Media Sector
Maintain underweight: November 2011 total gross advertising expenditure (adex) was up only 2% year-on-year (y-o-y) but TV adex contracted 6% y-o-y, the second consecutive month of contraction. December 2011 total gross adex may not be as strong as that of past Decembers as we understand that Europe-based companies are cutting their advertising and promotion (A&P) budgets. Maintain “underweight” on the media sector.
Newspaper adex, especially for the Malay and Chinese newspapers, grew 9% y-o-y while TV adex contracted 6% y-o-y, the second consecutive month of contraction. Radio adex’s inconsistent performance continued as it contracted 3% y-o-y, the third time this year.
November 2011 total gross adex was again little changed from the seasonally slower months of March 2011 and April 2011. Although newspaper adex eased only 1% month-on-month (m-o-m), historically November newspaper adex is usually seasonally higher m-o-m.
Ad spend by telcos plummeted by a whopping two thirds! November 2011 total gross adex growth of 2% y-o-y largely came from ad spend by government institutions which surged 40% y-o-y. That said, it was offset by a sharp contraction in ad spend by mobile service providers (telcos) which plummeted by a whopping 67% y-o-y.
Historically, December is the best month as advertisers exhaust their A&P budgets. We understand that the hitherto weak adex growth was aggravated by Europe-based companies cutting their A&P budgets. Therefore, this month’s total gross adex may not be as strong as that shown in December in previous years.
11M11 total gross adex grew 9% y-o-y, a tad above our +6.8% forecast for 2011; our forecast for 2012 is +7%. That said, we may cut our earnings estimates for Media Prima Bhd again as 11M11 TV adex grew by 5% y-o-y or below our 2011 TV adex growth assumption for Media Prima of 6.8% y-o-y.
We reiterate our view that total gross adex growth y-o-y going forward will be mid single digits in percentage terms at best. Media Prima and Media Chinese International Ltd remain as “sell” while Star Publications (M) Bhd remains a “hold” for its stable dividend yields of more than 5%. At current valuations, risk rewards ratios do not favour investors given the poor adex sentiment. — Maybank IB Research, Dec 21
This article appeared in The Edge Financial Daily, December 22, 2011.
Maintain underweight: November 2011 total gross advertising expenditure (adex) was up only 2% year-on-year (y-o-y) but TV adex contracted 6% y-o-y, the second consecutive month of contraction. December 2011 total gross adex may not be as strong as that of past Decembers as we understand that Europe-based companies are cutting their advertising and promotion (A&P) budgets. Maintain “underweight” on the media sector.
Newspaper adex, especially for the Malay and Chinese newspapers, grew 9% y-o-y while TV adex contracted 6% y-o-y, the second consecutive month of contraction. Radio adex’s inconsistent performance continued as it contracted 3% y-o-y, the third time this year.
November 2011 total gross adex was again little changed from the seasonally slower months of March 2011 and April 2011. Although newspaper adex eased only 1% month-on-month (m-o-m), historically November newspaper adex is usually seasonally higher m-o-m.
Ad spend by telcos plummeted by a whopping two thirds! November 2011 total gross adex growth of 2% y-o-y largely came from ad spend by government institutions which surged 40% y-o-y. That said, it was offset by a sharp contraction in ad spend by mobile service providers (telcos) which plummeted by a whopping 67% y-o-y.
Historically, December is the best month as advertisers exhaust their A&P budgets. We understand that the hitherto weak adex growth was aggravated by Europe-based companies cutting their A&P budgets. Therefore, this month’s total gross adex may not be as strong as that shown in December in previous years.
11M11 total gross adex grew 9% y-o-y, a tad above our +6.8% forecast for 2011; our forecast for 2012 is +7%. That said, we may cut our earnings estimates for Media Prima Bhd again as 11M11 TV adex grew by 5% y-o-y or below our 2011 TV adex growth assumption for Media Prima of 6.8% y-o-y.
We reiterate our view that total gross adex growth y-o-y going forward will be mid single digits in percentage terms at best. Media Prima and Media Chinese International Ltd remain as “sell” while Star Publications (M) Bhd remains a “hold” for its stable dividend yields of more than 5%. At current valuations, risk rewards ratios do not favour investors given the poor adex sentiment. — Maybank IB Research, Dec 21
This article appeared in The Edge Financial Daily, December 22, 2011.
