KUALA LUMPUR (May 15): While Media Chinese International Ltd (MCIL) had yesterday warned its shareholders that the company may report a net loss for the financial year ended March 31, 2019 (FY19), AllianceDBS Research is not anticipating any further significant impairment on goodwill.

In a notice filed with Hong Kong Stock Exchange (HKEx), which was also announced on Bursa Malaysia, MCIL blamed the weak results on a provision for the impairment of goodwill of approximately US$15 million in relation to a business unit of the group.

According to a note today, AllianceDBS Research analyst Abdul Azim Muhthar said the impairment is likely due to remaining Sin Chew Media Corp (SCMC) goodwill.

To recap, SCMC's goodwill was impaired by US$20.7 million in FY18, Azim wrote, adding that this provision for impairment was due to weak advertising sentiment and more cautious advertising expenditure (adex).

"Following the impairment, the remaining goodwill of SCMC was US$15.6 million as per its 2018 annual report. Recall the goodwill was from the acquisition of SCMC back in 2008," he added.

Nonetheless, Azim said the current depressed share price does not reflect fundamentals.

"Owing to its lean cost structure, MCIL has managed to stay in the black despite the sharp fall in adex over the last few years," he added.

At current market capitalisation of RM325 million, its latest net cash position of RM230 million (as at December 2018) is 71% of its market capitalisation.

Hence, with a deep discount to asset value, Azim has maintained a 'buy' on the stock with a 29 sen target price.

"While catalysts may take time to emerge (privatisation, asset unlocking exercises) for a re-rating of the stock, investors will be rewarded with a decent 7% to 8% net dividend yield in the meantime," he noted.

At 9.48am, shares of Media Chinese fell one sen or 5.13% to 18.5 sen, bringing its market capitalisation to RM320.58 million. Over the past 12 months, the stock has slid as much as 36.2% from 29 sen.