The research house also increases its target price on the stock to RM1.69 from RM1.25
ECM Libra Investment Research yesterday upgraded its call on Media Prima Bhd stock to "buy" from "hold", saying advertising revenue is gradually picking up with the improving economy.
The research house also increased its target price on the stock to RM1.69 from RM1.25. The increased target price is derived at by tagging a 13 times price/earnings on a forecast 2010 earnings per share of 13 sen.
Media Prima has direct interests in several media companies including TV3, 8TV, NTV7, TV9 and The New Straits Times Press (M) Bhd.
Media Prima's bottom line declined into the red in its first quarter of this year as advertising revenue generated by all media assets fell within the weak economic environment.
ECM Libra said advertising spending is also seasonally lower in the first quarter of any year.
It said industry players have stated that February 2009 has been the worst month in terms of advertising expenditure (adex) revenue, but adex has been gradually picking up since then.
Industry players have indicated that advertisers have been adopting a wait-and-see attitude during the first 2 months of the year as they got a handle on the economic situation.
However, now that the situation is showing signs of improvement, these advertisers have been coming back into the market, ECM Libra wrote in its report released yesterday.
The research house expects adex revenue to show some improvement when the group announces its 2QFY09 results later this month.
This in turn should translate to better margins and bottom line during the quarter.
"Taking this into consideration, we have increased our earnings estimates for FY09 to 12.6 sen from 11.5 sen; FY10 to 13.3 sen from 11.7 sen; and FY11 to 14.5 sen from 13 sen.
The downside risk to our estimates is a slower-than-expected pick up in the economy, which would translate into lower adex and lower revenue generally," ECM Libra said. |
