We are maintaining
our NEUTRAL view on the media sector. YTD October gross adex grew by +3.7% YoY
(or +8.2% MoM), in line with the market expectation. Going forward, we expect
the total adex spending continue to grow in the remaining two months in
year-2012 as advertisers will be rushing to finish its yearly advertisement
budget and reach our full-year adex growth rate estimate of 7.5% YoY (based on
1.5x GDP multiplier). No change in our media companies’ earnings forecast for
now, pending on their respective upcoming 3QCY12 results released. We
maintained our OUTPERFORM rating on Media Chinese International (“MEDIAC”) with
an unchanged target price of RM1.36 based on targeted FY13 PER of 12.1 (+1SD).
Meanwhile, our Star Publications (“STAR”) and Media Prima (“MEDIA”) target
prices continue to keep at RM3.15 and RM2.34, respectively, based on unchanged
targeted FY13 PERs of 13.0x and 13.4x. Maintained MARKET PERFORM calls on both
STAR and MEDIA.
The YTD October gross
adex grew by +3.7% YoY to RM9.0b according to Nielsen. The higher YTD
growth was mainly driven by the Pay TV (+15.3%) and FTA TV (+1.8%) segments but
was partially offset by the lower contribution from the Newspaper (-1.1%) segments.
The higher YTD performance in the Pay TV segment, we believe, was likely due to
the higher discount thus attracting some FTA TV advertisers to shift their
spending. On the month-on-month basis, total adex surged by 8.2% thanks to
higher adex spending in the Pay TV (+14.9% MoM); FTA TV (+11.1% MoM) and
newspaper (+1.2% MoM) segments, as advertisers rushing to finish its annual
adex budget towards the year-end. On the market share front, newspaper
continued to command the lion's share but with a lower quantum of 39.3% (vs.
41.1% a year ago) followed by 27.6% (vs. 28.1%) for FTA and 24.6% (vs. 22.1%)
for Pay TV.
Newspaper YTD gross
adex was lowered by 1.8% YoY to RM3.1b. The relatively weak performance was
mainly caused by the contraction in both the English (-6.9% YoY) and Chinese
(-0.2% YoY) segments but was partially offset by higher contributions from the Malay
(+2.9% YoY) segment. All the language's newspapers have recorded a positive MoM
growth during October. English’s newspaper was recorded the strong MoM growth
of 2.5% followed by Chinese (+1.9%) and BM (+1.1%). MEDIAC, STAR and MEDIA’s
newspaper gross adex recorded a +3.6% YoY, -11.0% YoY and -2.8% YoY in October.
The sharp YoY drop in STAR was mainly due to the continued lack of confidence
by advertisers, in our view, despite the company’s readership and circulation
numbers have shown some signs of recovery.
YTD Pay TV gross adex
continued to gain 15.3% YoY to RM2.2b at the expense of FTA TV, which
improved a merely 1.8% YoY. On a MoM basis, both Pay and FTA TV adex were climbed
by 14.9% and 11.1%, respectively. We suspect the surged, to certain extend, was
due to the higher discount rate provided by TV operators thus increased
advertisers’ appetite. MEDIA’s gross TV adex was surged by 20.5% YoY (or 12.0%
MoM) to RM253m in October, thanks to the strong performance in all of its
channels, namely 8TV (+28.4% YoY to RM49m); NTV7 (+15.2% YoY to RM40m); TV3
(+8.9% YoY to RM121m); and TV9 (+65.3% YoY to RM43m). On the Pay TV front,
Astro RIA; Astro Prima; and Astro Wah Lai Toi channels continued to rank the
top three highest adex generators and contributed an aggregate RM861m total
gross adex or 39% of the total YTD Pay TV gross adex of RM2.2b. On market
shares front, Pay TV segment has improved 310 basis points YoY to 47.1% in the total
YTD TV adex at the expense of the FTA TV segment.
Source: Kenanga
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