MITSUBISHI UFJ Financial Group Inc (MUFJ) is a very influential investor in Media Prima Bhd even though it is only ranked as the third major shareholder of Malaysia’s largest media and entertainment conglomerate after Tan Sri Syed Mokhtar Albukhary (31.9%) and Datuk Seri Johari Abdul Ghani (20.1%).
It is intriguing as to why the Japanese fund is cashing out from Media Prima on a daily basis since March 22 with its sale taking up as much as 76.4% of the counter’s daily trading volume year-to-date (YTD) as per CGS-CIMB Research’s revelation.
“In our company note entitled A Conundrum with One of the Shareholders dated June 16 last year, we penned our observation of MUFJ lightening its holding in Media Prima once the stock reached the 60 sen level,” analyst Kamarul Anwar pointed out in a company update.
“MUFJ has done so even though its average investment cost was 77.6 sen since it emerged as a substantial shareholder on April 4, 2017 based on our back-of-the-envelope calculation.”
As of April 8, MUFJ still held 118.65 million or 10.7% of Media Prima shares. While MUFJ may want to pare down its holding in Media Prima, it is also possible that it wants to make profit from the Media Prima shares that it had bought at much lower prices, according to CGS-CIMB Research.
“After reviewing Bloomberg’s data on Media Prima’s volume-weighted average price and Bursa Malaysia’s filings on MUFJ’s open-market transactions, we found that MUFJ had bought 22.8 million Media Prima shares at between 33 sen and 66 sen,” noted the research house. “Since April 12 last year, MUFJ has offloaded 24.2 million units of Media Prima’s stock.”
Although MUFJ’s stock sale could lead to concerns of potential short-term overhang on Media Prima share price, this can also provide an opportunity for long-term investors to accumulate the shares.
In fact, CGS-CIMB Research has retained both its “buy” rating and target price of 96 sen by ascribing a 1.5 times CY2023F price/book value (P/BV) for the stock.
“The economic re-opening has further stoked Media Prima Television Networks’ (MPTN) ad sales while Nielsen Malaysia’s data showed the networks’ advertising expenditure (adex) prior to discounting factor swelled by 4.9% year-on-year in 2M 2022,” noted the research house.
“Besides, MUFJ’s share sale will improve Media Prima’s liquidity since the group’s three largest shareholders currently own 62.7% of the company. Its downside risks include ad sales petering out and content sales faltering.”
At 11am, Media Prima was down 0.5 sen or 0.83% to 59.5 sen with 410,600 shares traded, thus valuing the company at RM660 mil. – April 13, 2022
