Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Research House: OSK



OSK Research has nudged up advertising expenditure (adex) growth forecast for 2010 to 15 per cent from 14 per cent previously.

In a research note today, OSK said this followed the recent upgrade in its gross domestic product (GDP) growth projection for the year to 7.5 per cent from seven per cent.

"As we expect adex growth for the fourth quarter of 2010 (4Q10) to moderate, we believe it is on track to meet our adex growth projection of 15 per cent for 2010.

"Based on this forecast, we see adex for 4Q10 growing at 10 per cent year-on-year and 3.5 per cent quarter-on-quater.

"This is in line with the slower GDP projection for the quarter, as well as a bigger base impact, whereby adex for 4Q09 accounted for some 29 per cent of total adex in for 2009," it said.

OSK said despite the rosier sector outlook, it was maintaining a 'neutral' call on the sector as there were now limited investment choices following the privatization of Astro All Asia Networks plc, and given the fact that investors had factored in robust adex growth for 2010 into stock prices.

"Media Prima is a good choice for investors seeking the widest exposure in the media sector, supported by its position as the only integrated media player in Malaysia with exposure to all media platforms," it said.

It recommended a 'buy' on the stock at the target price of RM2.45.

OSK said despite the recent windfall from its special dividend, the medium-term and long-term prospects for Star was rather unattractive, especially if one considered its relatively expensive valuation. It maintained its 'neutral' call on Star at a target price of RM3.68.

Meanwhile, it said Chinese Media was an attractive valuation proposition as the stock was currently trading below ten times its price earnings ratio on one-year forward earnings per share.
It recommended a 'buy' on the stock at a target price of RM1.35. -- Bernama