KUALA LUMPUR (July 4): CIMB IB Research has maintained its “Reduce” rating on Media Prima Bhd at 49 sen with an unchanged target price 34 sen, and says it sees little possibility of a mandatory general offer (MGO) taking shape.

In a note today, the research house said if anything, Media Prima’s shareholding has become more fragmented.

The Edge Financial Daily this morning reported that Umno has sold its 11.09% stake in Media Prima Bhd, the country’s largest media group, to tycoon Tan Sri Syed Mokhtar Al-Bukhary, who already owns equity interest in Utusan Melayu (Malaysia) Bhd and The Malaysian Reserve, according to sources.

With the shares in hand, Syed Mokhtar is now the third largest shareholder in Media Prima.

CIMB Research said it does not think Syed Mokhtar’s purchase of the 11.1% stake in Media Prima would trigger an MGO.

“Even if he mops up the remaining 7.96% stake in Media Prima that UMNO owns through Altima Inc, that would not be enough to trigger the 33%-50% creeping threshold for a GO.

“We would be negative on Media Prima’s prospects, if Syed Mokhtar would indeed consolidate his unprofitable media assets with Media Prima,” it said.

“Without an MGO angle, we see no reprieve for Media Prima's share price in the short- to medium term. Its high concentration in traditional media leaves it vulnerable to a continuing decline in revenue.

“Besides, its news division is underperforming relative to its peers, which makes it the biggest risk to the group’s overall profitability, and a potential de-rating catalyst for its stock We project Media Prima to only turn around in FY21F,” it said.

At 12.11pm, Media Prima dipped 1.03% or 0.5 sen to 48 sen, for a market capitalisation of RM532.42 million.