Published on 03 October 2013
RAM Ratings has revised the
outlook on Media Prima Berhad’s (Media Prima or the Group) long-term ratings
from stable to positive whilst reaffirming the respective long- and short-term
corporate credit ratings of Media Prima Berhad at AA2 and P1. Concurrently, the
short-term P1 rating of the Group’s RM180 million CP Programme (2007/2014) and
the AA2/P1 ratings of its RM500 million CP/MTN Programme (2012/2019) have been
reaffirmed.
The revision of the rating
outlook is premised on Media Prima’s strengthening financial profile and the
favourable prospects of the Group’s print division (Malay-language segment),
while being balanced by our concerns on the intensifying competition within the
TV broadcasting industry.
The Group’s balance sheet has
steadily improved, placing it in a near-net cash position with a net gearing
ratio of 0.04 times as at end-2Q FY Dec 2013 (FY Dec 2009: 0.53 times). Media
Prima’s cashflow protection measures had been relatively robust, with its
adjusted funds from operations debt coverage ratio averaging 0.45 times over
the last 5 years. Meanwhile, the Malay-language segment has been the
fastest-growing language segment in terms of non-discounted adex. Having an
edge as one of the most circulated and read newspapers in the country, the
Group’s Harian Metro is expected to benefit from robust growth in the
Malay-language segment. “Looking ahead, Media Prima’s capex plans are envisaged
to be sufficiently funded by internal cash whilst its financials are forecasted
to remain sturdy, potentially enabling it to boast a net cash position in 2
years,” notes Kevin Lim, RAM Ratings’ Head of Consumer & Industrial
Ratings.
The ratings reflect Media
Prima’s strong market position and diversification across the media industry
along with its solid financial profile. Given its multimedia-platform
capability such as free-to-air television (FTA) broadcasting, newspaper
publication, radio broadcasting, outdoor advertising as well as content
creation and online portals, the Group is not dependent on any single source of
revenue.
New Straits Times Press leads in
the newspaper publication market with an aggregate 31% share of non-discounted
newspaper adex; its popular tabloid, Harian Metro, is the most-circulated newspaper
in Malaysia. Media Prima maintained its runaway leadership position in the FTA
TV industry with an 88% market share of non-discounted advertising expenditure
(adex) in 2012. However, despite holding a narrow lead in viewership, the Group
lost its pole position in the share of non-discounted overall TV industry adex
to Astro Malaysia Holdings Berhad according to AGB Nielsen Media Research. The
Group also leads in the outdoor advertising segment, with a 44% share of adex.
Elsewhere, its radio network ranks second with a 28% share of radio adex.
The Group’s ratings, however,
remain moderated by the competitive industry backdrop, which has been
exacerbated by the emergence of new media platforms such as online news portals
and new channels via broadband-based TV services such as UniFi and Yes over the
last few years. This year, new entrant Asian Broadcasting Network (M) Sdn Bhd’s
pay-TV service and Maxis Berhad’s internet-portal TV service, along with the
prospective debut of YTL Communications Sdn Bhd’s hybrid-TV service, are set to
widen advertisers’ options further. Meanwhile, Media Prima’s performance is
also susceptible to economic cycles and newsprint price movements.
“The long-term ratings may be
upgraded if Media Prima’s business segments (particularly its TV division)
demonstrate resilience against competitive pressure and the Group’s financial
profile is maintained. On the other hand, the outlook on the ratings may revert
to stable if segmental operating performance deteriorates and/or the Group’s
overall financial profile weakens,” adds Lim.
Media contact
Sahil R Kamani
(603) 7628 1084
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