MEDIA: Media Group Exceeds Expectations on Cost Efficiency, Faces Lingering Pressures

A leading media group reported its FY25 core net profit of RM24.3 million, significantly surpassing both TA Securities’ and consensus full-year estimates by 309.2% and 282.7%, respectively. This robust performance was primarily attributed to better-than-expected margins, driven by effective cost efficiencies.

Performance Analysis

On a quarter-on-quarter basis, 4QFY25 revenue increased by 5.1%, buoyed by a substantial 21% surge in non-advertising revenue and a modest 2% uptick in advertising revenue. Consequently, core net profit experienced a remarkable rise from RM1.1 million to RM18.1 million compared to the previous quarter.

However, the year-on-year picture for 4QFY25 showed a contraction in core net profit by 20.6% to RM18.1 million, despite a 15.2% increase in revenue to RM222.5 million. This decline was primarily due to higher operating costs and a less favorable revenue mix, which collectively exerted pressure on margins. The group also proposed an interim dividend of 1.5 sen per share, reflecting ongoing returns to shareholders despite the mixed performance.

Future Outlook and Strategy

In response to the company’s performance and revised cost assumptions, TA Securities has increased its FY26-FY27 earnings forecasts to RM23.0 million and RM17.5 million, up significantly from previous estimates of RM7.8 million and RM3.0 million. An initial FY28 forecast has also been introduced at RM13.8 million. Industry data from Nielsen Media Research indicates that overall adex is stabilizing near historical averages, with 2QCY25 adex recording a 4.4% year-on-year increase.

The media group remains committed to its 3-year business plan for sustainable growth. As an integrated media entity, it aims to attract more clients by enhancing content offerings and upgrading its digital billboards, strategies designed to strengthen pricing power, maintain competitiveness, and drive long-term revenue growth.

Analyst View and Recommendation

TA Securities has slightly raised its target price (TP) for the company to RM0.37, up from the previous RM0.35. This revised TP is based on 0.55x CY25F P/BV, incorporating a 3% ESG premium. Despite the upward adjustment in TP, the investment bank maintains its Sell recommendation on the stock.

The continued “Sell” call reflects an “unattractive risk-reward profile” stemming from persistent cost pressures. However, potential rerating catalysts that could lead to a re-evaluation include stronger-than-expected adex performance combined with sustained revenue growth and improved margins.