Two other media companies -- Star Media Group Bhd
and Media Chinese International Ltd. – both saw a decline in earnings for the third quarter. However the analysts have generally maintained their `Hold’ or `Buy’ calls on the companies.
In the third quarter ended Sept 30, 2016, Media Prima slipped into a net loss of RM109.36mil or 9.86 sen loss per share compared with a net profit of RM44.16mil or 3.96 sen earnings per share a year ago.
The company attributed the loss to a one-off restructuring expense for its print media operation. Media Prima said even without the one-off restructuring expense, it would still need to endure a net loss of RM8.7mil in 3QFY16.
Its revenue for the quarter fell to RM316.76mil from RM365.36mil in the same period a year ago.
UOBKay Hian said Media Prima’s latest financial results was below expectations. It said excluding a one-off restructuring expense of RM104.6mil, Media Prima reported 3Q16 core net loss of RM2.3mil on revenue of RM316.8mil.
“This brought 9M16 core net profit to RM43.3mil, accounting for only 37% and 40% of our and street’s full-year estimates respectively. Key discrepancy was due to steeper-than-expected deterioration in the print segment performance,” it said.
The research house has cut its 2016-18 core net profit forecast by 33-50% after taking into account lower circulation and advertising expenditure (adex) contribution of 28-30%.
UOBKay Hian has maintained its ‘sell’ on Media Prima with a rolled-forward target price of 75 sen (from RM1.17), based on 10 times 2018 forecast price-earnings (P/E).
“While we believe that the recent restructuring of NSTP could offer a near-term solution to the declining print segment performance, persistent structural headwinds affecting the traditional print and free-to-air (FTA) TV segments would continue to weigh down on the company’s longer-term prospects.
“This could potentially affect its ability to pay dividend. We also expect some downward pressure on its share price following the latest earnings disappointment,” it added.
CIMB Research has maintained its “hold” on Media Prima but revised its target price to RM1.15 from RM1.34. It has also cut its FY16-18 forecast earnings per share by 22-31% to account for lower adex and circulation volume across key segments.
“In spite of the overall lacklustre performance, we are encouraged that its home shopping segment, CJ Wow Shop, is gaining good traction after recording RM21mil sales in third quarter 2016, up 15% quarter-on-quarter.
“We are also impressed that CJ Wow Shop managed to carry out sales across multiple platforms given that 83% of its sales are derived from TV, followed by the internet (9%) and mobile (8%). Overall, we estimate the segment will post sales of RM70mil in FY16 forecast and RM130mil in FY17 forecast,” CIMB said.
Meanwhile, Star Media registered a net profit attributable to shareholders of RM11.31mil in the third quarter ended Sept 30, 2016 on the back of a turnover of RM206.50mil. This compares with a net profit and turnover of RM23.64mil and RM254.5mil, respectively, a year ago.
It registered a revenue of RM671.77mil for the first nine months of the year. Profit for the period ended Sept 30 came in at RM70.47mil.
Media Chinese’s net profit came in at RM21.27mil for the quarter ended Sept 30, 2016 from RM31.5 million a year ago. Revenue was down 12% at RM353.4mil from RM402.4mil.
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