Thursday 5 January 2012

AMedia: Get Licenses Without Share Placement

We know that in order to obtain the Digital Terrestrial Television Broadcasting license, Asia Media needs to do a private placement of 35% of its total shares in order to meet the 30% bumiputera equity requirement. This represents a massive dilution in its EPS.

However, the plan of private placement has been cancelled. Asia Media announced in 22 Dec 2011 that it has obtained the licenses and has been given the approval to transfer the licenses to Maha Semarak Sdn Bhd, which is  70% owned by Asia media. Datuk Wira Syed Ali Bin Tan Sri Abbas Alhabshee, who is the Non-Executive Chairman of Asia Media, owns the remaining 30%. So now the license holder is Maha Semarak which has 30% bumiputera equity.

The transfer of license will not affect Asia Media plan and operation. Thus it is a rather good news for its investors.

With the various broadcasting licenses in hands, Asia Media will have the rights to operate live TV broadcast and radio on Rapid KL's buses and trains. This is said to be able to boost its income on advertisement. It has started testing the service in some of the buses and expect proper service by second quarter 2012.

The live TV should concentrate on news reporting and talk shows in English and Malay, while the radio is planned to cater for Chinese market. Nevertheless, doing live TV broadcasting requires expertise and rather big investment. If this new concept is not well accepted by the advertisers and public, then it might affect Asia Media's earning negatively. Countries like Japan, Korea and Taiwan have successfully operated the live TV broadcast.

Asia Media is applying to be transferred to the main board of Bursa Malaysia. It will give the share price a boost if it is successful.

After a 18% surge in its share price to 33sen in 14 Dec 2011, Asia Media has corrected to 30sen which should be a support for it. Currently it is trading at 29sen. Is it a good time to accumulate AMedia shares?

        AMedia at support

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