Stock Name: MEDIAC
Company Name: MEDIA CHINESE INTERNATIONAL LT
Research House: MAYBANK
Media Chinese International Ltd
(Feb 16, 88 sen)
Initiate coverage with buy call at 87.5 sen and target price RM1.22: We like Media Chinese International (MCIL) for its dominance in the Chinese newspaper segment. With a growing circulation, it will be able to capture a larger share of newspaper adex. Trading at an attractive 10 times CY11 PER (lowest among the media stocks) and offering a decent 5.3% net dividend yield (highest among peers), MCIL offers value. Investors can also expect M&A or higher dividends for more upside potential.
MCIL is a Chinese language newspaper and magazine publisher. Its Malaysian newspapers command more than 70% share of daily circulation of Chinese newspapers.
In Hong Kong, Ming Pao Daily News has the third highest daily circulation. With Yazhou Zhoukan, it is highly regarded for being credible and independent.
Malaysia contributes more 60% to revenue but more than 90% to earnings before interest, tax, depreciation and amortisation (Ebitda).
Daily circulation of its Malaysian newspapers has been growing steadily at 2% four-year compound annual growth rate, while all the other major mainstream newspapers have been experiencing otherwise. In a virtuous cycle, stronger daily circulation will allow MCIL to capture a larger share of newspaper adex. In fact, figures provided by Nielsen Media Research indicate that MCIL's Malaysian Chinese gross newspaper adex rose by an astounding 20% year-on-year in 2010.
Our target price is based on modest 13.5 times CY11 PER, backed by RM1.25 discounted cash flow per share. MCIL's current valuation is even below minus one standard deviation of Media Prima Bhd and Star Publications (M) Bhd's mean PERs. This is despite MCIL catching up in earnings and even better in operations.
Also, MCIL offers higher net dividend yields than Media Prima and Star.
We estimate that MCIL's net cash position will burgeon to RM188.1 million or 11 sen per share by the financial year-end. Management has expressed interest in expanding its global reach before. Otherwise, it can raise the high range of its net dividend payout policy (DPR) from 60% to even as high as 75% (the low range is 30%). Our forecasts assume 50% payout. ' Maybank IB Research, Feb 16
This article appeared in The Edge Financial Daily, February 17, 2011.
Company Name: MEDIA CHINESE INTERNATIONAL LT
Research House: MAYBANK
Media Chinese International Ltd
(Feb 16, 88 sen)
Initiate coverage with buy call at 87.5 sen and target price RM1.22: We like Media Chinese International (MCIL) for its dominance in the Chinese newspaper segment. With a growing circulation, it will be able to capture a larger share of newspaper adex. Trading at an attractive 10 times CY11 PER (lowest among the media stocks) and offering a decent 5.3% net dividend yield (highest among peers), MCIL offers value. Investors can also expect M&A or higher dividends for more upside potential.
MCIL is a Chinese language newspaper and magazine publisher. Its Malaysian newspapers command more than 70% share of daily circulation of Chinese newspapers.
In Hong Kong, Ming Pao Daily News has the third highest daily circulation. With Yazhou Zhoukan, it is highly regarded for being credible and independent.
Malaysia contributes more 60% to revenue but more than 90% to earnings before interest, tax, depreciation and amortisation (Ebitda).
Daily circulation of its Malaysian newspapers has been growing steadily at 2% four-year compound annual growth rate, while all the other major mainstream newspapers have been experiencing otherwise. In a virtuous cycle, stronger daily circulation will allow MCIL to capture a larger share of newspaper adex. In fact, figures provided by Nielsen Media Research indicate that MCIL's Malaysian Chinese gross newspaper adex rose by an astounding 20% year-on-year in 2010.
Our target price is based on modest 13.5 times CY11 PER, backed by RM1.25 discounted cash flow per share. MCIL's current valuation is even below minus one standard deviation of Media Prima Bhd and Star Publications (M) Bhd's mean PERs. This is despite MCIL catching up in earnings and even better in operations.
Also, MCIL offers higher net dividend yields than Media Prima and Star.
We estimate that MCIL's net cash position will burgeon to RM188.1 million or 11 sen per share by the financial year-end. Management has expressed interest in expanding its global reach before. Otherwise, it can raise the high range of its net dividend payout policy (DPR) from 60% to even as high as 75% (the low range is 30%). Our forecasts assume 50% payout. ' Maybank IB Research, Feb 16
This article appeared in The Edge Financial Daily, February 17, 2011.
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