OSK 'overweight' on media sector

Stock Name: MEDIA
Company Name: MEDIA PRIMA BHD

Research House: OSK

Price Call: BUY

Target Price: 3.09

Stock Name: CATCHA
Company Name: CATCHA MEDIA BERHAD

Research House: OSK

Price Call: BUY

Target Price: 1.21

OSK Research expects media advertisement expenditure (ADEX) growth to close 2011 at double the in-house gross domestic
product forecast of 5.2 per cent.

OSK Research in a research note today said the expectation is based on the strength in domestic consumption that can still be seen.

The research house said according to the AC Nielsen Media Research, the first nine months of 2011 saw ADEX grow by a robust 10.4 per cent year-on-year (y-o-y) shored up by resilient domestic consumer spending despite concerns of slowing recovery and weakening consumer confidence on the global economic front.

It said that advertisement spending on the three core divisions -- newspapers, television and radio channels -- made up a total of 94 per cent of the combined ADEX, rising by 10.7 per cent y-o-y to RM5.75 billion.

Meanwhile, the Internet segment remained the fastest growing, chalking up 34.4 per cent y-o-y growth but accounting for an insignificant 0.7 per cent share of total ADEX.

OSK Research maintains an "overweight" call on the sector as it believes that thematic factors such as an impending polls and the Euro 2012 football tournament would be the key catalysts in 2012.

OSK Research said that the top picks -- Media Chinese, Media Prima and Catcha Media -- are all pegged with a "buy" call and fair value at RM3.17, RM3.09 and RM1.21 respectively.

Meanwhile the research firm has rated a "neutral" call on Star with a fair value of RM3.34. -- Bernama

Carlist.my Is Coming On Board

Stock Name: CATCHA
Company Name: CATCHA MEDIA BERHAD

Research House: OSK

Price Call: BUY

Target Price: 1.21

Catcha: Catch this while you can

Stock Name: CATCHA
Company Name: CATCHA MEDIA BERHAD

Research House: OSK

Price Call: BUY

Target Price: 1.21

Catcha Media Bhd
(Aug 18, 81 sen)
Initiating coverage at 84 sen with buy call and fair value of RM1.21: Given our 'overweight' stance on the media sector on the belief the sector will still flourish in 2H11 despite the global turmoil, we like Catcha Media's direct exposure to the industry. According to AC Nielsen, Malaysia's 1H11 advertising expenditure surged 11.6% year-on-year to RM3.9 billion. Spurred by factors such as an impending general election and the upcoming major festive celebrations, we reiterate our view that the media sector as a whole will continue to prosper in 2H11 to close the year at two to three times our revised 2011 GDP forecast of 5.1%. Hence, we believe Catcha Media will directly benefit from sturdy advertising spending and see this as an opportune time to get exposure in the Internet media segment.

The development of the online media industry relies heavily on the growth of the average Internet speed provided by local Internet service providers. With the introduction of fibre-optic broadband services in Malaysia with average surfing speeds of five to 20Mbps, we see vast potential for Internet advertising to mushroom on improved transmission of content and enhanced web browsing experience. These present great opportunities for Catcha Media to capitalise on given the potential exponential growth in Internet adex as surveys show that the online media industry will bloom as Internet infrastructure becomes more established.

Catcha Media entered into a strategic alliance with Microsoft and Lowyat.net in 2009 to manage its online properties by selling advertising space on their respective portals. We see great potential in these two core web portals given the vast volume of Internet traffic, which stood at a combined 10 million unique users per month as at October 2010. We also understand that management is working to secure two more online properties by the end of this year, with at least one million unique users per month each. ' OSK Research, Aug 18


This article appeared in The Edge Financial Daily, August 19, 2011.