PP 7767/09/2010(025354)

Malaysia
RHB Research
Corporate Highlights l
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

R e su lts N ot e
26 August 2010
MARKET DATELINE

Media Chinese Int’l Share Price

Fair Value
:
:
RM0.84
RM1.21
YoY Improvement On The Back Of Stronger Revenue Recom : Outperform
(Maintained)

Table 1 : Investment Statistics (MEDIAC; Code: 5090) Bloomberg: MCIL MK

Net Core EPS Net
FYE Turnover profit EPS EPS# Growth# PER# C.EPS* P/NTA Gearing ROE NDY
Mar (RMm) (RMm) (sen) (sen) (%) (x) (sen) (x) (x) (%) (%)
2010 1,226.7 135.2 8.0 8.0 52.8 10.4 1.5 net cash 12.1 5.3
2011f 1,386.7 158.1 9.4 9.4 16.9 8.9 9.0 1.4 net cash 13.1 5.8
2012f 1,417.3 152.4 9.0 9.0 -3.6 9.2 9.0 1.3 net cash 11.9 5.8
2013f 1,442.7 160.1 9.5 9.5 5.1 8.8 9.0 1.2 net cash 11.7 6.0
Main Market Listing / Non- Trustee Stock / Syariah-Approved Stock By The SC # Excludes EI * Consensus Based On IBES Estimates

RHBRI Vs. Consensus

♦ Slightly above expectations. MCIL’s 1QFY03/11 net profit of RM43.1m Above
(+182.9% yoy; +21.9% qoq) accounting for 28% of our and consensus In Line
full-year estimates. The key variance was largely due to better-than- Below
expected 1Q EBIT margin of 18% vs. our full-year EBIT margin forecast of
Issued Capital (m shares) 1,683.9
15%. As expected, MCIL did not declare any dividend.
Market Cap (RMm) 1,406.1
♦ 1Q revenue grew 12.3% qoq … QoQ, revenue grew 12.3% due to Daily Trading Vol (m shs) 0.8
52wk Price Range (RM) 0.481-0.895
stronger contribution from the print and publishing segment (+7.8% qoq,
Major Shareholders: (%)
in US$ terms) as well as stronger revenue for the travel business (+58.4%
Tan Sri Datuk THK 50.1
qoq, in US$ terms). Nevertheless, the growth was not unexpected as 4Q is
Zaman Pemimpin 9.2
typically a slower quarter due to seasonality. In addition, the growth in the
travel business was helped by the weakening euro, which spurred demand
for the European tours. FYE Mar FY11 FY12 FY13
EPS chg (%) 3.8 4.3 4.6
♦ … but EBIT jumped 41.5% qoq due to operating leverage effect Var to Cons (%) 4.2 0.4 5.5
from the stronger revenue. 1Q11 EBIT grew 41.5% qoq on the back of
PE Band Chart
the stronger revenue with and 3.7%-pts margin expansion. We believe the
improvement reflects the operational leverage effects from the stronger
PER = 10x
revenue. 1Q11 net profit rose by 15.2% qoq due to higher MI allocation PER = 8x
PER = 6x
and higher effective tax rate of 28.6% (vs. 17.7%).

♦ Risks. The risks include: 1) weaker-than-expected adex; 2) higher-than-

expected newsprint costs; and 3) a depreciating RM vs. the US$.

♦ Forecasts. We have raised our FY11-13 EBIT margin assumptions to 14.5-

15.5% largely to reflect the higher-than-expected margin achieved by Relative Performance To FBM KLCI
MCIL thus far. As a result, our FY11-13 earnings forecasts have been
raised by 3.8-4.6% respectively.
MCIL
♦ Investment case. Our fair value have been slightly raised to RM1.21
(from RM1.16), which is based on unchanged target CY11 PER of 13x. We
expect earnings in the coming quarters ahead would see further FBM KLCI
improvement largely due stronger ad revenue supported by the upcoming
festive season ahead should flow straight to bottomline, hence
improvement in margins. Further weakening of US$ against RM should also
bode well for the group as this would reduce the import cost of newsprint
given that the raw material is traded in US$. We reiterate our Outperform
call on the stock.
David Chong, CFA
Please read important disclosures at the end of this report. (603) 9280 2186
david.chong@rhb.com.my

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Table 2 : Earnings Review

QoQ YoY
FYE Mar (RMm) 1Q10 4Q10 1Q11 (%) (%) Comments
Revenue 280.1 305.3 342.9 12.3 22.4 Stronger qoq due to seasonality, where 4Q is typically
a quieter quarter while yoy increase reflects the
improvement in macroeconomic conditions.
Geographically, SEA region contributed 61% to
1QFY11 revenue while Hong Kong accounted for
another 31.6%.

Operating profit 23.7 43.6 61.8 41.5 >100 Stronger yoy and qoq mainly due to the publishing
and printing business resulting from, we believe: 1)
recovery in ad revenue; 2) effective cost-control
measures; and 3) lower newsprint cost.
Interest expense (0.6) (0.7) (0.7) 8.5 15.8 Total debt as at end-Jun ’10 was US$28.6m (end-Mar
‘10: US$32.4m; end-Jun ’09: US$21.0m)
Associates 0.0 (0.3) (0.2) (6.8) nm

Pre-tax profit 23.1 42.7 60.8 42.4 >100

Tax (8.2) (7.6) (17.1) >100 >100
Minority interest 0.4 0.2 (0.6) >100 >100 Reflects turnaround of operations in North America.
Net profit 15.2 35.4 43.1 15.2 35.4

Margins (%)
EBIT 8.5 14.3 18.0
Pretax 8.2 14.0 17.7
Effective tax rate 35.6 17.7 28.2 Effective tax rate was higher than the applicable
Malaysian statutory tax rate mainly due to non-
allowable expenses for tax purposes and higher tax
rates of certain foreign subsidiaries.
Net profit 5.4 11.6 12.6
Core net profit 5.4 11.6 12.6
Source: Company data, RHBRI

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Table 3: Segmental Breakdown – Business Segment

QoQ YoY
FYE Mar (US$m) 1Q10 4Q10 1Q11 (%) (%) Comments
Revenue
Publishing & printing 76.1 83.6 90.1 7.8 18.4 Stronger yoy due to higher ad spending as well as
well as the increase in circulation revenue for Sin
Chew by 2% yoy.
Travel 10.5 10.0 15.8 58.4 51.1 Stronger yoy due to the improvement in
macroeconomic conditions as well as weaker Euro has
spurred demand for European tours.
Total 86.6 93.6 105.9 13.2 22.4

Operating profit
Publishing & printing 7.3 13.5 18.4 36.9 >100
Travel (0.1) (0.1) 0.6 >100 >100
Elimination 0.0 0.0 0.0 nm nm
Total 7.2 13.4 19.0 42.2 >100

Operating profit margin (%)

Publishing & printing 9.6 16.1 20.5 9.6 16.1 Improvement in yoy margins due to lower newsprint
prices and effective cost-control measures.
Travel (0.9) (1.0) 3.6 (0.9) (1.0)
Total 8.4 14.3 18.0 8.4 14.3
Source: Company data, RHBRI

Table 4 : Segmental Breakdown – Printing & Publishing Division By Geographic Region

QoQ YoY
FYE Mar (US$m) 1Q10 4Q10 1Q11 (%) (%) Comments
Revenue
54.4 60.4 65.0 7.7 19.6
Malaysia & SEA
Hong Kong & China 26.5 26.6 33.5 26.0 26.3

North America 5.7 6.6 7.4 12.0 31.0

Total 86.6 93.6 105.9 13.2 22.4

Operating profit
8.4 14.0 16.7 19.0 98.9
Malaysia & SEA
Hong Kong & China (0.7) (0.2) 1.3 >100 >100

North America (0.4) (0.4) 1.1 >100 >100

Total 7.2 13.4 19.0 42.2 >100

Operating profit margin (%)

15.4 23.2 25.7 15.4 23.2
Malaysia & SEA
Hong Kong & China (2.7) (0.8) 3.7 (2.7) (0.8)

North America (7.6) (6.7) 14.4 (7.6) (6.7)

Total 8.4 14.3 18.0

Source: Company data, RHBRI

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Table 5 : Earnings Forecasts Table 6 : Forecast Assumptions

FYE Mar (RMm) FY10a FY11F FY12F FY13F FYE Mar FY11F FY12F FY13F

Turnover 1,226.7 1,386.7 1,417.3 1,442.7 Sin Chew

Turnover gwth (%) 2.5 13.0 2.2 1.8 - ad revenue gwth (%) 3.0 3.0 3.0
- circulation revenue gwth (%) 0.0 0.0 0.0
EBIT 182.5 215.1 206.3 209.2
EBIT margin (%) 14.9 15.5 14.6 14.5 Nanyang
Net Interest (2.5) 3.1 3.9 3.8 - ad revenue gwth (%) 3.0 3.0 3.0
Associates (0.3) 0.0 0.0 0.0 - circulation revenue gwth (%) 0.0 0.0 0.0
Exceptionals 0.0 0.0 0.0 0.0
Ming Pao
Pretax Profit 179.8 218.2 210.2 213.0 - Ad revenue gwth (%) 5.0 3.0 3.0
Tax (44.6) (54.4) (52.2) (52.9)
Minorities 0.0 (5.7) (5.5) 0.0 Newsprint cost (US$/tonne) 550 575 575
Net Profit 135.2 158.1 152.4 160.1
Core Net Profit 135.2 158.1 152.4 160.1
Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
(previously known as RHB Sakura Merchant Bankers). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions and
information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to
opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an
offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever
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have an interest in the securities mentioned by this report.

This report does not provide individually tailored investment advice. It has been prepared without regard to the individual financial circumstances and objectives of
persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
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may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans
of any company that may be involved in this transaction.

“Connected Persons” means any holding company of RHBRI, the subsidiaries and subsidiary undertaking of such a holding company and the respective directors,
officers, employees and agents of each of them. Investors should assume that the “Connected Persons” are seeking or will seek investment banking or other
services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon
various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher
risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

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subject to the duties of confidentiality, will be made available upon request.

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