Maybank IB Research maintains Sell on Media Prima, target price RM2.34

KUALA LUMPUR (April 19): Maybank Investment Bank Bhd Research has maintained its Sell recommendation on MEDIA PRIMA BHD [] at RM2.52 with a target price of RM2.34 and said it does not believe that the determination to share sports content would benefit Media Prima greatly.

In a note April 19 the research house said if it wants prime sporting content, it will likely have to pay dear prices for them.

“We maintain our estimates and MYR2.34 target price on 13.5x 2012 PER.

“Although its current price poses only 9% downside risk, we maintain our SELL call for now pending a meeting with management. Note that 1Q12 gross TV adex plunged 11% YoY vs our estimate of +7% YoY,” it said.



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RHB Research upgrades Media Prima from Underperform to market perform, FV RM2.75

KUALA LUMPUR (Feb 24): RHB Research Institute said Media Prima’s 4QFY11 core net profit of RM75 million (up 13.5% on-year; +40.8% on-quarter) was above expectations.

It said on Friday the variance was improved margins due to an unexpected surge in adex demand during November and December, while content costs were contained.

“Given the improving adex outlook amid receding risk of a double-dip global recession, we upgrade Media Prima from underperform to Market Perform.

Fair value raised from RM2.10 to RM2.75 based on 14x (previously 12x) FY12 EPS of 19.7 sen,” said RHB Research.



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Media: Meek end to 2011

Media sector
Maintain underweight: Total gross advertising expenditure in December 2011 was up only 1% year-on-year (y-o-y), while TV adex contracted 2% y-o-y, the third consecutive month of contraction. With consumer sentiment at a two-year low, total gross adex growth in 2012 will likely be off to a slow start. Maintain “underweight” on the media sector.

Although newspaper adex still grew 6% y-o-y, this was the weakest growth since February 2011. By language, we understand that newspaper adex growth was driven by the Malay and Chinese newspapers, while adex of English newspapers was flattish if not lower y-o-y.

Gross adex growth for 2011 of 8% was within expectations and a tad higher than our forecast of 7%. By segment, however, TV adex growth of 4% was below our expectation of 7% while newspaper adex growth of 12% was above our 5% expectation. The eurozone debt crisis drove European multinationals to migrate more of their ad spend from TV to cheaper mediums such as newspapers in 2H11.

Media Chinese International Ltd, which owns Sin Chew Daily, remains a 'hold'.

There is a high correlation between consumer sentiment and total y-o-y adex growth. The Malaysian Institute of Economic Research (Mier) Consumer Sentiment Index hit a two-year low of 106.3 in 4Q11 on job security and inflation concerns. With consumers expected to reduce spending going forward, adex growth will be negatively affected.

We maintain our 2012 total gross adex growth forecast of 7% based on two times real GDP growth.

We understand that spot newsprint prices eased from US$700 (RM2,128) per tonne in 3Q11 to US$680 in 4Q11 due to the slowing Chinese economy negatively impacting old newspaper prices, the raw material for newsprint production. That said, it remains to be seen if the slowing Chinese economy will negatively impact the Malaysian economy and hence, adex growth, even further.

As 2011 TV adex growth of 4% was below expectation of 7%, we may have to review our Media Prima Bhd estimates. We reiterate our view that total y-o-y gross adex growth
going forward will be in mid-single digits at best until mid-2012 at the earliest.

Media Prima and Media Chinese International Ltd remain “sells”, while Star Publications (M) Bhd remains a “hold” for its stable dividend yields of more than 5%. — Maybank IB Research, Jan 26



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Media past its prime time for now

Media
Maintain underweight: We expect advertising expenditure (adex) growth to slow significantly due to weak consumer sentiment and slower economic growth. Coupled with still high newsprint prices, we expect three-year forward media sector earnings compound annual growth rate of only 2%. As current risk reward ratios are unfavourable, we continue to rate Media Prima Bhd and Media Chinese International Ltd (MCIL) as “sell” but Star Publications (M) Bhd a “hold” for its attractive net 5.8% dividend yield.

We expect media sector earnings to grow by just 3% in 2012. Over the next three years, we expect media sector earnings compound annual growth rate of only 2%. Although we still expect adex revenue of media companies to continue to expand, we do not expect it to outpace cost inflation, especially higher newsprint cost.

We note: (i) shortened forward ad booking visibility from two to three months pre-Hari Raya Aidilfitri to one to two months currently due to lack of adex friendly events and weak consumer sentiment; and (ii) the eurozone debt crisis has prompted European multinationals to cut their advertising and promotional (A&P) budgets.

We expect total gross adex growth year-on-year to be mid single digit in percentage terms at best, insufficient to outpace cost inflation. To reinforce our view, each adex bull cycle in the past lasted five to 11 quarters before contracting or stalling. This adex bull cycle has already lasted for 11 quarters.

Our forecast is based on two times real GDP growth of 3.5% and will be the weakest for a “peak” year (Olympics, Euro Cup football and general election) in a decade. This weakness is due to the slowest real GDP growth for a peak year and European MNCs cutting their A&P budgets. There is also added downside risk from slower-than -expected economic growth.

Spot newsprint prices have remained elevated at US$700 (RM2,205) per tonne to US$750 per tonne. The financial troubles of the two largest newsprint manufacturers in the world, Abitbi Bowater and Norske Skog, have kept global newsprint supply tight. Media companies cannot look to cheaper newsprint prices for relief.

This is because we expect media sector earnings growth to slow markedly with added downside risk. Media Prima is a “sell” for its vulnerability to deceleration in adex growth. MCIL is a “sell” for its vulnerability to increases in newsprint prices. Star is a “hold” for its attractive net dividend yield of 5.8% for 2012. — Maybank IB Research, Jan 10


This article appeared in The Edge Financial Daily, January 11, 2012.



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Media Prima dips, Affin Research has Sell, TP RM1.68

KUALA LUMPUR (Jan 4): Shares of MEDIA PRIMA BHD [] were marginally lower at RM2.54 at the midday break with trading volume on the thin side while Affin Investment Bank Research was cautious on the outlook for the group.

At 12.30pm, it was down one sen to RM2.54. There were 277,200 shares traded at prices ranging from RM2.54 to RM2.55.

The FBM KLCI was up just 1.21 points to 1,514.75. Turnover was 958.42 million shares valyed at RM782.15 million. Tthe overall broader market was slightly higher with advancing stocks lead decliners 377 to 269 while 306 counters were unchanged.

Affin Research said Media Prima was trading at a forward price-to-earnings (PE) multiple of 17 times (near its +1 standard deviation mean PE) but it was likely to come off, and could potentially test its -1SD historical mean PE level of 10.8 times, triggered by earnings disappointment ahead.

“Our FY12-13 EPS estimates are 10%-30% below street. Risk to our anti-consensus SELL rating lies on us being too early in our recommendation as the stock price could potentially be lifted by an election rally.

“Nevertheless, we believe that any stock price rally would optimally be the best time to trim positions in the stock ahead of a more challenging adex environment in 2012,” it said.

Affin research said Media Prima was highly leveraged to the broadcast segment which was highly vulnerable to an economic slowdown.

“Maintain our SELL rating on Media with an unchanged target price of RM1.68 based on 12x FY12 EPS,” it said.



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Slowdown in adex here to stay

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.



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RHB Research maintains underperform on Media Prima, FV RM2.10

KUALA LUMPUR (Dec 16): RHB Research Institute is maintaining its Underperform on Media Prima with a fair value of RM2.10.

The research house said Media Prima’s management believed the current environment looked challenging, given the prevailing debt issues in Europe that have led to advertisers tightening their ad spending.

“Maintaining margins will be one of the key challenges amid rising staff costs,” the research house said.

RHB Research said it was maintaining the earnings forecasts and indicative fair value of RM2.10 based on 12 times CY12 EPS of 17.5 sen.

“Media Prima is vulnerable in the event of an economic downturn from its high exposure to the more expensive broadcasting segment. Maintain Underperform,” it said.



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Dividend masks uncertainty for Media Prima

Media Prima Bhd (Nov 21, RM2.95)
Maintain sell at RM2.60 with target price of RM2.25: Results for 9MFY11 were within expectations but it is evident that 3QFY11 revenue and earnings growth year-on-year (y-o-y) ground to a halt. In addition, we are disturbed to notice that 3QFY11 revenue actually eased 1% quarter-on-quarter when we had expected it to exhibit strong q-o-q growth on Hari Raya Aidilfitri ad spend. Maintain “sell” and RM2.25 target price. Only a special single-tier dividend per share (DPS) of five sen (in addition to three sen second interim) provided some cheer.

Core net profit for 3QFY11 of RM53.3 million (+4% y-o-y, +20% q-o-q) brought 9MFY11 core net profit to RM132.7 million (+20% y-o-y), meeting 72% of our full-year estimate but 70% of consensus estimate. Revenue of RM1.2 billion for 9MFY11 (+5% y-o-y) was at 73% of our 2011 estimate.

Although 3QFY11 core net profit was 4% higher y-o-y, revenue and earnings before interest, tax, depreciation and amortisation (Ebitda) were little changed y-o-y. Due to weakening consumer sentiment, TV advertising revenue eased 3% y-o-y, the first time since 4QFY09. Radio ad revenue contracted 15% y-o-y on stiff competition. Although outdoor and print recorded revenue growth y-o-y, their Ebitda were subdued on higher site rental and newsprint costs.

Although 3QFY11 Ebitda and core net profit was 18% and 20% higher q-o-q respectively, we were disturbed to notice that revenue actually eased 1% q-o-q.


Historically, quarters with Hari Raya Aidilfitri tend to exhibit strong revenue growth q-o-q on festive ad spend. We gather that the earnings growth q-o-q was only due to content cost management at the TV networks.

A second interim single-tier DPS of three sen was declared bringing 9MFY11 recurring single-tier DPS to six sen. In addition, a special single-tier DPS of five sen was declared. Year-to-date, total single tier DPS declared is 11 sen or 87% net dividend per ratio (DPR), above our expectation of 60% net DPR for the full-year.

As industry gross TV adex contracted 6% y-o-y in October 2011, we concede that there is likely to be further downside risk to our earnings estimates. We maintain our earnings estimates for now pending a meeting with management but reiterate our “sell” call and RM2.25 target price on 13.5 times one-year forward PER. — Maybank IB Research, Nov 21


This article appeared in The Edge Financial Daily, November 22, 2011.



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Media Prima 3Q net profit dips 25.7% to RM53.37m

KUALA LUMPUR (Nov 18): MEDIA PRIMA BHD [] net profit for the third quarter ended Sept 30, 2011 fell 25.74% to RM53.37 million from RM71.87 million a year earlier, due mainly to non-recurring negative goodwill of RM35.77 million in 2010 arising from the acquisition of the equity interest in NSTP.

The company said that its revenue for the quarter rose marginally to RM417.47 million from RM416.75 million in 2010.

Earnings per share fell to 5.08 sen from 7.29 sen, while net assets per share was RM1.285.

The company declared a second interim single-tier dividend of three sen per share for the financial year ended Dec 31, 2011 and a special single-tier dividend of five sen per share.

For the nine months ended Sept 30, Media Prima’s net profit fell to RM132.6 million from RM154.09 million, on the back of revenue RM1.19 billion.

Media Prima said excluding the non-recurring negative goodwill in 2010 arising from the acquisition of the equity interest in NSTP, the group’s profit after tax and non-controlling interests from continuing operations grew by 31.6% to RM132.7 million compared to RM100.8 million in the same period last year.

Profit after tax and non-controlling Interests decreased by 14% for the period ended Sept 30, 2011 compared to the same period last year if the non-recurring RM53.3 million negative goodwill was included, it said.

Reviewing its performance, Media Prima said it registered minimal growth in revenue compared to second quarter of 2011 which included non-recurring revenues from Sarawak State Election operations.

The global economic slowdown which impacted market's confidence since August 2011 had resulted in the slowing down of advertisement spending, it said.

The Group’s results and revenue activities were significantly driven by its core platforms of television network, print media, outdoor media and radio network.

On its prospects, Media Prima said it was committed to maintaining its industry leadership position and its earnings through continued investment in quality and relevant content and branding for its targeted market.

Concurrently, the group will continue to exercise prudent financial and risk management and is optimising its cost management for better leverage on its operating efficiency, it said.

The group, however, said it was cognisant of the challenges faced by the industry at large and by its respective platforms and said it had strategies for each of its division.

“Barring any unforeseen circumstances, the board remains optimistic that the group is on track to achieve its 2011 target,” it said.



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October 2011 adex: Reality bites

Media sector
Maintain underweight: October 2011 total gross advertising expenditure was up 4% year-on-year (y-o-y), but disturbingly, TV adex contracted 6% y-o-y, the largest contraction since February 2009. We understand this is due to weakening consumer sentiment. Newspaper adex, especially Malay and Chinese newspapers, grew 12% y-o-y.

November 2011 is expected to be another quiet month due to lack of adex-friendly events. Maintain “underweight” on the media sector.

Whenever TV adex contracts but newspaper adex grows y-o-y, this indicates that advertisers are turning cautious on consumers. Historically, TV adex is more sensitive to sentiment fluctuations than newspaper adex.

October 2011 total gross adex was little changed from the seasonally slower months of March and April.

Historically, October total gross adex is seasonally higher than that of both March and April. Like September 2011, we understand that this was due to still weak consumer sentiment.

Historically, November is a quiet month due to a lack of adex-friendly events with the total gross adex levels little changed from October. In terms of total gross adex growth y-o-y going forward, we reiterate our view that it will be mid single digits in percentage terms at best due to the high base effect and weakening consumer sentiment. Adex for 10MFY11 grew 10% y-o-y, in line with our 6.8% forecast gain for 2011 and 7% for 2012.

We maintain our assumptions and earnings estimates for the media companies under our coverage. As we expect three-year forward sector earnings compound annual growth rate of only 2%, we opine that media companies should not be trading at historical averages but at close to -1 standard deviation valuations.

Media Prima Bhd is a “sell” for its vulnerability to slower adex growth. Media Chinese International Ltd is a “sell” for its vulnerability to newsprint prices. Star Publications (M) Bhd is a “hold” for its stable dividend yields of more than 5%. — Maybank IB Research, Nov 17


This article appeared in The Edge Financial Daily, November 18, 2011.



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Media Prima bags platinum award for CSR

KUALA LUMPUR Media Prima Bhd has won the platinum award for Best Corporate Social Responsibility at the National Annual Corporate Report Awards (NACRA) 2011 held Tuesday night.

It beat Malayan Banking Bhd and Telekom Malaysia Bhd, which received the gold award and the silver award respectively.

A total of 47 companies submitted their annual report for the adjudication process.

In a statement, the company said this achievement was a result of an extensive report for the year 2010, which included a comprehensive reporting of Media Prima's corporate responsibility initiatives throughout the group.

The initiatives were the Tabung Bencana NSTP-Media Prima, Bersamamu, Singgah Sahur, Aduan Rakyat, Sunshine Project and Pintar Project.

Media Prima group managing director Datuk Amrin Awaluddin said the award is another testimony to the group's continuous efforts in expanding and enhancing its corporate responsibility initiatives.

"This would not have been possible without the collective effort by all media platforms in the group to ensure a sustainable future for both the company and the community," he said.

The event was organised by Bursa Malaysia Bhd, Malaysian Institute of Accountants and The Malaysia Institute of Certified Public Accountants.

The awards are given to organisations as recognition of their commitment to produce a timely, informative, factual, and reader friendly reports.

Domestic Trade, Co-operatives and Consumerism Minister Datuk Seri Ismail Sabri Yaakob presented the awards to winners.



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Sleepy September for advertising

Media
Maintain underweight: September 2011 total gross advertising expenditure was up 4% year-on-year (y-o-y), but down 17% month-on-month (m-o-m) to a counter-seasonal six-month low. The underperformance was due to weakening consumer sentiment. October is expected to be another quiet month due to a lack of adex-friendly events. The 3Q11 results season may see earnings contractions y-o-y as adex growth will not outpace cost inflation. We maintain underweight on the media sector.

Despite Hari Raya Aidilfitri falling in September last year versus August this year, September 2011 total gross adex was still up 4% y-o-y. Newspaper adex, especially Malay and Chinese newspapers, grew 7% y-o-y while TV only grew 3% y-o-y. Radio adex contracted 7% y-o-y, the first time this year, while outdoor adex snapped its seven-month losing streak, growing 4% y-o-y.

We expected September total gross adex to be down m-o-m due to a lack of adex-friendly events, but we were disturbed that it was the lowest since March 2011. Historically, September total gross adex is seasonally higher than that of March.

Historically, October and November are quiet months due to a lack of adex-friendly events with their total gross adex levels little changed from September. In terms of total gross y-o-y adex growth, we reiterate our view that it will be mid single digits in percentage terms at best, due to the high base effect and weakening consumer sentiment.

In 3Q11, total gross adex grew 8% y-o-y led by newspaper adex which grew 12% y-o-y while TV grew 4%. Adex revenue of individual media companies will continue growing y-o-y but will not outpace cost inflation at low double digits in percentage terms y-o-y. Therefore, 3Q11 results season may witness earnings contractions y-o-y, especially TV-centric Media Prima Bhd.

We maintain our assumptions and earnings estimates for the media companies under our coverage. As we expect three-year forward sector earnings compound annual growth rate of only 2%, we believe media companies should not be trading at historical averages but at close to -1 standard deviation valuations. Media Prima is a “sell” for its vulnerability to slower adex growth. Media Chinese International Ltd is a “sell” for its vulnerability to newsprint prices. Star Publications (M) Bhd is a “hold” for its stable dividend yields of over 5%. — Maybank IB Research, Nov 10


This article appeared in The Edge Financial Daily, November 11, 2011.

Softer advertising expenditure in September

Media sector
Maintain underweight
As expected, September’s gross advertising expenditure (adex) for TV and print media combined showed a sequential monthly contraction of 18.1%, following the bumper August adex (due to Hari Raya and Merdeka festivities), according to Nielsen Media Research (NMR). On year-on-year (y-o-y) basis, adex growth moderated to 5.1% in Septemebr (August: +9.7% y-o-y).

Print: Bearing in mind the ad rate hike effective January 2011, the print media showed positive y-o-y growth of 7% in September, although it has moderated (August: +14.1% y-o-y). On a month-on-month (m-o-m) basis, the print media contracted 21.2%, surprisingly due to the Malay dailies’ 37.5% m-o-m contraction. Prior to September, the Malay dailies’ adex growth has been quite strong since February, with a monthly sequential growth of 15.5%, compared with English (8.5%) and Chinese (5.8%) dailies.

Media Chinese International Ltd’s (MCIL) newspapers recorded stronger y-o-y numbers across the board, compared with other Chinese dailies. Star Publications (M) Bhd had a relatively decent month as adex grew 1.8% y-o-y (-7.1% m-o-m).

TV: TV adex in September moderated further since July with only 2.9% y-o-y growth (August: +4.4% y-o-y), mainly supported by strong numbers from TV3 and 8TV. Collectively, adex for Media Prima’s channels held up quite well with 8.6% y-o-y growth (-12.1% m-o-m). In comparison, TV1 and TV2 combined recorded -27.5% y-o-y growth (-26.5% m-o-m).


For the remainder of 2011, we expect adex growth to moderate further due to lack of festivities or big events and a high base effect in 4Q10. Looking at 2008 elections, a snap election before 2012 will have a positive though not significant impact on the 2011 adex. Also, global economic uncertainties have resulted in advertisers being more prudent on ad spend. Year to date, adex grew 11%. For now, we maintain our projected 2011 adex growth of 9%, and expect adex growth to slow down to 3.6% in 2012.

The risks include: 1) stronger-than-expected consumer spending and demand (and hence, adex), possibly due to a faster-than-expected recovery in the global economy, among others; 2) lower-than-expected newsprint/content costs; and 3) stronger-than-expected ringgit vs the US dollar.

No change to our earnings forecasts. Maintain “underweight” on the sector. We believe the sector lacks catalysts as adex growth may weaken further if a double-dip global economic recession materialises. Historically, we note that the GDP multiplier effect on adex growth weakens (potentially deteriorating by as much as half) when GDP growth softens. — RHB Research, Oct 31


This article appeared in The Edge Financial Daily, November 1, 2011.

Can KLCI break through 1,500 points?

KUALA LUMPUR: Can the October rally extend into November, after chalking up gains of 8.35% over the month and breaking through the psychologically important 1,500? Or is the rally losing steam?

Based on Bursa Malaysia stock market data, the FBM KLCI is up 114.3 points from Oct 3’s 1,367.52 to end 1,481.82 last Friday. For past week, the KLCI was up 30.9 points or 2.19%.

The October performance was the strongest since the selldown in late June, as investors picked up equities after European officials hammered out the €1 trillion (RM4.33 trillion) rescue package to mend Europe’s debt woes, especially Greece.

On Wall Street, stocks closed out a fourth week of gains in quiet fashion last Friday, edging higher as the market took a breather after rallying 3% on Europe’s deal to stem its debt crisis.

The Dow Jones industrial average gained 22.56 points, or 0.18%, to 12,231.11. The Standard & Poor’s 500 Index added 0.49 of a point, or 0.04%, to 1,285.08. The Nasdaq Composite Index shed 1.48 points, or 0.05%, to 2,737.15.

OSK Research director of research Chris Eng said it is possible although the rally does look as though it is running out of steam.

He said for the KLCI, the rally thus far has been quite steep although slightly lagging the global average.

On the outlook for Greece, he said Greece could avoid default in the short term.

“However, Europe is still faced with the problem of cutting deficits from almost everyone except Germany. The risk of a mild recession is still there,” he said.

As for investors, he remained “neutral” on the market and said investors should buy below 1,300 and sell above 1,533. Eng’s advice is for investors to remain defensive.
Affin Investment Bank head of retail research Dr Nazri Khan believes the KLCI is likely to trend higher this week on stronger global risk appetite following twin Europe-US catalysts last week.

He said the positive factors were the long awaited plan to resolve the European debt crisis and the stronger than expected US third quarter economic growth (registering the fastest quarterly GDP in a year).

“Going forward next week [this week], we expect investors to price in stronger US/European economy as well as the reduced banking crisis risk in both continents, pushing the KLCI to a possible 1,524 level (KLCI’s high made in 2008 before the subprime crisis),” he added.

Nazri said given the KLCI has gained 13% from its October low and MSCI Asia Pacific index has gained 8.1%, there were highly probable signs that intermediate bottom has been in place and the traditional year-end rally has started, which is likely to last till before Chinese New Year 2012.

He cited positive local corporate earnings (for example Public Bank Bhd, Malaysia Airports Holdings Bhd (MAHB), Supermax Bhd) and good average daily volume above one billion shares.

Nazri said there was across-the-board sectoral strength in the trading service, plantation and finance indices and weekly gains in economically-sensitive oil and palm oil to sustain the KLCI rebound in the near term.

“As for strategy next week [this week], we are recommending our investors to gradually accumulate blue-chip leaders especially those in the fast growth service sector (such as Genting Bhd, Media Prima Bhd, MAHB and AirAsia Bhd).

Among the stocks to watch today are Tenaga Nasional Bhd, Envair Holdings Bhd, SILK Holdings Bhd and Malayan Flour Mills Bhd (MFM).

TNB announced a 4Q net loss of RM453.9 million, the second consecutive quarter of losses, and expected the current financial year to be very challenging.

Though investors anticipated TNB would report losses, their concerns were whether it could work out the gas supply issue and a definite compensation from Petroliam Nasional Bhd (Petronas).

However, the lack of assurance from Petronas could weigh on the share price, especially after TNB president and CEO Datuk Seri Che Khalib Mohamad Noh said last Friday no decision had been reached as yet.

Envair has received a letter of intent from Zai Corporate Finance Ltd, an investment banking firm based in London, to subscribe for up to 30% of its new ordinary shares of 10 sen each at the market issue price.

SILK chairman Datuk Mohd Azlan Hashim has said he is confident the company would be able to return to profitability in a couple of years as traffic volume picks up for its tolled highway operations and an improvement in the marine support services.

Malayan Flour Mills could be getting ready for the next stage of growth, having announced a series of corporate exercises in May and signing an agreement in October that would see it step into the Indonesian market, according to The Edge weekly.


This article appeared in The Edge Financial Daily, October 31, 2011.

Media Prima, Puncak Semangat in early talks

KUALA LUMPUR: Media Prima Bhd is in preliminary talks with privately-held Puncak Semangat Sdn Bhd, which is looking at converting all analog televisions (TVs) into the digital ones by 2015.

Puncak Semangat, owned by tycoon Tan Sri Syed Mokhtar Al-Bukhary, has been bidding for the conversion job from the government for the last three years.

"We cannot comment much on that. It's still in preliminary talks. Actually what I am doing here is evading your question," Media Prima chief operating officer for television networks Ahmad Izham Omar said at a press conference after announcing the content line-up for four of its TV stations for next year.

The conversion of all analog TVs to digital is expected to cost about RM2 billion, a study done in 2000 revealed.

The government is expected to announce the winner next year, but industry sources said the government has more or less confirmed that the tycoon has got the job.

Puncak Semangat has gone on a recruitment drive, looking for talent through collaboration with private colleges and universities.

For next year's content line-up, Izham said that their four stations, namely TV3, NTV7, 8TV and TV9 are expecting an increase. He did not share any number.

This year, Media Prima's TV stations took the top spot with 49 per cent viewership, followed by Astro 38 per cent and RTM channels at 13 per cent.

"Media Prima is committed to screening high quality local content helps to encourage and nurture the local content development industry.

"We have continually developed multimedia and interactive content that resonates with the IT-savvy generation. We believe in changing. Therefore, we are changing the landscape of content to be more interactive and innovative," added Izham.

CIMB Research has technical sell on Media Prima

KUALA LUMPUR: CIMB Equities Research has a technical sell on Media Prima at RM2.37 at which it is trading at a FY12 price-to-earnings of 11.3 times and price-to-book value of 1.8 times.

It said on Friday, Oct 21 the recent rebound may have exhausted. Prices hit the 50% FR level and the bears have since re-surfaced.

It added that even if a stronger rebound were to take place, gains will likely cap at the 50-day and 200-day SMAs, at RM2.50 and RM2.62 respectively.

“Our strategy here is to unload on strength, especially near the stipulated resistance levels. On the downside, once the RM2.31 low is infringed, expect the next downleg to drag prices towards RM2.18 and RM2.00,” it said.

CIMB Research said indicators are showing signs of exhaustion. MACD histogram bars are rising at a slower pace while RSI has also hooked downward.