KUALA LUMPUR (Nov 19): Media Prima Bhd rose as much as 14% or 2.5 sen to 20.5 sen in early trades from its close of 18 sen yesterday, as the group returned to the black with a net profit of RM12.43 million in the third quarter ended Sept 30, 2020 (3QFY20).
At 10.05am, the counter stood at 19.5 sen, still up 1.5 sen or 8.33%. The counter saw 27.1 million shares changed hands, making it one of the actively traded stocks this morning.
AmInvestment Bank Research said in a note today it had upgraded Media Prima to "buy" from "hold", as it believed the group is seeing benefits from its previous Odyssey transformation plan to grow commerce and digital revenues.
It has also revised up Media Prima's target price to 25 sen from 22 sen previously, as it pegged a higher price to book value of 0.5 times after reflecting the group’s latest 3QFY20 book value per share of 50 sen.
“Despite the challenging operating environment, we believe that Media Prima’s commerce and digital propositions continue to gain traction and are able to cushion declines in traditional advertising expenditure and circulation.
“Coupled with its new Omnia proposition for bundling advertising-related solutions as well as benefits seen from its cost optimization initiatives, we believe that the stock is undervalued at the current price, hence we upgrade our call to 'buy',” it said.
It also narrowed its FY20 to FY22 loss projections amid better margin assumptions across the board following realization of cost savings and better-than-expected recovery post-MCO.
It said Media Prima’s results exceeded expectations, recording a core profit of RM16 million in 3QFY20 which brings 9MFY20 core loss to RM18 million.
“The 9M results accounted for 29% and 27% of our and consensus FY20F projected loss of RM62 million and RM68 million respectively,” it said.
Meanwhile, Hong Leong Investment Bank Research also upgraded Media Prima to "buy" from "hold", and revised up its target price to 26 sen from 18 sen.
“Despite the challenging outlook in the media industry, we are encouraged by the group's initiative in streamlining its operations and at the same time proactively improving their integrated advertising solutions,” it said.
It also revised the group’s FY20/21/22 forecasts upward from -RM48.3 million/-RM15.8 million/RM10.2 million to -RM25.9 million/RM7.7 million/RM27.1 million after factoring higher revenue and lower operating expenditure.
“Media Prima’s 3Q20 chalked an improvement with core net profit of RM4.9 million (against -RM5.6 million in 2Q20). 9M20 core loss of -RM29.6 million came in better than our/consensus’ loss forecasts of -RM48.3 million/-RM60.9 million for FY20.
“This was accomplished on the back of the rise in topline, coupled with the cost savings measures that have helped bolster its bottom line,” it said.
Media Prima announced yesterday that it had returned to the black with a net profit of RM12.43 million for 3QFY20 from a net loss of RM24.16 million a year ago, thanks to improved revenue and lower operating expenses.
Its revenue for 3QFY20 rose 1.21% to RM268.77 million from RM265.55 million a year ago.
For the nine months ended Sept 30, 2020, the group’s net loss narrowed to RM37.22 million from RM73.4 million a year earlier. Its revenue for the period fell 7.23% to RM743.48 million, from RM801.41 million a year earlier, due to the impact of the current challenging economic climate which has especially hurt advertising spending.