CGS CIMB has made an Add” recommendation Media Prima Bhd with a target price of RM0.96 as it sees it to be the engine of growth to be its TV advertising sales, which had renewed vigour since it introduced a medium-bundling strategy in FY20 adding that content sales are another segment to look out.
It said that it feels that Media Prima’s nature of minimal variable cost could make it an attractive investment in this high-inflation area.
The stockbroking house said that the group’s earnings base has become more diversified which is a good thing for hedging unlike the old days for relying heavily on ad sales
The stockbroking house said that its content sales grew three-fold YoY in FY21 adding that the unpredictable nature of audiences’ tastes renders content production a risky investment, Media Prima’s production business has little exposure to the direct-to-consumer revenue model
CGS CIMB said that apart from advertising revenue generated from the group’s broadcasting arm, Media Prima has been monetising its television shows and movies through sales to international streaming giants since FY17. Its content sales in FY21 buoyed to RM42.9m – up 201.7% YoY.
“It made up 3.8% of the group’s FY21 revenue, bolstering its share from 1.4% in FY20. And many titles sold to the streaming services are dated content and have been fully amortised,” CGS CIMB said
