Tuesday 5 July 2011

Asia Media: A Pearl in the ACE?

Asia Media is a company established in 2007 that mainly provides advertisement on the LCDs in public buses in Klang valley, and it can post a net profit of RM10 million in year 2010! It's better than a lot of big "main board" companies.

Initially I didn't put my attention into this company as I'm not very interested in media stocks and also ACE market. How can someone just put advertisement on the buses and make big money?

At Penang I can see lots of LCDs being put up in restaurant for advertisement purpose. For Asia Media, the LCDs are placed on buses of RapidKL, Handal Indah (JB-SG), Plusliner, Konsortium and Nice.

    LCD on bus

The one that I just aware of which makes a big difference is, Asia Media last year was awarded licenses for digital multimedia broadcasting (CAST-i, NFP-i, NSP-i and ASP). This means that Asia Media can actually operate TV/radio channel like RTM, TV3 and Astro! Currently the content displayed in the LCDs on the public transport are pre-recorded. After implementing the digital broadcasting, Asia Media will have its own bandwidth and can transmit content to the LCDs live!

Asia media has its IPO at 23sen in Jan 2011. It then announced a private placement in June which the amount comprises 35% of its original share offered during IPO. This represents a massive dilution in EPS! It is known that the reason for this private placement is to comply with the requirement of at least 30% bumiputra shares in order to get the licenses.

The CEO Ricky Wong earlier mentioned that Asia Media not only need the money from new bumiputra investors, but also wish to share the expertise in the media industry. Recently Star Publication has been rumoured to get the shares or even takeover Asia Media. However, any formal talk seems does not happen. This may be a catalyst for its uptrend share price for the last 2 months. Base on the win-win situation, I guess Star will sooner or later invest in Asia Media. Other than Star, there are other companies interested in the shares of Asia Media, according to the CEO.

Asia Media financial results

RM mil2010200920082007
Net Profit10.

For 2010 net profit, there is a exceptional one time gain of RM4.87mil. So the actual net profit for 2010 could be just RM5.4 mil. With this earning, the EPS is only 2.4sen before the private placement, which doesn't look impressive. After the private placement, the share will increase from 228mil to almost 308mil shares, and the EPS is very much diluted.

However, there is one good sign, which is the latest 2011Q1 earning

RM mil2011Q1
Net Profit4.1

I'm not sure whether there is any one-time gain in this result. Nevertheless, it is really encouraging. If you think the company will continue to grow, the revenue and profit for 2011 may grow at least 100% and 50% respectively.

Asia Media has yet to expand its business into Rapid Penang buses and LRTs in Klang valley. Since both of them are owned by the Rapid company, I guess investors can just sit back and wait for the good news. There are other big cities in Malaysia and other countries like Singapore and Indonesia, which Asia Media has plan to expand into. Besides, with the licenses on hands, who knows Asia Media later decide to have its own subscribed/non-subscribed TV channel to compete with Astro, RTM and Media prima? It could have big potential ahead.

    AMedia: May revisit resistance of RM0.325. Can it break?

CIMB gives a fair value of 53sen. If not for the crazy private placement, it can be better. There may be more positive news ahead. Is Asia Media a pearl in the ACE?

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