Media Prima said to trim workforce again

TheEdge Wed, Aug 16, 2017 10:27am - 6 years View Original


KUALA LUMPUR: Media Prima Bhd may trim its workforce again as the group explores further cost-saving measures to mitigate the impact of lower revenue, according to CIMB Investment Bank Bhd.

CIMB analyst Mohd Shanaz Noor Azam wrote in a note yesterday that Media Prima said this during an analyst briefing on its second quarter and first half of 2017 results.

“No surprises from Media Prima’s 1HFY17 (first half of financial year 2017) results briefing, but the group [has] shared that it is exploring further cost-savings initiatives, given the decline in group revenue.

“For example, it plans to trim its workforce to rationalise the group’s cost structure. To recap, Media Prima carried out a mutual separation scheme in 2014, which effectively reduced the group’s headcount by about 10%,” Mohd Shanaz said.

On Monday, Media Prima reported a net loss of RM132.91 million in the second quarter ended June 30, 2017 (2QFY17), versus a net profit of RM27.92 million a year earlier. Revenue fell 5.9% to RM328.77 million, from RM349.55 million.

This brought its 1HFY17 net loss to RM171.37 million, compared to a net profit of RM45.16 million a year earlier. Revenue was down 8% at RM600.97 million, versus RM653.61 million in 1HFY16.

Mohd Shanaz said Media Prima’s 1HFY17 results were below consensus and its expectations, due to lower-than-expected advertisement expenditure (adex) and higher operating cost for digital business initiatives.

Similarly, Hong Leong Investment Bank Bhd analyst Sia Ket Ee wrote in a note that Media Prima’s core net loss at RM37.3 million is “not comparable to our and consensus full-year [net profit] forecasts of RM70 million and RM40 million respectively”, and that the company had recorded “lower-than-expected revenue contributions from traditional platforms”.

Moving forward, analysts agree that it will be a challenging time for traditional media due to digital disruptions in the industry. However, Mohd Shanaz highlights Media Prima’s home shopping segment, CJ Wow Shop, could be the group’s major driver for growth in the foreseeable future.

“The segment’s revenue rose by 15.4% q-o-q (quarter-on-quarter) in 2Q17 to RM32 million, in line with the average increase since its launch in 2Q16. Overall, the division is on track to be profitable in FY18,” he wrote.

“Moving forward, Media Prima’s digital initiatives should somewhat cushion the impact of declining adex. Encouraging results can be seen after the launch of CJ Wow Shop, [with] YTD (year-to-date) revenue boosted by more than 100% to RM60 million,” Sia said.

However, he has maintained a “sell” call on the stock and lowered its FY17, FY18 and FY19 core earnings forecasts by 62%, 27% and 26% to RM43.6 million, RM59.1 million and RM63.4 million respectively, largely to reflect lower adex revenue and higher operating cost.

CIMB also kept its “reduce” call on the stock, with a lower target price of 68 sen. “While we like Media Prima’s initiatives to contain its exposure in the declining print segment, we are concerned that the cost rationalisation measures may not be able to catch up with the decline in traditional adex,” Mohd Shanaz added.

The content is a snapshot from Publisher. Refer to the original content for accurate info. Contact us for any changes.






Related Stocks

CIMB 6.690
MEDIA 0.440

Comments

Nadarajah Mohan
Like · Reply
get the package and just join
kementerian penerangan

Login to comment.