This article first appeared in The Edge Financial Daily, on April 4, 2016.
Media Prima Bhd
(April 1, RM1.46)
Downgrade to hold from buy with an unchanged target price (TP) of RM1.48: On Jan 18, 2016, Media Prima Bhd announced that it had entered into a 51%:49% joint venture (JV) with CJ O Shopping to launch a home shopping business.
The JV, CJ Wow Shop, commenced broadcasting last Friday across Media Prima’s four TV stations (TV3, ntv7, 8TV and TV9).
CJ Wow Shop is also accessible online and via mobile app.
Recall that Astro Malaysia Holdings Bhd has been operating a 60%-owned home shopping business called Go Shop for more than five quarters.
While CJ Wow Shop occupies Media Prima TV stations’ off-peak hours, Go Shop is carried round-the-clock on two dedicated channels on Astro (118 and 318).
That said, we understand that Media Prima may dedicate one channel to CJ Wow Shop if it is awarded more TV channels going forward as a result of TV digitisation.
Media Prima expects to incur less content cost going forward, as it will no longer broadcast programmes during CJ Wow Shop’s broadcasting times.
All in, Media Prima does not expect CJ Wow Shop to negatively impact its earnings materially.
We perused CJ O Shopping’s other overseas earnings and none are materially loss-making, save for India.
With narrowed upside potential to our TP, as we upgraded Media Prima to a “buy” on Aug 14, 2015, its share price has already appreciated 28% with 10 sen dividend per share to boot. — Maybank Investment Bank Bhd, April 1