Analysts are weighing in on Media Prima’s sale of their loss-making associate company, Malaysian Newsprint Services (MNI) for RM142 mil.

AmInvestment Research said although the sale will reduce Media Prima’s earnings for 2017, the disposal would however improve the media company’s profitability for this year.

CIMB Research said they are ‘negatively surprised’ on this disposal, but said that Media Prima could potentially benefit from the removal of MNI’s losses in next year’s financial statements.

MNI is principally engaged in the manufacturing and sales of newsprint. They supply newsprint materials to Media Prima’s print business segment.

MNI has suffered net losses since 2014 due to weaker demand from the newsprint business.

Forecasts show that this year is another loss-making year for MNI.

AmInvestment has previously assumed similar losses by Media Prima going forward and the research house is treating this asset disposal as an ‘exceptional item’.

The market is anticipating a stronger performance by Media Prima in the second quarter of this year.

They are expected to release their 2Q17 results on Aug 17, 2017. CIMB Research is expecting the group to record quarterly sequential earnings recovery, on the back of better consumer sentiment pre- and post-raya festivities.

CIMB Research puts a RM0.70 target price, and said that they prefer Astro for exposure in media stocks.

AmInvestment Research puts a ‘hold’ call on Media Prima’s stake.