Wednesday, April 6, 2011

RHB Research sees more upside for media sector

KUALA LUMPUR: RHB Research said while year-to-date (Jan-Feb) gross adex for TV and print media was up 8.6% on-year, for full-year 2011, it projects adex could grow by 10.5% on-year.

'This is based on our projected 2011 GDP growth of 5% and the average GDP multiplier of 2.1 times. Notwithstanding the lack of ad-friendly events this year, adex growth should remain healthy, supported by resilient consumer spending,' it said on Wednesday, April 6.

Telecom companies have been the biggest spenders in terms of adex last year and RHB Research believes this would likely continue in FY11 as telco operators compete to defend and/or grow market share and revenues.

Over at the cost side, newsprint prices have been hovering around US$720-780/tonne up from US$650/tonne seven months ago, although the weakening of the US dollar (-1.2% YTD) has helped cushion the higher US dollar-denominated cost.

RHB Research said Media Prima (Outperform, FV=RM3.20) remains its top pick given its position as the largest integrated media player in Malaysia.

'We view the sector as defensive and coupled with decent valuations and attractive dividend yields, these could help shield investors from the volatile market. Thus, we maintain our Overweight stance on the sector,' it said.

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