MEDIA (4502) - Media - overall - Digital is key
Recommendation: Neutral
2014 was a challenging year for the media sector, given weak consumer spending following the subsidy rationalisation exercise and tragic incidents that further dampened consumer sentiment. We expect a gradual recovery in 2015, especially in 2H after anxiety over GST implementation subsides and better operating efficiency in the sector. We stay Neutral on the media sector due to the challenging operating environment caused by weak consumer sentiment on the back of uncertainty in the domestic economy. However, we still expect the sector to post a three-year EPS CAGR of 7.3%, mainly driven by Astro. Astro is our sector top pick due to its resilient earnings growth, dominant position and less reliance on adex market.
We stay Neutral on the media sector due to the challenging operating environment caused by weak consumer sentiment on the back of uncertainty in the domestic economy. However, we still expect the sector to post a three-year EPS CAGR of 7.3%, mainly driven by Astro. Astro is our sector top pick due to its resilient earnings growth, dominant position and less reliance on adex market.
2014 in review
The sector recorded a 3.5% yoy decline in core net profit to RM648m in 9M14 vs. RM672m in 9M13. However, excluding Astro’s contribution, the sector recorded a significant decline in earnings mainly due to lower adex spending across major traditional platforms like free-to-air (FTA) TV and print segments which fell by 10% and 11%. The weaker performance was attributable to poor consumer sentiment on the back of the government’s ongoing subsidy rationalisation, three misfortunate plane incidences (MH370, MH17 and QZ8501) and flooding in Peninsular Malaysia. Given the weaker earnings, the sector’s share prices fell by 5% on average in 2014, in line with the KLCI.
Outlook for 2015
2015 could be another challenging year for the sector given persistently weak consumer sentiment on the back of the upcoming GST implementation. The recent fuel price drop may have minimal impact on consumer spending, given the uncertainty in the domestic economy. Nevertheless, we still expect the sector to record moderate growth in 2015, driven by a recovery in adex especially in 2H15 as anxiety over GST implementation subsides and better operating efficiency, following industry-wide cost rationalisation exercises carried out in 2014. We also expect the structural shift in adex to digital platforms to gain traction due to rising internet connectivity and the popularity of social media advertising.
Source: CIMB Daybreak - 27 January 2015
Recommendation: Neutral
2014 was a challenging year for the media sector, given weak consumer spending following the subsidy rationalisation exercise and tragic incidents that further dampened consumer sentiment. We expect a gradual recovery in 2015, especially in 2H after anxiety over GST implementation subsides and better operating efficiency in the sector. We stay Neutral on the media sector due to the challenging operating environment caused by weak consumer sentiment on the back of uncertainty in the domestic economy. However, we still expect the sector to post a three-year EPS CAGR of 7.3%, mainly driven by Astro. Astro is our sector top pick due to its resilient earnings growth, dominant position and less reliance on adex market.
We stay Neutral on the media sector due to the challenging operating environment caused by weak consumer sentiment on the back of uncertainty in the domestic economy. However, we still expect the sector to post a three-year EPS CAGR of 7.3%, mainly driven by Astro. Astro is our sector top pick due to its resilient earnings growth, dominant position and less reliance on adex market.
2014 in review
The sector recorded a 3.5% yoy decline in core net profit to RM648m in 9M14 vs. RM672m in 9M13. However, excluding Astro’s contribution, the sector recorded a significant decline in earnings mainly due to lower adex spending across major traditional platforms like free-to-air (FTA) TV and print segments which fell by 10% and 11%. The weaker performance was attributable to poor consumer sentiment on the back of the government’s ongoing subsidy rationalisation, three misfortunate plane incidences (MH370, MH17 and QZ8501) and flooding in Peninsular Malaysia. Given the weaker earnings, the sector’s share prices fell by 5% on average in 2014, in line with the KLCI.
Outlook for 2015
2015 could be another challenging year for the sector given persistently weak consumer sentiment on the back of the upcoming GST implementation. The recent fuel price drop may have minimal impact on consumer spending, given the uncertainty in the domestic economy. Nevertheless, we still expect the sector to record moderate growth in 2015, driven by a recovery in adex especially in 2H15 as anxiety over GST implementation subsides and better operating efficiency, following industry-wide cost rationalisation exercises carried out in 2014. We also expect the structural shift in adex to digital platforms to gain traction due to rising internet connectivity and the popularity of social media advertising.
Source: CIMB Daybreak - 27 January 2015
