Can Media Prima share price rise with Umno’s exit?

MPB’s link to a political party has weighed on the stock as investors contemplate the future of the company following BN’s defeat in GE14


Umno’s plan to dispose of its shareholding in Media Prima Bhd (MPB) could provide a boost to the conglomerate’s share price which has been battered over the last few years due to declining revenues.

MPB’s link to a political party has also weighed on the price of the stock as investors contemplate the future of the company following the Barisan Nasional (BN) defeat in the May 2018 14th General Election (GE14).

“If this sale goes through, MPB’s share price could recover,” an analyst who declined to be named told The Malaysian Reserve recently.

Last Friday, Umno acting president Datuk Seri Mohamad Hasan was reported as saying that the party would sell its stake in MPB.

“We will sell our stake in MPB as there is nothing much we can do. We can’t put out our own news, and we do not have board representation. At least it (the sale) can cover us for another 2½ years,” he said according to news portal Free Malaysia Today. Mohamad said Umno needed a lot of money for all its total expenses.

Umno has been consolidating its assets, especially its shareholdings in listed companies and monetising them. Recently, Umno sold 31.6% stake in another media company Utusan Melayu (M) Bhd to its current executive chairman Datuk Abd Aziz Sheikh Fadzir. Utusan, which is a PN17 company, is undergoing a restructuring to put its books in order, pare down its debts and for capital expenditure.

The analyst said both Umno and MPB could reap benefits from the share sale.

“On the Umno side, I think this is a good time for them to dispose of the shares because they no longer have the prerogative in MPB, either on the board or management.

“They have no representation in MPB anymore. So that being said, it’s no longer a strategic stake for Umno. Additionally, yes this is good news for Umno, because they need better fund for their day-to-day operations.

“And these include for any upcoming legal fees and expenses for the Rantau by-election, besides the dayto- day operations,” said the analyst.

“For MPB, this is beneficial for them also, because I believe partly to them being underperforming due to political reason. Hence, if Umno finally decides to sell their shares, I believe this is another good catalyst for MPB shares to recover,” said the analyst, adding that the sale would not impact MPB operations.

But the analyst believed it would be a challenge to find a buyer for Umno’s stake presently due to MPB’s unsatisfactory financial performance in previous years.

“There’re no interested or suitable buyers for now even though their valuation is very interesting, at a very low pricebook. I don’t see any willing buyers to take up those shares currently,” said the analyst.

Despite the dire financial situation, there are parties who are interested to get hold of a stake in the country’s largest media company.

Last month, Edgbaston Investment Partners LLP emerged as a new substantial shareholder in MPB.

The London-based financial manager — which acts as the discretionary investment manager for the Edgbaston Asian Equity Trust and the Edgbaston Asian Equity (Jersey) Trust (the funds) — holds together 56.2 million shares or a 5.37% stake, making it the fifth-largest single shareholder in MPB.

Other major shareholders in the Umno-linked media conglomerate are Mitsubishi UFJ Financial Group Inc (held through Morgan Stanley & Co International plc) with a 12.76% stake, the Employees Provident Fund (11.94%), Gabungan Kesturi Sdn Bhd (11.09%) and Altima Inc (7.96%).

Gabungan Kesturi is listed as a wholly owned unit of Amanah Raya Bhd, which in turn is 100%-owned by the Minister of Finance Inc. Altima, meanwhile, is believed to be owned by Umno, translating to 87.69 million shares valued at RM47.5 million based on yesterday’s closing price of 54 sen.

Mitsubishi UFJ, which has been steadily acquiring MPB shares, is the largest single shareholder in the media group which owns free-to-air television (TV) stations, newspapers, radio stations, billboard advertising and digital media.

Meanwhile, another analyst from an investment bank said changing shareholders does not necessary mean business will improve for MPB.

“The intention is unclear. We don’t know who’s going to buy and at what price. Everything has a price. So, if the price is cheap enough, maybe someone would buy it,” the analyst said.

“Changing a shareholder does not mean the business will improve. In other words, there’s nothing much we can say right now. It’s an expression of interest to sell and it’s not certain,” he added.

MPB, the parent company of multiple media outlets currently owns four free-to-air TV channels and four radio stations namely TV3, NTV7, 8TV,TV9, Fly FM, Hot FM, One FM and Kool FM respectively.

It also owns three newspapers namely the New Straits Times, Berita Harian and Harian Metro.

Umno owns about 19% of MPB as of the end of 2018, thus making it the largest shareholder in the firm known as Malaysia’s most comprehensive media conglomerate.