MCIL’s FY13 results in line

by **Cals** Fri 31 May 2013, 12:09

MCIL’s FY13 results in line
Business & Markets 2013
Written by AmResearch
Friday, 31 May 2013 11:21

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MEDIA CHINESE INTERNATIONAL LT []d
(May 30, RM1.28)
Maintain buy at RM1.30 with a fair value of RM1.45: We maintain our “buy” recommendation on MCIL with an unchanged fair value of RM1.45, based on a 5% discount to our discounted cash flow valuation. MCIL reported a net profit of RM176 million (-10% year-on year [y-o-y]) for the 2013 financial year ended March (FY13), in line with expectation.

The weaker FY13 net profit was largely due to higher operating expenses and finance costs due to the borrowings undertaken to partly fund the special dividend declared during the year. Revenue from the Malaysian operations increased quarter-on-quarter (q-o-q) by 2.7% despite the first quarter being traditionally the slowest for advertising expenditure (adex) due to higher advertising revenue driven mainly by increased government spending.

However, q-o-q, overall publishing and print segment revenue declined by 0.7% due to adverse economic conditions in North America and increased competition from the free newspapers in Hong Kong. Currently, the free papers command approximately 40% of print adex in the local market. The tour business experienced a 10% y-o-y pickup in revenue as the division saw higher demand for its Europe and other long-haul tours by Asian customers due to its promotional campaigns and the weak euro.

With the general election behind us, we expect a marginal pickup in adex by the traditional advertisers in the second half of the year, coupled with the many festivities and advertisers’ inclination to exhaust their budgets towards the year-end.

The newsprint price continues to trend lower, with the spot price breaking below US$600 (RM1,842) per tonne currently. MCIL holds six to eight months’ inventory at an average cost of US$660 to US$680 per tonne (including duties and freight charges).

The group declared a final dividend of 3.1 sen per share. Stripping out the 41 sen per share special dividend that was declared during the year, this brings the full-year dividend per share to 5.15 sen. This is equivalent to a payout of 49% and a yield of 5%. — AmResearch, May 30

This article first appeared in The Edge Financial Daily, on May 31, 2013.