KUALA LUMPUR (May 31): CIMB Research has downgraded Media Prima Bhd to “Reduce” at 38 sen with a lower target price of 34 sen (from 51 sen) and said Media Prima’s 1Q19 core net loss of RM40.4 million exceeded house and Bloomberg consensus full-year net loss projections in FY19F.

In a note today, the research house said the publishing segment was the main drag in 1Q19, as its after-tax loss widened by almost 10x year-on-year (y-o-y) to RM22 million on lower adex and circulation revenue.

CIMB Research said it was negatively surprised by the 41% y-o-y revenue drop in Media Prima’s publishing subsidiary, New Straits Times Press Bhd (NSTP).

It said the y-o-y decline was inevitable because NSTP’s 1Q18 was boosted by election-related adex.

“Yet, the print and digital segment of NSTP’s competitor, Star Media, had a more benign y-o-y drop in its 1Q19 revenue, at 21.9%.

“Also, NSTP’s 1Q19 revenue of RM48.1 million was only two-thirds of Star’s print and digital segment’s – despite NSTP having more titles than Star.

“Downgrade Media Prima to Reduce. Our target price is lowered by 33% to 34 sen, now based on 0.5x FY20F P/BV,” it said.