KUALA LUMPUR: Media Prima Berhad, Malaysia's largest integrated media group, is poised to benefit from increased advertising spending in the digital market.
According to Public Investment Bank Bhd (PublicInvest), Statista projects Malaysia's digital advertising spending to reach USD 1.04 billion by 2024.
By 2028, mobile advertising is expected to account for 48 per cent of total advertising spending, with some industry data suggesting that digital advertising could eventually become three times larger than traditional advertising.
PublicInvest also noted that Media Prima continues to offer innovative solutions to advertisers and engaging content across its media platforms.
However, the research firm cautions that rising operational costs may pose challenges to the monetisation of these investments in the near term.
Media Prima's cost-cutting effort, which helped to reduce total operating costs, resulted in a stronger net profit in the fourth quarter of its financial year 2024 (4QFY24), the firm said.
"The group reported a headline net profit of RM60.4 million, but this is inclusive of a reversal of accrual for site occupancy fee pursuant to the termination of an advertising agreement that amounted to RM30.1 million," it said in a note today.
Media Prima continued to stay resilient, achieving a revenue of RM844 million for the year ended June 30, 2024, despite a challenging economic environment.
The group recorded a normalised net profit (excluding exceptional items) of RM30.5 million. This was driven largely by enhanced operational efficiencies, venturing into the small and medium enterprise market, and effective cost management initiatives.
In Q4, the group reported RM193.1 million in revenue and RM2.6 million in normalised net profit.
PublicInvest said the full-year FY24 results came in below its estimate at 79 per cent but beat the consensus estimate at 159 per cent.
"We slash our FY25-26 earnings forecasts by 26 per cent to factor in lower advertising revenue for its traditional media platforms," it said.
PublicInvest maintained its "neutral" call on Media Prima with a target price of 45 sen.