Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Research House: RHB
Media sector
Neutral; Media Prima remains preferred pick with fair value of RM2.23: According to Nielsen Media Research (NMR), February's gross advertising expenditure (adex) for television and print media rose 29.1% year-on-year (y-o-y) with both TV and print media reporting y-o-y growth of 55.3% and 11.7% respectively. On the whole, we believe this strong y-o-y growth was mainly due to the low base effect as a result of weak economic conditions a year ago.
Overall, February's print media y-o-y growth was led by the Chinese dailies, which grew 42.6% with stronger numbers generally posted across the board.
The English dailies also recorded better y-o-y figures (+5.4%), led by The Star and The Malay Mail, which grew (16.5% and 16% respectively). As for the Malay dailies, gross adex declined by 2.6% y-o-y, mainly due to weaker adex for Utusan Malaysia (-27.9%) and Berita Harian (-4.6%).
February's TV adex was still going strong, recording 29.1% y-o-y growth, mainly a reflection of last year's low base. The stronger TV adex growth was led by TV2 (+120.5%), of which, we believe was aided by their repositioning exercises last year.
We expect 2010 to be a relatively better year for ad spending, especially as compared to 2009. Based on our projected 2010 gross domestic product (GDP) growth of 4.5% (-1.7% in 2009) and the average GDP multiplier of 2.1 times (between 1989 and 2008), 2010 gross adex could see a growth of 9.5%.
Apart from higher overall ad spending anticipated as the global economy recovers, adex growth in 2010 would also be supported by "ad-friendly" events such as the 2010 FIFA World Cup, Thomas/Uber Cup and the Commonwealth Games.
The risks include weaker-than-expected consumer spending and demand, and hence, lower adex which could be due to a slower-than-expected recovery in the global economy, among others, higher-than-expected newsprint or content costs; and a weaker-than-expected ringgit versus the US dollar.
Media Prima Bhd (outperform, fair value of RM2.23) remains our preferred pick as we believe adex especially for TV will be a prime beneficiary of a recovering economy. We maintain our outperform call on Media Chinese International Ltd and market perform call on Star Publications Malaysia Bhd. We have, however, downgraded our call for Astro All Asia Networks plc to underperform (from trading buy previously), given that its share price has run up closer to the conditional offer price of RM4.30 per share.
We maintain our neutral stance on the sector. - RHB Research Institute, March 24
This article appeared in The Edge Financial Daily, March 25, 2010.
Company Name: STAR PUBLICATIONS (M) BHD
Research House: RHB
Media sector
Neutral; Media Prima remains preferred pick with fair value of RM2.23: According to Nielsen Media Research (NMR), February's gross advertising expenditure (adex) for television and print media rose 29.1% year-on-year (y-o-y) with both TV and print media reporting y-o-y growth of 55.3% and 11.7% respectively. On the whole, we believe this strong y-o-y growth was mainly due to the low base effect as a result of weak economic conditions a year ago.
Overall, February's print media y-o-y growth was led by the Chinese dailies, which grew 42.6% with stronger numbers generally posted across the board.
The English dailies also recorded better y-o-y figures (+5.4%), led by The Star and The Malay Mail, which grew (16.5% and 16% respectively). As for the Malay dailies, gross adex declined by 2.6% y-o-y, mainly due to weaker adex for Utusan Malaysia (-27.9%) and Berita Harian (-4.6%).
February's TV adex was still going strong, recording 29.1% y-o-y growth, mainly a reflection of last year's low base. The stronger TV adex growth was led by TV2 (+120.5%), of which, we believe was aided by their repositioning exercises last year.
We expect 2010 to be a relatively better year for ad spending, especially as compared to 2009. Based on our projected 2010 gross domestic product (GDP) growth of 4.5% (-1.7% in 2009) and the average GDP multiplier of 2.1 times (between 1989 and 2008), 2010 gross adex could see a growth of 9.5%.
Apart from higher overall ad spending anticipated as the global economy recovers, adex growth in 2010 would also be supported by "ad-friendly" events such as the 2010 FIFA World Cup, Thomas/Uber Cup and the Commonwealth Games.
The risks include weaker-than-expected consumer spending and demand, and hence, lower adex which could be due to a slower-than-expected recovery in the global economy, among others, higher-than-expected newsprint or content costs; and a weaker-than-expected ringgit versus the US dollar.
Media Prima Bhd (outperform, fair value of RM2.23) remains our preferred pick as we believe adex especially for TV will be a prime beneficiary of a recovering economy. We maintain our outperform call on Media Chinese International Ltd and market perform call on Star Publications Malaysia Bhd. We have, however, downgraded our call for Astro All Asia Networks plc to underperform (from trading buy previously), given that its share price has run up closer to the conditional offer price of RM4.30 per share.
We maintain our neutral stance on the sector. - RHB Research Institute, March 24
This article appeared in The Edge Financial Daily, March 25, 2010.
No comments:
Post a Comment