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Olympics, European Cup, General Election – Three Reasons For Cheers In The Media Industry
Malaysia Perspective | 28 February 2012

By Cecelia Kong

With the 2012 London Olympics, 2012 European Cup Championship and the Malaysian General Election just round the corner, stock brokers believe that the Malaysian media industry will stand to benefit from this flurry of events, to not only grow the businesses but also see the valuation of listed media companies go up.
Brokerage OSK Investment Research did an analysis of the research data released by media research company A.C. Nielsen, and reported that the 2011 advertising revenue (ADEX) of the Malaysian media industry registered a year-on-year increase of 8.2 percent to ring in RM8.3 billion.
More thrillingly, OSK Investment Research reported that the media industry’s advertising revenue in 2012 will be higher, thanks to the two major sporting events and the election taking center stage this year.
OSK’s report stated “We predict the 2012 advertising revenue growth rate will be close to our forecast of twice of Malaysia’s economic growth rate of 5.2 percent.”
The report also noted that the slide in television advertising revenue is attributed mainly to the slowdown in the final quarter and a soft landing in the economy, which stood at 4.2 percent, 0.8 percent lower than the projected 5 percent.
The report continued, “The outstanding result of newspaper advertising revenue was achieved at the indirect expense of television income.”
Figures showed that newspaper advertisement revenue in 2011 surged 12.1 percent year-on-year to capture 52.6 percent of the market, which translated into RM4.3 billion in market value.
On the other hand, with the final quarter coinciding with the festive seasons that are traditionally marked by a universal shopping frenzy, there was a sharp increase in the advertisements put on newspapers by retailers such as telecommunication companies and hypermarkets, thus putting more distance between newspaper and television advertising revenues.
The report pointed out that “Among all the newspapers, Malay newspapers are still the industry leader, with ad spending going up by 33.4 percent and cornering a further 4.8 percent of the advertising market share.”
On the other hand, the English and Chinese newspapers’ shares of the advertising revenue market fell 3.5 percent and rose 6.8 percent respectively. OSK Investment Research said that this is very likely due to English newspaper readers increasingly relying on internet news instead.
According to OSK Investment Research’s report, Media Chinese, which boasts an earnings ratio of 9.5 times for FY2012, is the choicest counter among media companies.
The report says, “With the emergence of Chinese as an international language, we see a huge potential in the international Chinese media.”
Media Prima is another counter recommended by OSK for its diversification of businesses, free-to-air television stations and the contribution from its subsidiary Malay newspapers.
Over at the small and medium-sized company stocks section, OSK Investment Research is of the opinion that Catcha Media will benefit from the rise of internet advertising.
OSK said in its report that “On the other hand, we believe that Star Publishing may face operational challenges in the future because of its falling readership.”
In addition, OSK Investment Research said the internet media industry was the fastest-growing industry in 2011, with an annual growth rate of 20 percent. “We view this industry favourably, and we believe that the internet media will see an even greater potential for growth as the Malaysian Government strives to develop Malaysia into a high-income nation.”
The report also noted that the Government’s efforts to popularise the internet by making networks and broadband more accessible will also offer direct stimuli to the growth of the internet media industry.

Source: OSK Investment Research, AC Nielsen Media Research.

Source: OSK Investment Research, AC Nielsen Media Research.

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