution from MNI sales of newsprint. PBT PAT Effective tax rate of 26%. Core PATAMI Higher earnings growth due to better cost control, lower depreciation and financing costs. Core EPS (sen) EBITDA Margin (%) 25% 24% 26% 8 3 TV 38% 36% 35% -2-6 Radio 44% 62% 62% 0 40 Outdoor 33% 33% 35% 6 6 Print 17% 15% 16% 3-5 PBT Ex-Assoc Margin (%) 18% 17% 19% 10 8 MPR, HLIB Made up 31% and 29% of ours and streets estimates respectively. Page 2 of 5 19 November 2013

3 Figure #2 Cumulative results comparison FYE Dec (RM m) 9MFY12 9MFY13 YoY (%) Comments Revenue 1, , Made up 76% and 73% of ours and streets estimates respectively. Refer to segmental. TV Good growth achieved despite absence of key sporting events. Radio Driven by Government-related adspend. Outdoor Print Lifted by growing Bahasa readership segment. Expenses (954.9) (998.0) 5 Kept cost under control to match revenue growth. EBITDA TV Largely in line with revenue growth. Radio Higher EBITDA growth due to better economies of scale. Outdoor Print Hit by higher expenses due to investment in new market to sustain readership. EBIT Finance Costs (22.0) (20.0) -9 Net cash position of RM51.2m (4.7 sen/share). Associates Contribution from MNI sales of newsprint. PBT PAT Core PATAMI Higher earnings growth due to better cost control, lower depreciation and financing costs. Core EPS (sen) EBITDA Margin (%) 23% 23% 2 TV 31% 31% 2 Radio 48% 59% 23 Outdoor 31% 33% 7 Print 17% 16% -11 PBT Ex-Assoc Margin (%) 15% 16% 6 MPR, HLIB Made up 75% and 70% of ours and streets estimates respectively. Figure #3 HLIB vs Consensus FYE Dec (RM m) FY13E FY14E FY15E HLIB Consensus (%) HLIB Consensus (%) HLIB Consensus (%) Revenue 1, , % 1, , % 2, , % PATAMI % % % Bloomberg, HLIB Page 3 of 5 19 November 2013

4 Financial Projections for Media Prima (HOLD; TP: RM2.58) Income Statement Quarterly Financial Summary FYE 31 Dec (RM m) 2011A 2012A 2013E 2014E 2015E FYE 31 Dec (RM m) 2012Q3 2012Q4 2013Q1 2013Q2 2013Q3 Revenue 1, , , , ,078.0 Revenue EBITDA Expenses (330.8) (359.6) (305.1) (360.4) (332.5) D&A (97.4) (102.4) (105.0) (105.0) (102.5) Other Income EBIT EBITDA Interest Income D&A (25.5) (26.5) (24.5) (25.5) (24.8) Finance Costs (32.1) (27.5) (27.1) (27.1) (27.1) EBIT Associates/JCE Finance Cost (7.3) (5.4) (8.2) (6.0) (5.9) Profit Before Tax Associates Tax (71.4) (72.0) (68.4) (75.4) (89.8) PBT Net Profit Tax (19.8) (25.1) (8.9) (20.6) (21.4) Minority Interests (2.0) (2.0) (2.0) (2.0) (2.0) PAT PATAMI MI (0.3) (0.5) (0.7) (0.5) (0.6) Core PATAMI Exceptionals Core Earnings Discontinued Ops Reported PATAMI Basic Shares (m) 1, , , , ,163.0 Core EPS Core EPS (sen) FD Core EPS FD Core EPS (sen) Dividend Per Share Balance Sheet Rates and Ratios FYE 31 Dec (RM m) 2011A 2012A 2013E 2014E 2015E FYE 31 Dec (RM m) 2011A 2012A 2013E 2014E 2015E Cash ,059.0 Core PER (x) Receivables FD Core PER (x) Inventories DPS (sen) Development Costs DY (%) Associates BVPS (RM) PPE P/B (x) Others NTA/Share (RM) Total Assets 2, , , , ,136.0 Payables EBITDA Margin (%) Total Debt EBIT Margin (%) Others PBT Margin (%) Total Liabilities 1, , , , ,224.9 PATAMI Margin (%) Shareholders' Funds 1, , , , ,885.7 Minority Interests ROE Total Capital 1, , , , ,911.1 ROA Net Gearing (%) 3.5 (0.3) (7.6) (18.0) (20.6) Cashflow Analysis Assumption Metrics and Growth Ratios FYE 31 Dec (RM m) 2010A 2011A 2012E 2013E 2014E FYE 31 Dec (RM m) 2011A 2012A 2013E 2014E 2015E EBITDA Revenue 1, , , , ,078.0 Working Capital 28.0 (68.5) 27.6 (13.0) (11.1) TV Net Interest (23.5) (18.3) (12.3) (9.3) (6.7) Radio Others (148.8) 20.7 (68.4) (75.4) (89.8) Outdoor CFO Print CFI (85.9) (91.4) (80.0) (100.0) (80.0) Financing (44.8) Revenue Growth Dividends (180.3) (118.7) (141.3) (179.4) (209.3) PATAMI Growth Others (77.8) EPS Growth CFF (46.4) (16.4) (141.3) (29.5) (209.3) Net Cashflow Page 4 of 5 19 November 2013

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As of 19 November 2013, Hong Leong Investment Bank Berhad has proprietary interest in the following securities covered in this report: (a) As of 19 November 2013, the analyst, Jarod Soon Sien Ming, who prepared this report, has interest in the following securities covered in this report: (a) -. Published & Printed by Hong Leong Investment Bank Berhad (10209-W) Level 23, Menara HLA No. 3, Jalan Kia Peng Kuala Lumpur Tel / Fax Equity rating definitions BUY Positive recommendation of stock under coverage. Expected absolute return of more than +10% over 12-months, with low risk of sustained downside. TRADING BUY Positive recommendation of stock not under coverage. Expected absolute return of more than +10% over 6-months. Situational or arbitrage trading opportunity. HOLD Neutral recommendation of stock under coverage. Expected absolute return between -10% and +10% over 12-months, with low risk of sustained downside. TRADING SELL Negative recommendation of stock not under coverage. Expected absolute return of less than -10% over 6-months. Situational or arbitrage trading opportunity. SELL Negative recommendation of stock under coverage. High risk of negative absolute return of more than -10% over 12-months. NOT RATED No research coverage and report is intended purely for informational purposes. Industry rating definitions OVERWEIGHT The sector, based on weighted market capitalization, is expected to have absolute return of more than +5% over 12-months. NEUTRAL The sector, based on weighted market capitalization, is expected to have absolute return between 5% and +5% over 12-months. UNDERWEIGHT The sector, based on weighted market capitalization, is expected to have absolute return of less than 5% over 12-months. Page 5 of 5 19 November 2013