MEDIA: Financial Performance Aligns with Estimates; Digital Initiatives to Propel Future Growth
| Investment Bank | TA SECURITIES |
|---|---|
| TP (Target Price) | RM0.25 (+25.0%) |
| Last Traded | RM0.20 |
| Recommendation |
A leading media entity reported its IQFY26 core net profit at RM1.7 million, aligning precisely with both TA SECURITIES’ and consensus full-year estimates at 7.2% and 9.1% respectively. The results were deemed within expectations, with analysts anticipating a seasonal uplift in the second half of the fiscal year, particularly a robust fourth quarter, driven by year-end advertising budget allocations and festive campaigns.
Performance Overview
On a quarter-on-quarter (QoQ) basis, revenue saw a 10.6% decrease, primarily attributed to lower non-advertising revenue. Consequently, core net profit experienced a significant 90.8% decline QoQ, falling from RM18.1 million to RM1.7 million.
Conversely, year-on-year (YoY) revenue demonstrated a slight increase of 2.0% to RM198.9 million. This growth was largely propelled by a substantial 16% increase in non-advertising revenue streams, which successfully offset a marginal 1% decline in advertising revenue. As a result, YoY core net profit improved from RM0.5 million to RM1.7 million, underscoring the resilience of diversified revenue streams.
Industry Challenges and Strategic Response
The media landscape continues to face headwinds, as indicated by recent Nielsen Media Research data showing a 14.5% YoY fall in 3QCY25 traditional adex to RM1,091 million, falling below the five-year average of RM1,229.4 million. Despite this challenging backdrop, the company, with its expanding digital footprint, is strategically positioned to capitalize on the digital adex recovery and mitigate the impact of traditional ad-spend weakness.
The company remains steadfast in its commitment to a three-year business plan aimed at sustainable growth. As an integrated media group, it actively seeks to attract more clients by continuously enhancing its content offerings and upgrading its digital billboards, which are expected to bolster its pricing power. These concerted efforts are designed to maintain competitiveness and foster long-term revenue growth.
Analyst View and Recommendation
TA SECURITIES maintained its target price for the company at RM0.37, based on a P/BV of 0.55x CY26F BV, incorporating a 3% ESG Premium. The firm reiterated its “Sell” call on the stock, noting that the risk-reward profile remains unattractive amidst persistent cost pressures. Potential rerating catalysts include stronger-than-expected adex performance, coupled with sustained revenue growth and improved margins.
