BUY Media Prima and Astro. Feb 2013 total gross adex was up only 5% YoY but drilling deeper into the details, FTA TV adex jumped 26% YoY and radio adex surged 32% YoY, at the expense of print adex (- 6% YoY). This was due to pre-13th General Election (GE) ad spend by government agencies, especially Jabatan Perdana Menteri (Prime Minister‟s Department). We maintain our 2.5% gross adex growth forecast for 2013. Our BUYs are Media Prima and Astro.

Feb 2013 total gross adex up 5% YoY. Of the four major mediums, FTA TV and radio performed the best. FTA TV adex surged 26% YoY and radio adex surged 32% YoY but print adex fell 6% YoY. This is typical of ad spend before GEs, where the government spends more on ads on FTA TV and radio than on print, to better „connect‟ with the voters. FTA TV and radio adex also benefited from a low base last year while the opposite was true for print adex.

Jabatan Perdana Menteri (JPM) was the top ad spender. It spent MYR36.1m on ads, comprising 7% of Feb 2013 total gross adex. The second largest ad spender was Unilever Malaysia at a distant MYR13m. Curiously, the ruling coalition itself, Barisan Nasional (BN), appeared on the top 20 advertisers list after having spent MYR4.9m on ads. We expect ad spend by both JPM and BN to sustain ahead of the 13th GE, which is now widely expected to be called in Apr 2013.

Maintain 2013 total gross adex growth forecast of 2.5%. Although 2M13 total gross adex was up 5% YoY, we maintain our 2013 total gross adex growth forecast of 2.5% on 0.5x real GDP growth as we expect ad spend by JPM, BN and other government agencies to take a breather after the 13th GE. There are also no major adex friendly sports events this year for the private sector advertisers to place their ads on (2012: Euro Cup, Summer Olympics).

Maintain Neutral but BUY TV and radio operators. Our call on the newspaper companies, Star and Media Chinese International (MCIL) are still HOLDs due to the still poor prospects of print adex. We prefer the TV and radio operators, Media Prima (FTA) and Astro (Pay). While TV (7%) and radio (5%) adex accounted for only 12% of Astro‟s FY1/13 total revenue, we understand that any adex growth will accrete directly to its bottom line as the related marginal cost is negligible.

Source: Maybank Research - 19 Mar 2013