Stock Name: MEDIA
Company Name: MEDIA PRIMA BHD
Research House: OSK
Media Prima Bhd
(April 21, RM2.21)
Initiating coverage with a buy at RM2.25: target price of RM2.60: Over the years, Media Prima has transformed from a single media entity into an integrated media group with presence across all platforms.
We see MPB as the best proxy to the entire media sector, which is expected to grow in line with the country's growing economic prosperity.
Following a series of acquisitions, Media Prima has become the only integrated media player in Malaysia with exposure to all the media platforms, which we believe works to the group's advantage.
As an integrated media group, it benefits from synergies across areas such as back-office consolidation, cross marketing and expanded reach across media platforms, as well as focused segmentation, which facilitate its marketing efforts and revenue strategies.
Supported by its exposure in all platforms, we believe the group will also be the key beneficiary from advertising expenditure (adex) growth.
With the Malaysian economy projected to grow at more than 5% in 2010 and over the next few years, Media Prima - which has the biggest exposure in the media sector - may gain the most from the favourable sector outlook. This would also see the group posting better financial performance going forward.
Given the fast-growing adex, particularly in the TV, radio and Malay market segments, Media Prima is in the right position to capture their growth potential.
As the TV and radio segments continue to snare adex share from the newspapers, Media Prima is set to gain the lion's share of total adex given its strong hold in the TV and radio segments.
Although the newspaper segment has been losing adex share over the last few years, the Malay newspaper sub-segment has been doing otherwise. As such, Media Prima, through its subsidiary The New Straits Times Press (Malaysia) Bhd, is expected to reap the benefits driven particularly by Harian Metro, which currently has the highest daily circulation and a growing adex share.
We initiate coverage on Media Prima with a buy recommendation at a target price of RM2.60 based on the regional sector price-earnings ratio (PER) of 18 times on FY10 earnings per share (EPS).
The 18 times PER implies a premium of 25% over its historical PER (since its listing in Oct 2003) of 14.4 times, which we deem reasonable given that the group has over the years emerged stronger and more robust, and can now lay claim to being the country's only integrated media company.
With some of its regional peers trading at more than 20 times PERs, we do not discount the possibility of an upward PER re-rating as Media Prima is the only proxy to the country's fast-growing broadcasting industry, especially after the upcoming privatisation of Astro. - OSK Research, April 21
This article appeared in The Edge Financial Daily, April 16, 2010.
Company Name: MEDIA PRIMA BHD
Research House: OSK
Media Prima Bhd
(April 21, RM2.21)
Initiating coverage with a buy at RM2.25: target price of RM2.60: Over the years, Media Prima has transformed from a single media entity into an integrated media group with presence across all platforms.
We see MPB as the best proxy to the entire media sector, which is expected to grow in line with the country's growing economic prosperity.
Following a series of acquisitions, Media Prima has become the only integrated media player in Malaysia with exposure to all the media platforms, which we believe works to the group's advantage.
As an integrated media group, it benefits from synergies across areas such as back-office consolidation, cross marketing and expanded reach across media platforms, as well as focused segmentation, which facilitate its marketing efforts and revenue strategies.
Supported by its exposure in all platforms, we believe the group will also be the key beneficiary from advertising expenditure (adex) growth.
With the Malaysian economy projected to grow at more than 5% in 2010 and over the next few years, Media Prima - which has the biggest exposure in the media sector - may gain the most from the favourable sector outlook. This would also see the group posting better financial performance going forward.
Given the fast-growing adex, particularly in the TV, radio and Malay market segments, Media Prima is in the right position to capture their growth potential.
As the TV and radio segments continue to snare adex share from the newspapers, Media Prima is set to gain the lion's share of total adex given its strong hold in the TV and radio segments.
Although the newspaper segment has been losing adex share over the last few years, the Malay newspaper sub-segment has been doing otherwise. As such, Media Prima, through its subsidiary The New Straits Times Press (Malaysia) Bhd, is expected to reap the benefits driven particularly by Harian Metro, which currently has the highest daily circulation and a growing adex share.
We initiate coverage on Media Prima with a buy recommendation at a target price of RM2.60 based on the regional sector price-earnings ratio (PER) of 18 times on FY10 earnings per share (EPS).
The 18 times PER implies a premium of 25% over its historical PER (since its listing in Oct 2003) of 14.4 times, which we deem reasonable given that the group has over the years emerged stronger and more robust, and can now lay claim to being the country's only integrated media company.
With some of its regional peers trading at more than 20 times PERs, we do not discount the possibility of an upward PER re-rating as Media Prima is the only proxy to the country's fast-growing broadcasting industry, especially after the upcoming privatisation of Astro. - OSK Research, April 21
This article appeared in The Edge Financial Daily, April 16, 2010.
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