Kenanga maintains underperform on Media Prima on FY17 losses

KUALA LUMPUR: Kenanga Research maintained its underperform call on Media Prima Bhd with a lower target price of 53 sen from 55 sen previously as the company put in another disappointing earnings result.

The research firm noted that Media Prima's losses after tax and minority interests (Latami) of RM153mil was well below expectations due to the cleaning up of legacy assets and resizing of the group's workforce to align with the group's future decision. 

On year, FY17 net revenue was 7% lower at RM1.2bil as the improvement in the home shopping segment was not enough to offset the lower advrtising revenue and newspaper sales. 

The TV segment contracted 14% due to pressure on free-to-air TV by weak adex sentiment.

"The segment incurred a LAT of RM113m (FY16:RM22m PAT) as a result of the lower revenue, compensation and provision for manpower rationalization of RM14.4 and net movement of deferred tax of RM28m."

The print segment fell 22% to RM323mil with losses after tax of RM433mil vs RM124mil a year ago due to the RM315mil incurred from impairments and the staff rationalisation plan.

Kenanga Research said Media Prima is accelerating its business transformation plan to grow its new businesses via its Odyssey strategies. 

"The group is set to continue focusing and cross-selling each medium’s strengths (to become the market leader in broadcast and digital publishing), growth in commerce through integrated media, and expanding beyond Malaysia."

However, despite the transformation in FY18, the research firm said the oulook of the group remains challneging judging from the subdued adex outlook. 

"Any light from the tunnel is only expected to happen in 2H18 should MEDIA is able to continue its transformation journey in defending traditional revenue sources while increasing efforts in
growing new revenue streams."