Media Prima Berhad has announced exceptional results for its FY24, significantly surpassing market expectations. The company’s core net profit reached RM35.9 million, exceeding projections by 59% and consensus estimates by 86%. This remarkable performance can be attributed to a decrease in operating expenses, which resulted from the termination of a long-term advertising agreement within the Out-of-Home (OOH) segment.
Analysts have responded positively, with a consensus upgrade to OUTPERFORM from UNDERPERFORM and an increased target price (TP) of RM0.51, up from RM0.32.
The impressive financial results were bolstered by substantial one-time exceptional items, including a reversal of accruals for site occupancy fees amounting to RM30.1 million and a RM5.1 million provision for site restoration. Additionally, the company reported gains from insurance claims of RM2.2 million and litigation provisions of RM4.5 million. Despite a 7% year-on-year contraction in revenue, primarily due to lower advertising expenditure and content distribution revenue from its television networks, Media Prima managed to maintain profitability.
Lower operating expenses were the primary driver behind the company’s profitability, which nearly doubled year-on-year, thanks to enhanced operational efficiencies and effective cost management initiatives. Media Prima’s streamlined operations have positioned it for sustained improvement, signalling a positive outlook for the company’s financial health in the upcoming fiscal years.
The advertising landscape, although challenging, is showing signs of recovery from a low base. According to Nielsen data, the advertising expenditure (adex) for Media Prima’s major newspapers and TV channels experienced growth of 3.5% and 4.8%, respectively, year-on-year. However, Media Prima itself faced a 2% decline in adex during the first half of CY24. The dip was attributed to mass consumer boycotts of major advertisers linked to the ongoing Gaza conflict, which resulted in significant budget reductions from large corporations. Conversely, Media Prima’s pivot towards small and medium-sized enterprises (SMEs) has yielded positive results, with a reported 20% revenue growth from this segment.
Looking ahead, analysts have raised FY25 earnings forecast by 3%, reflecting continued cost-cutting measures and operational optimisations. The company plans to maintain its momentum in the SME segment while focusing on recovery in its traditional advertising revenue streams.
