KUALA LUMPUR (Mar 19): Astro Malaysia Holdings Bhd and MEDIA PRIMA BHD [] advanced in afternoon trade after analysts said they see television and radio network operators as prime beneficiaries of advertising expenditure (adex) growth ahead of Malaysia's coming general election.
At 3.04pm, Astro rose as much as one sen or 0.4% to an intraday high of RM2.79 with some eight million shares done. The stock which traded flat at RM2.78 at 3.34pm, was the 10th most-active entity across the exchange.
Meanwhile, Media Prima changed hands at RM2.36 with about one million shares traded at 3.35pm after rising as much as two sen or 0.9% to RM2.37 earlier.
Maybank Investment Bank Bhd analyst Yin Shao Yang said the government tends to earmark higher adex for free-to-air television (FTA TV) and radio compared to print entities to reach voters more effectively ahead of the general election.
"We prefer the TV and radio operators, Media Prima (FTA) and Astro (Pay).
"While TV (7%) and radio (5%) adex accounted for only 12% of Astro?s FY1/13 total revenue, we understand that any adex growth will accrete directly to its bottom line as the related marginal cost is negligible," Yin wrote in a note.
Yin said while the research firm has kept its "neutral" call on the media sector, it has "buy" calls for Astro and Media Prima at target prices of RM3.40 and RM2.47 respectively.
Domestic adex grew 24% to RM792.1 million in February 2013 from a year earlier. During the month, FTA TV and pay-TV adex rose 26% and 96% respectively while radio expenditure advanced 32%, according to market research firm Nielsen Co.
RHB Research Institute Sdn Bhd analyst Jerry Lee said the research firm stays cautious on the prospects of the media industry.
In a note, Lee said Malaysia's adex may linger at similar levels over the next few months as advertisers withhold their expenditure, hence, RHB’s "neutral" recommendation for the sector.
"(This is) due to the local political uncertainties with the impending 13th General Election, and economic uncertainties in Europe and the US," Lee wrote in a note.
Hence, RHB is optimistic about Astro, the income of which, is not heavily reliant on adex. The research firm has a "buy" call and fair value (FV) of RM3.36 for the firm.
This compares to a "neutral" call for Media Prima with a FV of RM2.20.
Written by Chong Jin Hun of theedgemalaysia.com
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