KUALA LUMPUR: Kenanga Research has maintained its ‘neutral’ call on the media sector despite its prospects remaining vague.
With disruptive industry headwinds, particularly with the growing digitalisation of advertising, industry players would inevitably face market structure changes and eventually need comprehensive business restructuring, it said.
“Although this could have a fluctuating impact in the near term, it is essential for the players’ long-term survival,” the research firm said in a note today, adding manpower rationalisation would be necessary to ensure long-term sustainability especially in the print segment.
As for advertising expenditure (adex), Kenanga Research does not anticipate any changes in trends with digital media now a viable option for advertisers as a more cost-effective and better platform to reach the desired audiences.
The general outlook would see diminishing relevance for conventional media platforms, although some companies may be able to ride the storm better than others, it said.
“We do not think the introduction of the 6% service tax on foreign digital services providers would be a trend changer as digital platforms remain the most affordable and effective alternative to consumers and advertisers,” it said.
Kenanga Research’s preferred pick is Astro, with an outperform rating recommendation, as it continues to offer high dividend yields of over seven per cent.
The research firm has revised downward its rating call on Media Chinese International Ltd to market perform from outperform, but with a higher target price of 24 sen.
It has also downgraded Star Publications (M) Bhd to underperform from market perform with a target price of 42 sen, noting the stock has seen a price rebound which Kenanga Research believed could be overdone given the still bleak operational outlook for the stock. – Jan 6, 2020 Bernama
