MEDIA CHINESE INTN'L

28 February 2014

(MCIL MK, MCDH.KL)

Opportunity to accumulate in current price weakness

and trough valuation

BUY

Company report

(Maintained)

Wong Joe Vuei

wong-joe-vuei@ambankgroup.com

Rationale for report: Company Result

+603 2036 2292

Price
Fair Value
52-week High/Low

RM0.90
RM1.13
RM1.30/RM0.90

Key Changes
Fair value
EPS

YE to Mar
Revenue (RMmil)
Core net profit (RMmil)
EPS (Sen)
EPS growth (%)
Consensus EPS (Sen)
DPS (Sen)
PE (x)
EV/EBITDA (x)
Div yield (%)
ROE (%)
Net Gearing (%)

Investment Highlights

FY13

FY14F

FY15F

FY16F

1,478.2
176.3
10.5
-9.1
n/a
45.4
11.0
2.0
39.6
27.5
33.9

1,482.2
168.4
10.0
-4.5
n/a
6.1
9.0
3.9
6.8
23.8
19.8

1,509.0
173.6
10.3
3.1
n/a
7.0
8.7
5.2
7.8
22.4
7.2

1,543.3
181.1
10.7
4.3
n/a
7.3
8.4
4.8
8.1
21.6
n/a

We maintain our BUY recommendation on Media Chinese

International (MCIL) with a lower fair value of RM1.13/share (vs.
RM1.20/share previously), as we revise our FY14F-FY16F
earnings downwards by 3%-4% to account for a softer adex
environment for the print segment.

MCIL reported 3QFY14 net profit of RM47.7mil (15% QoQ, -7%

YoY), bringing total 9MFY14 earnings to RM128.7mil (-9% YoY).
This is within our expectation, making up 74% of our full year
estimates, and 75% of consensus.

As expected, no dividends were declared this quarter.

3QFY14 earnings grew by 15% QoQ due to the year-end

seasonal effect attributed to the festive seasons. However, on a
YTD basis, earnings declined by 9% mainly due to higher
finance costs from the loan undertaken to pay the special
dividend in FY13.

YTD pre-tax profit for its printing and publishing business in

Malaysia remains flat, due to a weak 3Q (-14% YoY)
performance. This was caused by reduced spending by
advertisers due to cautious sentiments arising from the
governments subsidies rationalisation plan.

However, the Hong Kong and Mainland Chinas printing

operations appear to be back on the track of recovery. The local
governments tightened policy on Hong Kong properties seems
to have moderated and consumer sentiments have improved.
This contributed to the segments quarterly PBT growth of 9.2%
YoY.

Its travel division also charted decent performance with overall

YTD revenue growing by 18% and PBT increasing by 35%, due
to strong demand for its long-haul tour packages, especially
the European tours.

Its North America print operations remain in a challenging

environment with YTD revenue contracting by 5%.
Nevertheless, it managed to register a 9MFY14 PBT of $541k in
vs. a loss of $60k in 9MFY13, due to lower operating costs.

While adverse sentiments have caused overall adex to remain

muted, we are confident that the Chinese adex environment
would remain stable due to its more entrenched loyal
readership.

At the current FY15F PE of 8.7x, MCIL is trading at its trough

level. Furthermore, any weaknesses in the group have already
been priced in. We view the recent weakness of share price as a
buying opportunity.

Its current dividend yield of 6%-8% would also provide strong

support to its share price, sustained by its strong cashgenerating capabilities.

Stock and Financial Data

Shares Outstanding (million)
Market Cap (RMmil)
Book value (RM/share)
P/BV (x)
ROE (%)
Net Gearing (%)

1,687.2
1,518.5
0.38
2.4
18.5
24.7

Major Shareholders

Progresif Growth Sdn Bhd (19.4%)

Conch Co Ltd (15.0%)

Free Float (%)

Avg Daily Value (RMmil)

34.1
n/a

Price performance

3mth

6mth

12mth

Absolute (%)
Relative (%)

(12.1)
(14.1)

(16.2)
(22.8)

(16.2)
(29.3)

2.00

1,966

1.50

1,623
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Media Chinese

PP 12247/06/2013 (032380)

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FBM KLCI

TABLE 1 : RESULTS SUMMARY

YE 31 Mar (RM mil)
Turnover
EBIT
Interest ex pense
Interest income
Pre-Associates profit
Associates
Pre-Ex ceptionals profit

9M13

9M14

% YOY

2Q14

3Q14

% QoQ

Ann

1,204.6

1,209.0

1.2

411.0

384.3

(6.5)

1,612.1

189.5

199.8

5.5

61.2

70.7

15.6

266.5

(2.4)

(21.1)

(7.2)

(6.7)

18.8

242.7

6.6

4.2

1.3

1.5

193.7

182.9

55.2

65.5

(0.2)

(0.9)

(0.3)

(0.2)

193.5

182.0

54.9

65.2

Ex ceptionals

0.0

0.0

Pre-tax profit

193.5

182.0

0.0

0.0

54.9

65.2

Tax ation

(47.6)

Minority interest

(4.2)

(49.9)

(15.0)

(17.5)

(3.4)

(0.4)

Net Profit

141.7

128.7

(2.2)

(9.2)

39.5

45.5

Core Net Profit

141.7

128.7

15.2

171.6

(9.2)

39.5

45.5

15.2

171.6

(5.9)

EPS (sen)

8.4

7.6

2.4

2.7

Gross DPS (sen)

44.8

2.42

2.4

0.0

BV/Share (RM)

38.2

40.3

40.3

40.3

EBIT margin (%)

15.7

16.5

14.9

18.4

Pretax margin (%)

16.1

15.1

13.4

17.0

Effectiv e tax (%)

24.6

27.4

27.2

26.8

Source: Company / AmResearch

28 February 2014

Media Chinese Intn'l

CHART 1 : PB BAND CHART

CHART 2 : PE BAND CHART

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5.5
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2.5

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AmResearch Sdn Bhd

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28 February 2014

Media Chinese Intn'l

TABLE 2 : FINANCIAL DATA

Income Statement (RMmil, YE 31 Mar)

2012

2013

2014F

2015F

2016F

1447.2
288.0
-33.8
254.2
-0.8
6.8
0.0
260.2
-63.0
-3.5
193.7
193.7

1478.2
275.6
-32.6
243.1
-0.4
-3.2
0.0
239.4
-59.2
-4.0
176.3
176.3

1482.2
286.0
-35.5
250.5
0.0
-20.9
0.0
229.6
-57.4
-3.8
168.4
168.4

1509.0
291.1
-36.8
254.3
0.0
-17.6
0.0
236.7
-59.2
-3.9
173.6
173.6

1543.3
299.6
-38.1
261.5
0.0
-14.5
0.0
247.0
-61.8
-4.1
181.1
181.1

2012

2013

2014F

2015F

2016F

510.4
239.4
4.4
754.1
412.7
177.4
233.3
7.6
831.0
216.4
16.6
16.9
250.0
4.1
44.6
48.7
1267.4
19.1
0.75

531.0
241.0
5.2
777.2
315.0
155.1
231.1
3.7
704.9
225.5
527.9
22.1
775.6
4.1
40.5
44.7
640.4
21.5
0.38

527.6
241.5
5.2
774.3
346.8
150.7
231.7
3.7
733.0
226.1
482.4
22.2
730.6
4.1
40.6
44.8
706.6
25.3
0.42

521.8
241.5
5.2
768.5
384.0
150.1
235.9
3.7
773.7
233.6
435.9
22.2
691.6
4.1
40.6
44.8
776.6
29.3
0.46

514.7
241.5
5.2
761.4
408.0
153.3
241.2
3.7
806.3
238.5
389.4
22.2
650.0
4.1
40.6
44.8
839.6
33.4
0.50

2012

2013

2014F

2015F

2016F

260.2
33.8
17.9
-68.4
243.5
-22.1
0.9
6.5
-14.7
-30.0
1.7
-121.6
-2.9
-152.9
75.9
284.2
391.9

239.4
32.6
35.5
-65.2
242.3
-53.3
0.6
7.4
-48.6
511.1
0.0
-809.0
3.1
-294.8
-101.1
391.9
-217.0

229.6
35.5
4.7
-36.5
233.3
-31.0
0.0
6.9
-24.1
-46.7
0.0
-103.6
-27.8
-178.1
31.2
-217.0
-139.7

236.7
36.8
3.9
-41.6
235.8
-31.0
0.0
7.7
-23.3
-46.5
0.0
-103.6
-25.3
-175.3
37.2
-139.7
-56.0

247.0
38.1
-3.6
-47.2
234.3
-31.0
0.0
8.2
-22.8
-46.5
0.0
-118.2
-22.7
-187.4
24.0
-56.0
14.5

Key Ratios (YE 31 Mar)

2012

2013

2014F

2015F

2016F

Revenue growth (%)

EBITDA growth (%)
Pretax margins (%)
Net profit margins (%)
Interest cover (x)
Effective tax rate (%)
Net dividend payout (%)
Debtors turnover (days)
Stock turnover (days)
Creditors turnover (days)

7.3
13.8
18.0
13.4
-37.1
24.2
70.7
59
56
68

2.1
-4.3
16.2
11.9
75.7
24.7
446.1
57
47
68

0.3
3.8
15.5
11.4
12.0
25.0
61.5
57
46
69

1.8
1.8
15.7
11.5
14.5
25.0
68.1
57
45
70

2.3
2.9
16.0
11.7
18.0
25.0
68.0
57
45
70

Revenue
EBITDA
Depreciation
Operating income (EBIT)
Other income & associates
Net interest
Exceptional items
Pretax profit
Taxation
Minorities/pref dividends
Net profit
Core net profit
Balance Sheet (RMmil, YE 31 Mar)
Fixed assets
Intangible assets
Other long-term assets
Total non-current assets
Cash & equivalent
Stock
Trade debtors
Other current assets
Total current assets
Trade creditors
Short-term borrowings
Other current liabilities
Total current liabilities
Long-term borrowings
Other long-term liabilities
Total long-term liabilities
Shareholders funds
Minority interests
BV/share (RM)
Cash Flow (RMmil, YE 31 Mar)
Pretax profit
Depreciation
Net change in working capital
Others
Cash flow from operations
Capital expenditure
Net investments & sale of fixed assets
Others
Cash flow from investing
Debt raised/(repaid)
Equity raised/(repaid)
Dividends paid
Others
Cash flow from financing
Net cash flow
Net cash/(debt) b/f
Net cash/(debt) c/f

Source: Company, AmResearch estimates

AmResearch Sdn Bhd

28 February 2014

Media Chinese Intn'l

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(A member of the AmInvestment Bank Group)
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The information and opinions in this report were prepared by AmResearch Sdn Bhd. The investments discussed or recommended in this
report may not be suitable for all investors. This report has been prepared for information purposes only and is not an offer to sell or a
solicitation to buy any securities. The directors and employees of AmResearch Sdn Bhd may from time to time have a position in or with
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date and are subject to change without notice.

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(A member of the AmInvestment Bank Group)
15th Floor Bang unan AmBank Group
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Managing Director