Opportunity for long-term investors to accumulate Media Prima shares, says CGS-CIMB Research

NST Wed, Apr 13, 2022 10:46am - 2 months View Original

Mitsubishi UFJ Financial Group's (MUFJ) stock sale could raise concerns about a possible short-term impact on Media Prima Bhd's (MPB) share price. NSTP/Asyraf Hamzah

KUALA LUMPUR: Mitsubishi UFJ Financial Group's (MUFJ) stock sale could raise concerns about a possible short-term impact on Media Prima Bhd's (MPB) share price.

However, this provides an opportunity for long-term investors to accumulate the shares, according to CGS-CIMB Research.

The research firm noted that MPB's closing price had rocketed by as much as 61.7 per cent year-to-date (YTD), from 40.5 sen on 3 January 2022 to 65.5 sen on 23 March.

"Alas, the stock has pared its gains to close at 62 sen on 11 April. The culprit, in our view, is MPB's third-largest shareholder, MUFJ.

"The fund has sold MPB shares every day since 22 March, with its sale taking up as much as 76.4 per cent of the counter's daily trading volume YTD," CGS-CIMB Research noted in a report.

CGS-CIMB Research previously noted that MUFJ has been lightening its holding in MPB once the stock reached the 60-sen level.

MUFJ has done so even though its average investment cost was 77.6 sen since it emerged as a substantial shareholder on 4 April 2017, based on our back-of-the-envelope calculation, the research firm noted.

As of 8 April, MUFJ still held 118.65 million or 10.7 per cent of MPB shares.

While MUFJ may want to pare down its holding in MPB, it is also possible that it intends to profit from the shares it had bought at much lower prices, CGS-CIMB Research said.

"After reviewing Bloomberg's data on MPB's volume-weighted average price and Bursa Malaysia's filings on MUFJ's open-market transactions, we found that MUFJ had bought 22.8 million MPB shares at between 33 sen and 66 sen.

"Since 12 April 2021, MUFJ has offloaded 24.2 million units of MPB's stock," CGS-CIMB Research said.

The research firm made no change to its Add call and affirmed its target price of 96 sen for MPB.

The economic re-opening has further stoked Media Prima Television Networks' (MPTN) ad sales, while Nielsen Malaysia data showed the networks' advertising expenditure (adex) before discounting factor swelled by 4.9 per cent year-on-year (YoY) in the two months (2M) of 2022.

Besides, MUFJ's share sale will improve MPB's liquidity since the group's three largest shareholders currently own 62.7 per cent of the company, CGS-CIMB Research noted.

Downside risks are ad sales petering out and content sales faltering.

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