By Lawrence Yong
Malaysian media stocks look lacklustre as advertising expenditure (adex) growth was reported almost flat in May with more spenders switching to TV advertisements from print, analysts said.
Citing reports by Nielsen Media Research, Alliance Bank Group’s stocks research unit rated the sector which includes stocks such as Star Publications, Media Chinese International Ltd (MCIL) and Media Prima as ‘neutral.’ A strong 6.4% growth in free-to-air (FTA) TV advertising in May helped to offset a 3.9% decline in newspaper advertisements.
Overall, total adex grew 0.5%, excluding Pay TV, in May compared to same period last year.
“We remain ‘neutral’ on the sector as we feel that it still lacks re-rating catalysts given our expectation of an overall softer adex environment in 2013,” Alliance Research said.
Alliance Research noted that they had expected a pick up in adex after a famine period prior to the 13th Malaysian general election. However, they noted a strange divergence in media as advertisers appears to prefer TV rather than newspapers.
Alliance Research noted that the trend also showed in adex growth for Astro pay TV, which had reported a 28% surge in year on year adex growth for January to April 2013. According the Nielsen, pay TV garnered the most adex in May at RM433.6 million.
Alliance Research however maintained a ‘buy’ recommendation on Star, publisher of Malaysia’s most widely circulated English newspaper, as its earnings could be helped by lower newsprint costs.
“Star offers the highest net dividend yield of 6.3% in the sector now that is sustainable and backed by its strong operating cashflow, as well as balance sheet with net cash position,” Alliance said.
Similarly, the company kept a ‘buy’ call on Chinese-language newspaper publisher MCIL and said it was reviewing its rating on Media Prima, which operates Malaysia’s key free-to-air TV stations and publishes Malay-language newspapers, pending a meeting with management.
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