KUALA LUMPUR (Sept 1): Hong Leong Investment Bank (HLIB) Research has maintained its “sell” rating on Media Prima Bhd at 44.5 sen with an unchanged target price (TP) of 31 sen.

In a note on Friday, the research house said Media Prima recorded sixth quarter ended June 30, 2023 (6Q2023) core profit after tax and minority interest (Patami) of RM17.4 million, compared to a loss after tax and minority interest of RM18.7 million in 5Q2023 and RM10.9 million Patami in the April-June 2022, bringing 18 months ended June 30, 2023 (18M2023) core Patami to RM31.4 million.

HLIB said this came in above house's full year forecast at 137% but below consensus at 90%.

HLIB said Media Prima managed a turnaround in 4Q2023 largely due to lower operational costs and lower taxation.

Nonetheless, the research house said that there are still challenges ahead as advertisement expenditure (adex) is still expected to be lower in 2023 versus 2022 due to a lack of any adex friendly events.

“This is on top of the fact that competition for advertising budgets remains fierce as more and more digital avenues for advertising are being introduced (both new social media platforms as well as streamers introducing cheaper ad-supported tiers to consumers).

“Moreover, the home shopping segment is also not expected to pose an earnings recovery soon as consumers remain prudent on discretionary spending. For these reasons, we argue that the group is not entirely out of the woods just yet.

“We adjust our FY2024 forecast by +79% and FY2025 forecast by +67%.

“Despite recovering from [the] previous quarter’s net loss, we opine that the uncertainties ahead will continue to pose challenges to the group’s recovery.

“Maintain 'sell' with an unchanged TP of 31 sen based on 0.5 times P/B (price-to-book ratio) of FY2024 BVPS (book value per share) of 62 sen,” it said.