‘Add’ from CGS-CIMB, ‘buy’ from HLIB

Media Prima Bhd’s TV advertisement sales will likely increase over the next quarters as advertisers will have room in their advertising and promotion (A&P) budgets, said CGS-CIMB Research.

Its analysts, Kamarul Anwar and Mohd Shanaz Noor Azam, are bullish about improved A&P budgets after a contraction in the traditional advertisement expenditure for six consecutive years.

“We lift our Media Prima’s earnings per share estimates by 23 to 32 per cent for the financial years ending Dec 31 this year and next year,” they said.

The positive sentiment followed Media Prima’s strong performance in the fourth quarter ended Dec 31 last year, in which it posted a net profit of RM18.84 million.

CGS-CIMB said online ads cost only a fraction of that in traditional mediums while print was losing its relevance by the year.

“Since free-to-air broadcasts have steadily retained audience engagement at two hours per day, TV has proven that it has the drawing power that advertisers want to latch on to.”

They said Media Prima’s share price had vaulted by 205.5 per cent since reporting a core net profit in the third quarter ended Sept 30 last year.

“With the likelihood of yearon-year turnover growth in its financial year 2021, we advocate investors to capitalise on the stock’s comeback story.

“We place an ‘add’ call on Media Prima with a 63 sen target price after the earnings revision,” it said.

Downside risks include ad sales faring worse in financial year 2021 and a drop in CJ WOW Shop’s sales.

Hong Leong Investment Bank Bhd analyst Syifaa’ Mahsuri Ismail said Media Prima continued to maintain its profitability trajectory.

Its latest result was better than the research firm’s and consensus core net loss estimates of RM25.9 million and RM26.7 million, respectively.

“We expect the catalysts to be on the back of contribution from the WeTV partnership, 100 per cent stake of CJ Wow Shop home shopping segment and strategic collaboration with the Education Ministry’s DidikTV,” she said in a report yesterday.

After earnings adjustments and rolling over its valuation year, HLIB has upgraded Media Prima to “buy” call with a higher target price of 66 sen.