Hot Stock Media Chinese up 10% on One Media stake sale talks

by **Cals** Wed 13 Jan 2016, 20:02

Hot Stock

[size=28]Media Chinese up 10% on One Media stake sale talks

By Chen Shaua Fui / theedgemarkets.com | January 13, 2016 : 11:56 AM MYT

KUALA LUMPUR (Jan 13): Media Chinese International Ltd (MCIL) ([You must be registered and logged in to see this image.] Valuation: 1.80, Fundamental: 2.40) rose as much as six sen or 10% on Bursa Malaysia, after the company said it was in talks to dispose of its controlling 73.01% stake in Hong Kong-listed One Media Group Ltd.

At Bursa Malaysia, MCIL shares rose to their highest so far today at 68.5 sen. At 11:17am, the stock pared gains at 65.5 sen, with 965,500 units changing hands.

At 65.5 sen, MCIL has a market value of RM1.11 billion. MCIL's share trade on Bursa Malaysia resumed today, following a suspension yesterday (Jan 12).

The stock is also listed on the Hong Kong bourse.

In Malaysia, CIMB Investment Bank Bhd ([You must be registered and logged in to see this image.] Valuation: 1.65, Fundamental: 0.55) said MCIL could benefit from a one-off gain of RM136 million, with minimal impact to future earnings from the proposed disposal of its One Media stake.

In a note today, CIMB analyst Mohd Shanaz Noor Azam said MCIL could reward its shareholders with special dividends, if the disposal materialised. Mohd Shanaz said MCIL had net cash of RM100.5 million, as at Sept 30, 2015.

“We believe that its existing free cashflow generation is sufficient to finance the group’s operations. It could potentially pay up to RM0.12/share, based on full payout or dividend yield of 19%,” he said.

For now, Mohd Shanaz said CIMB was maintaining its MCIL earnings forecast, given the preliminary status of the proposed deal.

“We maintain our Hold rating on the stock, with a target price of RM0.60, based on 8 times CY17 price-earnings ratio (PER) (still at a 50% discount to our target market PER).

“While MCIL offers attractive FY16/17 dividend yields of 6.4%/5.9%, we prefer Astro Malaysia Holdings Bhd ([You must be registered and logged in to see this image.]Valuation: 2.10, Fundamental: 1.10) for exposure to the media sector, due to its defensive earnings structure and lower sensitivity to adex,” CIMB said.

(Note: The Edge Research's fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.)
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