Re­search house main­tains ‘hold’ call on in­te­grated me­dia group with tar­get price of RM1.10

New Straits Times - - Business / News -


KUALA LUMPUR bt@me­di­aprima.com.my

ME­DIA Prima Bhd’s val­u­a­tions in its pro­posed ac­qui­si­tion of REV Asia Hold­ings Sdn Bhd (RAH) are fair, said May­bank In­vest­ment Bank (May­bank IB).

It said the pur­chase con­sid­er­a­tion val­ued RAH at 21.5 times last year’s en­ter­prise value (EV) to earn­ings be­fore in­ter­est, tax, de­pre­ci­a­tion and amor­ti­sa­tion (EV/Ebitda) and 4.5 times of last year’s EV to rev­enue.

May­bank IB said these val­u­a­tions were fair based on previous ac­qui­si­tions in­volv­ing Catcha Group’s sub­sidiaries job­sDB at 22 times of 2010 EV/Ebitda, JobStreet.com at 22 times of 2013 EV/Ebitda, and iProp­erty at 28.7 times of 2015 EV/rev­enue.

It said RAH posted rev­enue of RM23.5 mil­lion, a 32 per cent year-on-year growth, and net profit of RM4.2 mil­lion, or 27 per cent year-on-year growth.

On Mon­day, Me­dia Prima, Malaysia’s largest in­te­grated me­dia group, an­nounced that it would ac­quire 100 per cent of RAH from REV Asia Bhd and Youth Asia Sdn Bhd for RM105 mil­lion cash.

RAH is mainly en­gaged in pro­vid­ing ad­ver­tis­ing, pub­li­ca­tion and In­ter­net so­cial me­dia ser­vices through nine dig­i­tal brands that have a dig­i­tal reach of 4.6 mil­lion.

With RAH, Me­dia Prima will grow its dig­i­tal reach to nine mil­lion (as­sum­ing a 30 per cent over­lap) from 5.8 mil­lion and es­tab­lish it­self as the third largest dig­i­tal me­dia com­pany in Malaysia. The ac­qui­si­tion is ex­pected to be com­pleted by the third quar­ter of this year.

May­bank IB said it gath­ered that the ac­qui­si­tion would be debt-fi­nanced de­spite RM300.1 mil­lion of ex­ist­ing debt due to be re­paid in De­cem­ber.

It said as­sum­ing 4.4 per cent in­ter­est rate, the in­ter­est ex­pense of RM4.6 mil­lion per year would ap­prox­i­mate RAH’s net profit of RM4.2 mil­lion last year.

May­bank IB had trimmed its fi­nan­cial years 2017, 2018 and 2019 Ebitda es­ti­mates by 4.0, 2.0 and 2.0 per cent, re­spec­tively, to im­pute RM10 mil­lion more over­heads per year af­ter ac­count­ing for the ac­qui­si­tion.

Its fi­nan­cial years 2017, 2018 and 2019 earn­ings fore­cast are cut by 17, 11 and six per cent, re­spec­tively, due to neg­a­tive op­er­at­ing lever­age.

May­bank IB has main­tained its “hold” call on Me­dia Prima with an un­changed tar­get price of RM1.10.

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