Asia Media aims for aggressive growth in highly anticipated DOOH media segment in Klang Valley vicinity
Posted on July 24, 2012, Tuesday
KUCHING: Asia Media Group Bhd (Asia Media) aims for aggressive growth in The Digital Out-of-Home (DOOH) media segment, which is said to be at its infancy stage in its industry life cycle as many are less than five years of age.
To recap, Asia Media was expected to begin commissioning of its highly anticipated DOOH Digital Terrestrial Television Broadcasting (DTTB) in the Klang Valley sometime next month or September this year, which was a slight delay from the initial plan in first half of 2012 (1H12).
Its two towers are located in USJ and Berjaya Times Square. Meanwhile, the other three towers located in Bukit Lanjang, Bukit Besi and Puchong were expected to begin commissioning by year end. Total cost for the five transmission towers was estimated at RM60 million, which was to be depreciated over the next 30 years.
According to the research team at the TA Securities Holdings Bhd (TA Securities), DOOH media advertising expenditure (adex) compound annual growth rate (CAGR) grew by 75 per cent between 2007 to 2010, which was significantly higher than that of Out-of-Home segment of 14 per cent and the total industry adex of just 12 per cent.
“The strong growth, which is mainly due to the nascent stage of the DOOH media industry, is a great opportunity for Asia Media to tap into especially given its stronghold position in the DOOH market with a 74 per cent market share,” said the research firm.
Furthermore Asia Media had more to benefit from the government’s initiative to increase the usage of public transport by 20 to 30 per cent yearly, targeting 30 per cent of public transportation users by 2015.
Currently, its DOOH media content was pre-recorded in a thumb drive or compact flash card which can then downloaded to media players installed in each transit vehicle.
On Asia Media’s plan to roll out DTTB in Penang on financial year 2013 (FY13) and Johor in FY14 as previously indicated, the management said that its plans would be put on hold at this juncture.
“The management intends to focus its capital in the Klang Valley where Rapid KL buses are expected to grow aggressively in the coming years,” added the research firm.
Regarding the revenue, TA Securities expected Asia Media to grow by 40 per cent and 30 per cent repectively for FY13 and FY14.
“With the higher degree of content customisation for advertisers, we are expecting the group to benefit from the increasing demand coupled with higher chargeable rates,” according to the research firm and maintaining the airtime utilisation rate of 45 per cent and 50 per cent for FY13 and FY14 respectively.
On the back of that and an average 34 per cent growth for both its programme sponsorship and content segment, the research firm derived a revenue growth of 40 per cent and 30 per cent for FY13 and FY14 respectively.
Despite the positive outlook on the company in the coming years especially with the rolling out of the DTTB technology, the group might still be susceptible to economic risk where corporates usually cut down on advertising expenditure.
“Organically, the group may face the risk of losing its concessionaire agreements, revocation of licenses and further delays in DTTB roll out,” concluded the research firm and maintained a fair value of RM0.65 per share.