Media Prima's adex encouraging. We like Media Prima (BUY, FV RM2.98) for its: (i) status as the nation's sole integrated media player with exposure across all media platforms, (ii) strong print media business, with a dominant position in the BM daily space, thanks to BM sub-segment adex market share leaders Harian Metro (47.9%) and Berita Harian (24.1%), and (iii) its leading FTA TV position with the lion's share of 87.2% in adex. With such encouraging adex growth, we are bullish on the group's potential to lure more adex monies from the other media platforms in 2HCY12. Based on its 34% q-o-q TV adex growth as well as Harian Metro's 13.9% y-o-y and 29.9% q-o-q adex growth, we believe that the group will register healthy mid single digit q-o-q and y-o-y growth in its upcoming 2QFY12 results, which are expected to be announced on14 Aug 2012. Should negotiations on content sharing rates between the Pay and FTA TV operators bear fruit, Media Prima is likely to record strong adex growth moving forward. Nonetheless, we are maintaining our 4% adex growth forecast, pending the release of more concrete details on content sharing charges between TV operators.

Media Chinese still a BUY. Media Chinese (BUY, cum-FV RM1.86) has high potential, considering the country's growing Chinese-literate population and the increasing emphasis on the language in the global arena. The company's advertising space is still largely untapped, as its existing publications are skewed towards editorial content as opposed to advertising, at a ratio of 60:40. MCIL's recent proposed capital repayment of 41 sen bumped up its ROE to 20%, turning it into the highest-ROE media company in Malaysia. While it was surprising that the company paid huge dividends amounting to RM700m. or RM0.41 per share funded through RM500m in borrowings, MCIL will no longer be a cash cow after the payout; it will have to service interest on the loan amounting to RM30m p.a. going forward, based on a 6% p.a. interest rate. We maintain our BUY call for now, considering the group's ability to pay the debt interest as well as dish out dividends based on a 60% payout ratio, assuming that it does not take on any major capex in the next three to four years. Note that MCIL has a strong free cash flow of approximately RM60m per quarter. Our cum-capital repayment FV is MYR1.86 based on an unchanged 13x FY13 PER. With marginal growth of adex recorded in 2QCY12, and the appreciation of the USD (which poses a threat), we still expect the group's 1QFY13 results to be in line with our projection of healthy growth in the mid-single digit, boosted by prudent cost controls and its healthy Malaysia and Hong Kong operations.

Riding on robust Internet growth. Within the small- to mid-cap space, we like Catcha Media (BUY, FV RM1.03) for its potential to reap benefits from the Internet media segment, which continued to record a healthy y-o-y adex growth of 9.8% in 1QCY12. Note that adex for this segment was not available in 2QCY12. As Internet advertising grows in tandem with the expansion of broadband services, Catcha Media will benefit from telco companies' aggressive rollout of broadband services and Government initiatives to boost household Internet penetration. We also expect its e-commerce arm, Haute Avenue, to blossom going forward, capitalizing on its healthy membership growth and the growing trend in internet shopping among Malaysians, especially young working adults. We maintain our BUY call, at an unchanged FV of RM1.03, based on a 12x FY12 PER. An upward re-rating is imminent when iCar Asia is eventually listed on the ASX. iCar Asia is a new online car classifieds company comprising Catcha's 50%-owned Auto Discount, Mobil 123 (Indonesia's most notable used-car trading website) and Autospinn (Thailand's leading online auto news website for car enthusiasts). Post-listing, Catcha will hold a 40.4% stake in iCar Asia)

Not a shining Star. We are less keen on STAR (NEUTRAL, FV RM3.46), which is facing a declining readership, dwindling adex share and a saturation in advertising space. While the group is strengthening its position as a complete media group via the purchase of CNM Events SB, which owns Perfect Living and Perfect Lifestyle for RM45m and which translates into a forward PER of 6x, we are keeping NEUTRAL on the stock due to its limited upside. Still, we believe the group will continue to pay out lucrative dividends in FY12, judging from its huge net cash pile of RM513.4m, or net cash per share of RM0.63. We are maintaining our DPS forecast of 19.2 sen based on a 75% payout ratio, translating into a dividend yield of 6%.

Source: OSK