FORMER Second Finance Minister Datuk Seri Johari Abdul Ghani couldn’t have better timed his decision to up his stake in Media Prima Bhd to emerge its second largest shareholder.
Not only has the country’s largest media and entertainment company narrowed its net losses substantially to RM18.09 mil in its FY2020 (FY2019: RM185.49 mil), now even the “vital statistics” are looking up.
To re-cap, Johari who made the acquisition on March 23 through his private investment vehicle JAG Capital Holdings Sdn Bhd currently has a direct holding of 15.15% or 168.02 million shares in the media conglomerate.
This has prompted CSG-CIMB Research to retain Media Prima’s “add” rating while raising its target price by 40% to 98 sen (previously 63 sen).
“In our view, Media Prima offers a good turnaround play to investors,” opined analyst Kamarul Anwar in a company update.
“The premium is to account for its return to profitability, and for being the only non-pay TV media company in Malaysia that we expect to be profitable in the foreseeable future.”
Although CGS-CIMB Research noted the print segment performing worse than expected as Media Prima’s key downside risk, its stable of TV stations, Media Prima Television Networks (MPTN), collectively grew its adex (advertising expenditure) by 8.1% year-on-year (yoy) in January to RM185.4 mil.
“The rise was attributable to the inclusion of a new channel called Drama Sangat (literally translates as “So Dramatic”) which officially went on air in April last year,” justified the research house.
“MPTN’s flagship network, TV3, eked out 1.7% yoy growth in adex in January despite re-implementation of the movement control order (MCO 2.0).”
According to CGS-CIMB Research, the free-to-air (FTA)’s adex growth during MCO 2.0 bodes well for the medium as Malaysia looks to move past the COVID-19 pandemic and resume its economic growth.
“As advertisers seek sales expansion, we believe they would consider augmenting advertising and promotion (A&P) budgets,” the research house pointed out.
“Media Prima’s newly consolidated marketing arm also makes for a better sales proposition as advertisers’ brand and likenesses are displayed across all of Media Prima’s mediums.”
Amid better adex prospect, CGS-CIMB raised Media Prima’s FY2021-2023F earnings per share (EPS) by 22-55%, primarily on the back of higher FTA adex and home-shopping revenue.
At 11.25am, Media Prima was unchanged at 61 sen with 4.52 million shares traded, thus valuing the company at RM677 mil. – March 25, 2021