Communications
and
Multimedia
Market
and
Financial
Review
3rd Quarter 2004
Industry Development Division
CONTENTS
SUMMARY HIGHLIGHTS 2
MARKET PERFORMANCE 3Q 2004 Market Posted 3.7% Gain 3 C&M Sector Market Capitalisation up by 4.6% 4 C&M Company Market Contribution 5 C&M Companies – Telekom took the Limelight 6 C&M Companies Trade Details (3Q 04) 6 C&M Companies Amongst Other Heavyweights Heavyweights Telekom & Maxis 7 Malaysian Top 10 Heavyweights 7 Overseas Markets Comparatives 8 FEATURES MESDAQ Market Listing Trend 9 Malaysian Economy Remains Upbeat 10 C&M Sector Revenue – Continued Growth 12 Budget 2005 – A C&M Perspective 13 New Medium For Advertising 16
ADEX MONITOR Malaysian ADEX: Jan-Aug 04 19 Adex by Sector 20 Adex by Media 21 Television ADEX 22 Radio ADEX 24
GLOSSARY 26
C & M Bulletin 3rd Quarter 2004 1
SUMMARY HIGHLIGHTS
3Q 2004 MARKET POSTED 3.7% GAIN BUDGET 2005 – AN INDIRECT BOOST The Malaysian stock market TO C&M managed an encouraging gain of Although there were no big ticket 3.7% to close at 849.96 points on the items in Budget 2005 in respect of KL Composite Index. ICT sector development, it contained measures aimed at SMEs, financial, This was despite the continued rise manufacturing, Government and in oil prices and uncertainty over home market segments for new direction of the US economy that had areas of growth in ICT. prompted profit taking earlier in 3Q 2004. ADEX REACHED ALL TIME HIGH Malaysian Adex has exceeded the C&M SECTOR MARKET RM2 billion mark at half year of CAPITALISATION UP 4.6% 2004. The Adex for August is The C&M sector captured a market recorded at RM2.8 billion. capitalisation of RM75.6 billion in the 3Q 2004. This constituted 11.2% of TELCOS TOP ADEX CONTRIBUTOR overall Bursa Malaysia market Telecommunications companies capitalisation of RM673 billion. remained one of the top advertisers, contributing RM342.4 million as of Telekom contribution to overall August for this year alone. Top market capitalisation has increased advertisements in the significantly to 5.6% at the end 3Q telecommunications sector are 2004 from 4.3% in Dec 2003. The mobile interactive services (RM165.5 difference in ringgit terms amounted million) and mobile line services to RM10.4 billion. (RM138.9 million).
TOP 10 MARKET CAPITALISATION POSITIVE TELEVISION ADEX GROWTH Telekom and Maxis shares ranked Television adex growth surpassed as second and sixth largest print adex growth at 36.1%. This respectively in terms of market compares favourably to print adex capitalisation on Bursa Malaysia. growth of only 17% for the period of January to August 2004. However, C&M SECTOR REVENUE CONTINUED print adex still holds majority of total GROWTH adex market share at 65.9%. C&M sector revenue continued to Television and radio total market record encouraging growth of 22.5% shares are at 29.1% and 3.8% as at end June 2004. Overall sector respectively. revenue notched RM11.8 billion for first half of 2004. Telekom holds TV3 TOP TELEVISION STATION largest market share (55%) while TV3 topped TV advertising market DiGi registered strongest revenue share at 43.4% or RM353.9 million. growth with 32.5% gain over the TV3 is also Malaysia’s favourite TV previous years’ half year revenue. station with 51% market share in terms of viewership.
C & M Bulletin 3rd Quarter 2004 2
MARKET PERFORMANCE
Third Quarter Market Posted Overall improved sentiment was also 3.7% Gain boosted by a better-than-expected 29% rise in the July exports posted Amidst concerns of higher oil prices by manufacturers shipping more affecting earnings and uncertainty computer chips and other electronic over the impact of the US goods to US, Asia and Europe. government fine tuning of their economy, the Malaysian market took In line with such market buying to profit taking in July and August optimism, the KL Composite Index, 2004. which is the main barometer of Bursa Malaysia, steadily climbed However, the local market sparked from its low of slightly above the 800 to life in late August due mainly to mark level in August to hit a high of two factors - the improved perception 865.32 on 20 September 2004. of local political climate that created an extra boost to foreign buying in For the third quarter 2004, the KL Bursa Malaysia, and the Malaysian Composite Index closed off its high, Budget 2005 that unveiled measures overall gaining 3.7% to close at to reduce the budget deficit. A lower 849.96 points. In contrast, the KL deficit is expected to improve the Emas Index, which is a Main Board country’s debt rating and reduce All-Share Index, posted a gain of borrowing costs. 2.6% to close at 202.35 at the end of September.
KLCI (Jan - Sep Index 950 04) Last 849.96 High 22/03/04 908.96 Average 840.32 900 Low 17/05/04 781.05
850
Index 800
750
700
300 Average Volume 76.04 million
200
Volume 100
0
Jan Jan Feb Feb Mar Mar Apr Apr May MayJun Jun Jul Jul Aug Aug Sep Sep
C & M Bulletin 3rd Quarter 2004 3
MARKET PERFORMANCE
C&M Sector Market gains over this period were mainly Capitalisation up by 4.6% contributed by Telekom and Maxis share re-ratings. The public-listed C&M companies comprising the integrated service Of significant note is that Telekom providers, CASP and Pos Malaysia market capitalisation gained a captured altogether a market massive difference of RM3.3 billion capitalisation of RM75.6 billion in the or 9.6% in 3Q 04. third quarter of 2004. This is 4.6% higher than the market capitalisation of RM72.3 billion recorded at the end Communications & Multimedia Companies Market Capitalisation (RM billion) of June 2004. Dec-03 Mar-04 Jun-04 Sep-04
Telekom 27.3 34.3 34.4 The RM75.6 billion C&M sector 37.7 Maxis 18.6 22.6 21.6 market capitalisation at the end of 21.0 ASTRO 8.5 9.5 8.8 9.4 September 2004 constituted 11.2% DiGi 2.7 3.2 3.4 3.5 of overall Bursa Malaysia market Time 2.3 2.5 2.3 2.1 capitalisation of RM673 billion. PosM 0.7 0.8 1.0 1.0 Media 0.8 1.0 0.8 0.9 For the year to date, the C&M sector Prima has recorded 24% gain from RM60.9 Total 60.9 73.9 72.3 75.6 billion market capitalisation on 31 December 2003. The substantial
Communications & Multimedia Companies Market Capitalisation vs KLSE Market Capitalisation 800 673 700 640 600 482 500 400 300 RM(billion) 200 100 75.6 0 48.9 60.9 Dec-02 Dec-03 Sep-04 C&M Others
C & M Bulletin 3rd Quarter 2004 4
MARKET PERFORMANCE
C&M Company Market difference in ringgit terms amounted Contribution to a significant RM10.4 billion.
In terms of the individual C&M On the other hand, Maxis contributed companies’ contribution to Bursa 3.1% (Dec 2003 at 2.9%), ASTRO Malaysia, the four companies - contributed 1.4% (Dec 2003 at 1.3%) Telekom, Maxis, ASTRO and DiGi, while DiGi contributed 0.5% (Dec posted individually increased market 2003 at 0.4%) to Bursa Malaysia capitalisation in the third quarter market capitalisation. 2004 compared to December 2003. The rest of the C&M companies Telekom contribution to overall market capitalisation contribution Bursa Malaysia market capitalisation remained unchanged at 0.4% and has increased to 5.6% at the end 3Q 0.1% respectively except for Time 04 from 4.3%, in Dec 2003. The contribution which decreased by 1%.
C&M Companies contribution to Bursa Malaysia Market Capitalisation
Dec 2003 DiGi 0.4% Maxis ASTRO 2.9% 1.3% Telekom Time 4.3% 0.4% PosM
0.1%
Media Prima Others 0.1% 90.5%
Sep 2004
Maxis DiGi ASTRO 3.1% 0.5% 1.4% Telekom Time 5.6% 0.3% PosM 0.1%
Media Prima 0.1% Others 88.8%
C & M Bulletin 3rd Quarter 2004 5
MARKET PERFORMANCE
C&M Companies – Telekom took the Limelight C&M Companies Performance (Jan – Sep 04) 160
03 150 - PosM 140 Media Prima DiGi 130 Telekom 120 Maxis 110 ASTRO Time
% Change :Base31 Dec 100
90 Dec Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul Jul Aug Aug Sep
Telekom Maxis ASTRO DiGi Time Pos Media Prima
The C&M companies posted positive and Time posted a loss of 7.2% from gains ranging between 3% and 9% 90 sen to 84 sen. DiGi gained by as at third quarter 2004. Telekom 3.1% to RM4.72 per share in 3Q 04 topped the gainers list at end of while Media Prima gained 6.4% to September, both in terms of share RM1.66 per share. ASTRO, on the price and market capitalisation. other hand, gained 6.6% to RM4.88 Telekom share price gained 8.7% per share. from RM10.30 to RM11.20 per share on active trading with an average Pos Malaysia was quite actively volume traded at 3.6 million shares. traded and posted 6.7% gain from RM2.09 to RM2.23 per share. This in Maxis share declined 3.4% (30 sen), part was due to its direct investment from RM8.80 to RM8.50 per share in Transmile Group.
C&M Companies Trade Details 3Q 04 Average Share Price Market Volume Company 30 Jun 30 Sep % Change High Low Capitalisation Traded (RM billion) (RM) (RM) (3 Month) (RM) (RM) ('000) Telekom 10.30 11.20 8.7 11.70 9.95 3,697 37.7 Maxis 8.80 8.50 -3.4 9.00 8.10 2,334 21.0 ASTRO 4.58 4.88 6.6 4.90 4.30 1,770 9.4 DiGi 4.58 4.72 3.1 4.98 4.60 568 3.5 Time 0.90 0.84 -7.2 0.97 0.81 413 2.1 Pos 2.09 2.23 6.7 2.28 2.06 832 1.0 Media Prima 1.56 1.66 6.4 1.79 1.44 1,768 0.9 Market Barometer KLCI 819.86 849.96 3.7 865.34 804.89 54,158 420.5
C & M Bulletin 3rd Quarter 2004 6
MARKET PERFORMANCE
C&M Companies Amongst Other Heavyweights
Heavyweights Telekom & Telekom and Maxis shares ranked Maxis as second and sixth largest respectively in terms of market Telekom and Maxis shares feature capitalisation on Bursa Malaysia as amongst the large market at end September 2004. capitalisation stocks on Bursa Malaysia. It is noted that Maxis has shifted from fifth position to sixth position overtaken by Public Bank Berhad.
Malaysia Top 10 Heavyweights
Share Price Average Market Volume Company Capitalisation 30 Sep-04 % change High Low Traded (RM billion) (RM) (3 months) (RM) (RM) ('000)
Maybank 11.00 8.9 11.00 10.10 2,781 39.6 Telekom 11.20 8.7 11.70 9.95 3,697 37.7 Tenaga 11.00 8.9 11.50 9.75 1,452 34.7 MISC 12.70 7.6 13.00 11.90 573 23.6 Public Bank 6.35 5.0 6.50 6.10 2,669 21.1 Maxis 8.50 -3.4 9.00 8.10 2,334 21.0 Petronas Gas 6.95 2.2 7.30 6.75 182 13.8 Sime Darby 5.75 3.6 5.85 5.40 2,038 13.6 BAT 46.25 -8.4 51.50 46.25 291 13.2 PLUS 2.47 9.8 2.55 2.29 1,330 12.4
C & M Bulletin 3rd Quarter 2004 7
MARKET PERFORMANCE
Overseas Markets Comparatives
Our selected overseas market apart However, the Nikkei Index and DJIA from Japan and New York posted posted losses of 8.7% and 3.4% gains. respectively due to higher oil prices and disappointing earnings The KL Composite Index gained forecasts. 3.7% while the Hang Seng Index (HSI) posted slightly higher gain of at Overseas 6.8%. % Market Jun-04 Sep-04 Change Indices Overall, the Singapore Straits Times STI 1,838.0 1,984.7 8.0 Index (STI) was the best performer, Hang Seng 12,285.8 13,120.0 6.8 with 8.0% gain to 1,984.7 points. KLCI 819.9 850.0 3.7
KL EMAS 197.3 202.4 2.6 DJIA 10,435.5 10,080.3 -3.4 Nikkei 225 11,858.9 10,823.6 -8.7
DJIA Nikkei 225 10800 10,737.70 12500 12,163.89 10600 12000 10400 11500 10200 Index Index 11000 10000 10,080.27 (-3.57) 10500 10,823.57 9800 (1.38) 9,814.59 10,365.40 9600 10000
Jan Jan Feb Feb Mar Mar Apr Apr May May Jun Jun Jul JulAug Aug Sep Sep Jan Jan Feb Feb Mar Mar Apr AprMay May Jun Jun Jul JulAug AugSep Sep
Hang Seng STI 14500 2050 13,928.38 2,003.99 14000 13,120.03 2000 (4.33) 13500 1950 1,984.74 13000 1900 (12.48)
12500 Index
Index 1850 12000 1800 11500 1750 11000 1700 10,967.65 1,700.33 10500 1650 Jan Jan Feb Feb Mar MarApr AprMay May Jun Jun Jul JulAug AugSep Sep Jan Jan Feb Feb Mar Mar Apr AprMay May Jun Jun Jul JulAug AugSep Sep
C & M Bulletin 3rd Quarter 2004 8
FEATURES
MESDAQ Market Listing Trend
MESDAQ Top 10
MESDAQ Composite Index Market Capitalisation Component Stocks Business Activities (RM million) Mar-04 Jun-04 Sep-04 *Redtone International Telecom Services 526.7 443.5 511.6 *Symphony House Computer Software 568.4 554.4 495.0 Dreamgate Corp Casino Services 509.6 490.0 487.2 MEMS Technology Electronic Compo - Semicon 0.0 0.0 453.3 *AKN Messaging Technologies Internet Content/SMS 392.2 371.3 314.8 OSK Ventures International Venture Capital 0.0 0.0 300.0 *YTL e-Solutions Internet Incubators 229.5 291.6 236.3 *Iris Corp Identification System/Services 304.2 191.8 191.8 Perisai Petroleum Teknologi Oil-Field Services 0.0 0.0 186.2 Brite-Tech Water Treatment System 184.5 169.5 156.0 *Communication and Multimedia related
Out of the Top 10 market constituted six companies. This is capitalisation companies on the about 35% of the 17 new listings in MESDAQ market, five of such Bursa Malaysia in 3Q 04. companies were in the communications and multimedia Out of the six MESDAQ new listings sector. in the third quarter 2004, only two are in the communications and There are 52 MESDAQ companies multimedia sector, categorised under listed on the tech market. In the third software. quarter 2004, MESDAQ new listings
MESDAQ - (3Q 04) 20 18 18 16 14 13 12 10 10 8 7 6 5 5 4 No. of Companies 2 1 1 0 Internet Software Computer Services Manufacturing (IT) Dec-03 Sept-04
C & M Bulletin 3rd Quarter 2004 9
FEATURES
Malaysian Economy Remains Upbeat Economic activities accelerated in most countries in the ASEAN region, World output, projected to grow by as well as China, Japan and 4.6% in 2004 (2003: 4.5%), is driven Republic of Korea (ASEAN+3). East mainly by sustained consumption Asian economies are forecasted to and export growth in US and Japan, register a GDP growth of 7.3% in and the economies of the Asia- 2004 (2003: 6.5%), due to their Pacific region, in particular China healthy balance of payment position and India. Amidst the optimistic and stronger financial and corporate development, world inflation sectors. The ASEAN economies continued to remain benign despite followed suit and are expected to concerns of rising oil prices. register a GDP of 5.5-5.9% in 2004 (2003: 5%), due to robust commodity Selected ASEAN and East Asian prices, rising exports, strong economies: domestic demand, particularly from Major Economic Indicators 2003-2005 private consumption and investment. The increase of trade between 1 2 2003 2004 2005 ASEAN and China also contributed
3 to the growth. GDP (%) Indonesia 4.1 4.8 5.4 Malaysia 5.3 7.0 6.0 In Malaysia, the GDP for the year Philippines 4.7 4.9-5.8 5.3-6.3 2004 was forecasted at 7% which Singapore 1.1 8.0-9.0 3.0-5.0 Thailand 6.8 7.1 6.7 surpassed earlier expectations. It China 9.1 7.0 8.0 began with a strong start of 7.6% Japan 2.5 4.5 2.4 growth in 1Q, and the momentum Republic of Korea 3.1 5.2 5.2-5.3 continued to 8% at 2Q. Forecasts Inflation (%) are that 3Q growth would be Indonesia 6.6 5.0 4.5 moderated in line with global growth. Malaysia 1.2 1.5 - Philippines 3.1 3.9 4.0 Singapore 0.5 1.2 1.5 Malaysia inflation rate was at 1.5% Thailand 1.8 2.2 1.3 indicating some stability in China 1.2 3.5 3.0 Japan -0.2 -0.4 -0.1 inflationary pressures. The Republic of Korea 3.5 3.7 3.4 Consumer Price Index (CPI) was contributed mainly by the increase in Current Account food, rent, fuel and power prices. Balance (% of GDP) Indonesia 3.9 2.9 2.2 The CPI was offset by the Malaysia 12.9 13.2 13.2 decelerated price in transport and Philippines 2.1 1.6 0.8 communications, due to the Singapore 30.9 28.0 26.7 Thailand 5.6 4.4 2.3 competitive environment in those China 2.1 1.6 1.9 industries. Japan N/a N/a N/a Republic of Korea 2.0 1.5 0.9 In contrast, the Producer Price Index 1 Estimate 2 Forecast 3 Real GDP (PPI) reflected an increase, in tandem with the world commodity Source: IMF World Economic Outlook, April 2004 and prices. However, this higher PPI various national sources value did not translate into a higher
C & M Bulletin 3rd Quarter 2004 10
FEATURES
CPI value. This is due to the fact in the lower balance of payments. that the CPI was cushioned by Singapore, in particular, forecasted a strong productivity gains and the conservative growth of between 3.0- producers also absorbed some of 5.0%, which is a significant decrease the increased costs. from its performance in 2004, and this may affect Malaysia’s GDP, as Malaysia GDP (current value) Singapore is Malaysia’s second largest trading partner. However, 2003 2004 2005 the positive trend from China may RM billion 394.2 438.5 466.7 help to cushion the effects. % change 9.0 11.2 6.4 Malaysian domestic demand would USD billion 103.7 115.4 122.8 continue to be led by private
investment (growing at 6%) and Source: Economic Report 2004/2005 private consumption, whilst public Domestic demand is positive, driven consumption would be on the by strong private sector spending, decline. led by the manufacturing and services sectors, fueled by an Even though public investment increased demand of declines, the Government would semiconductors in a broad range of continue to invest in projects and applications overseas. programmes that would support private sector initiatives. For Malaysia’s monetary policy also example, the Government’s efforts in remained accommodative and simplifying the application procedure continued to provide support to for the Foreign Investment business activities and expansion. Committee (FIC) would be an impetus for continual growth in the The strong economic growth and private sector. rising demand for labour from increased private investment would Global foreign direct investment result in lower retrenchments and a (FDI) was also forecasted to more stable labour market. increase, mainly from the US, Unemployment rate is expected to Germany, Britain, France and China. decline to 3.5% (2003: 3.6%), below the generally accepted 4% Private consumption would continue unemployment rate for full to expand by 7.9% due to strong employment level. domestic activities, easier access to credit, accommodative interest rates, Moving forward to 2005, Malaysia’s low inflation and better employment GDP was forecasted at 6%, in prospects. contrast to the more pessimistic global growth at 4.4%. The As such, the current account balance ASEAN+3 nations experience some for Malaysia is also envisaged to conservative growth possibly due to remain large and record a surplus for the external environment as reflected the 8th consecutive year.
C & M Bulletin 3rd Quarter 2004 11
FEATURES
C&M Sector Revenue – ASTRO recorded strong revenue Continued Growth growth of 21.5% between the half year periods of 2003 and 2004. Revenue was boosted by a rise in The combined revenue of the C&M subscriber base and a RM5 hike for sector as represented by public- its multi-channel TV services in late listed telecommunications, May 2004. On the other hand, Pos broadcasting and postal companies Malaysia charted a rather on Bursa Malaysia, amounted to encouraging growth of 4% to RM336 RM11.8 billion at the end of the first million in 1H 04. half of 2004. Telekom generated the highest turnover at RM6.5 billion as Overall, the public-listed C&M sector at end June 2004 representing 55% appears to be performing well as on of overall sector revenue. annualised basis, the total revenue
for the C&M sector is RM23.6 billion The C&M sector revenue was for 2004. This is favourable in considerably more compared to contrast to total C&M revenue of RM9.2 billion increased by 22.5% RM21 billion in 2003. and RM9.7 billion recorded at the end of 1H 02 and 1H 03 respectively. C&M Companies Revenue (RM billion) Growth Growth (%) (%) In terms of individual companies’ 1H 02 1H 03 1H 04 1H 02 - 1H 03 - revenue growth, Telekom (+22.9%), 1H 03 1H 04 Maxis (+26.8%) and DiGi (+32.5%) DiGi 0.597 0.793 1.051 32.8 32.5 posted strong growth compared to Maxis 1.783 2.152 2.729 20.7 26.8 the same corresponding periods in Telekom 4.778 5.289 6.501 10.7 22.9 the previous year. In respect of ASTRO * - 0.638 0.775 n.a. 21.5 DiGi, it posted the highest revenue Pos M 0.339 0.323 0.336 -4.7 4.0 growth at +32.8% and +32.5% for Media Prima - - 0.139 n.a. n.a. the same corresponding period in Time 0.449 0.467 0.308 4.0 -34.0 2003 and 2004 respectively. This is Celcom 1.289 Delisted Delisted in part attributed to the growth in its 11.83 prepaid (33%) and postpaid (29%) Total 9.235 9.662 9 4.6 22.5 services as well as enhanced data *Adjusted year end traffic services revenue with the 1H 04 1H 05 Growth launching of its EDGE (Enhanced (RM’bil) (RM’bil) (%) ASTRO 0.650 0.815 25.4% Data Rates for GSM Revolution), a Note: ASTRO FYE Jan 31 high speed mobile data service, in C&M Revenue Market Share 1H 2004 May 2004. Telekom 54.9% Maxis By contrast, in line with Time’s sales 23.1% of TimeCel (completed in May 2003), it recorded a negative growth of 34% in revenue compared to the same DiGi Pos 8.9% period in the previous year. Malaysia Media ASTRO Time 2.8% 6.5% 2.6% Prima 1.2%
C & M Bulletin 3rd Quarter 2004 12
FEATURES
Budget 2005 – A C&M Perspective First Enhancing the effectiveness of The overall thrust of Budget 2005 Government was to strengthen the domestic financial economy by bolstering domestic management, demand to mitigate the moderating efficiency of the effects of the external environment delivery system and and, in particular, rising oil prices competitiveness and economic uncertainties in respect of US and China. Given the Second Accelerating the uncertainties in the external shift towards a environment, the budget introduced higher value-added measures aimed at spurring economy economic growth in key strategic areas specifically by developing Third Developing human human capital, increasing capital as a catalyst productivity, enhancing R&D of growth capabilities, and identifying new Fourth Ensuring the well- sources of growth to increase the being of the rakyat country’s resilience against the through improving moderating effects of the external their quality of life environment.
The strategies behind the formulation of Budget 2005 also addressed the transition of the final There was continued commitment to year of the Eighth Malaysia Plan and ongoing implementations such as to pave the way for the Ninth the Multimedia Super Corridor’s Malaysia Plan. (MSC) Second Phase roll-out which will feature the award of MSC status Budget 2005 reaffirmed the to the Bayan Lepas Free Industrial Government’s commitment in Zone (FIZ) in Pulau Pinang and developing the ICT sector as one of Kulim High-Technology Park, Kedah. the drivers of economic growth and Given the numerous MNCs located as an enabler for critical areas like within these areas earmarked for education, health and biotechnology. MSC status, the opportunity arises to Although the national budget did not leverage on Malaysia’s popularity as hold any big ticket items for the C&M third best location in the world for industry compared to the previous shared services and outsourcing, as years, the industry would benefit a new source of growth. indirectly from the measures to promote the growth of a broader national economy.
C & M Bulletin 3rd Quarter 2004 13
FEATURES
MSC Status Companies (as at 19/10/2004) maintenance techniques of public infrastructure and facilities. Technology companies 1,079 (96%) Aside from human capital development and Government delivery system enhancement, the Incubator C&M sector is set to gain from companies Institutions 12 (1%) of higher measures to encourage the learning participation of technopreneurs and 39 (3%) Source: Multimedia Development Corporation investors by increasing international promotions and availing specific The enlarged number of MSC status incentives for these purposes. One companies would accelerate the use such move is to allow 100% foreign of high technology in the equity of local venture capital manufacturing sector thereby companies to promote funding for enhancing workers’ expertise . In line this sector. Not only would this with the second phase of the MSC's intensify healthy competition among expansion plans from 2003 to 2010, market players but also increase the it is also targeted to create an demand for professionals in the additional pool of 100,000 high sector. value-added jobs to the current 20,000 in the MSC. In line with the prevailing shift towards high technology and high The Government’s ongoing valued added activities in the eGovernment efforts to advance ICT manufacturing sector, there were is articulated via more services to the incentives to enhance the country's public using electronic gateways R&D capabilities, and innovation in thus effectively leveraging on its all areas of technology. Towards this unique reach to raise the awareness end, a National Innovation Centre is and usage of ICT on a macro level. to be established to foster sharing of The budget highlighted the best practices and experiences in impending implementation of science and technology. eTreasury under the Ministry of Finance’s functions which Additionally, with a view to promote incorporates eSPKB (budget the commercialisation of R&D planning and control system) and projects, emphasis shall be in the ePerolehan (procurement). fields of biotechnology, ICT, advanced materials and advanced In addition, the public sector delivery manufacturing. Incentives were also system is being further honed for aimed at public sector researchers productivity and efficacy by an and innovators to facilitate the undertaking to review processes. transition towards commercialisation. Public sector services will also be In respect of training and design in complemented by the microelectronics, a Microelectronics implementation of programs aimed Centre will be established to serve at modernising equipment and as coordinator for these purposes.
C & M Bulletin 3rd Quarter 2004 14
FEATURES
To encourage high quality products, import duty exemption would be 10 0 0 0 9 0 0 0 granted to certain category of 8 0 0 0 70 0 0 manufacturers engaged in high value 6 0 0 0 added activities and R&D to alleviate 50 0 0 4 0 0 0 their financial burden as well as 3 0 0 0 2 0 0 0 double deduction on expenses for 10 0 0 those pursuing international quality 0 '95 '96 '97 '98 '99 '00 '01 '02 '03 standards. The double deduction Source: PIKOMNo of PCs active/installed Internet subscribers incentive is also extended to cover No. of Internet Users expenses incurred for the preparation of architectural and engineering models, perspective As an incentive to stockbroking firms drawings and 3-D animations for that have merged with at least one participation in international other stockbroking firm, they may competitions to encourage the export choose to establish four additional of services. branches, Electronic Access Facilities, or Electronic Access In respect of Small and Medium Facilities with Permitted Activities. Enterprises (SMEs), the Small and Medium Industry Fund 2 was A significant amount has been significantly increased from RM1.5 allocated to improve rural education billion to RM4.5 billion and the New in particular to avail computer-lab Entrepreneurs Fund 2 by RM550 facilities in rural schools. Going million to RM2 billion thereby forward, the Info Desa and Internet facilitating the availability of funding Desa programmes will be further options that is needed in deploying expanded with an emphasis on the appropriate ICT infrastructure, apart development of content application, from funding to upgrade products provision of information and and services. Aside from the enhancement of skills of rural users, additional funds to support the aimed at raising the computer growth of SMEs, the role of literacy of groups such as farmers, development financial institutions livestock breeders and fishermen. would be revisited to facilitate And lastly, ICT continues to play a efficient and effective financing and key role in the nation’s pursuit of advisory services to SMEs. socio-economic goals serving not only to enhance the quality of life The budget contained consumer- especially among minority groups friendly incentives such as the such as the disabled and the poor increased tax rebate of RM500 from but other broader wide-reaching RM400 previously for home PC objectives such as reducing the ownership. This incentive would no digital and knowledge divide doubt complement other efforts to disparity between urban and rural promote greater ICT accessibility dwellers, and towards a more and through various other economically resilient nation. Government-led initiatives.
C & M Bulletin 3rd Quarter 2004 15
FEATURES
New Medium for Advertising In a study entitled “ Gargling with The availability of new technologies Pepsi – putting value on placement ” allows for greater possibilities to presented in the ESOMAR create and enhance the mediums for Worldwide Audience Measurement advertising. Seminar, June 2004, it was cited that 56% of its survey respondents Greater purchasing powers of the e- preferred this mode of advertising generation, broadly, the 16 to 25 compared to traditional year olds are allowing media advertisement break between a practitioners to leverage on this television program. opportunity as they are projected to shape the future consumer patterns in this country.
Apart from providing strategically placed and effective advertisements via different and innovative mediums, brand placement has become an important avenue to showcase a product. Brand placement is a creative media to market a product via television.
tmnet, one of the main sponsors for Malaysian As an example, brand placement Idol placed an inflated blimp strategically moving has created a refreshing impact in around during the entire program. (Photo from the Indian television industry. Brand Malaysian Idol website) placement is an innovative way of advertising where a product is Brand placements in high-traffic assimilated into a television television programmes such as programme, through strategic “Events Programmes” (“Malaysian placement or use of the product. The Idol”, for example), show higher product could be actively or propensity for purchase of the passively placed or used in the product. The study indicated that the programme. Such brand placing is higher the brand integration, the different from a product sponsored- higher the rate for brand recognition. television programme. Brand placement is increasingly used as an Brand placements in such events alternative to traditional television programmes also prove to be a advertising especially in India where lucrative revenue churner for the over the last 10 years, there has television station. For example, been an increase from 2,000 to American Idol on Fox Television 5,000 advertisements vying a spot achieved 2.5 times higher revenue for television advertising in that from the previous season in 2003. country.
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FEATURES
Another new idea for advertising, in SMS premium text messaging in an the case of Kuala Lumpur, is an interactive television program has extension of the traditional billboards become one of the new mode of by way of board advertisements at revenue for the broadcast industry, the monorail and Light Railway creating an estimated global revenue Transit (LRT) stations as well as of €9.4 billion (RM64.9 billion) by end entrance of car parks. of the year.
The ever growing Internet users in Malaysia should also create an incentive platform for Internet advertising. By the end of the year, it is estimated that there will be more than 8 million Internet users in Malaysia. Out of this, more than 70% of the users are under the age of 30.
As the e-generation are likely to be
the early adopters of new An advertising space found in Midvalley technology, Internet advertising Shopping Megamall located at the entrance from the carpark. would appeal to the upper categories in the socio-economic and education Banners placed at outdoor spaces or hierarchy. even the walls of an office building are gaining popularity due to its great In the US, the growth of Internet visibility. A prominent example of advertising has increased from 15% advertising by this medium is the to 30% in 2003. For the period of half advertising panel at the old year 2004 alone, the revenue for Government office building at Pusat Internet advertising in US totalled Bandar Damansara Kuala Lumpur. $4.6 billion, 39.7% higher compared to the same period in 2003. For second half period alone, US Internet advertising recorded $2.37 billion in revenue, a 42.7% increase from $1.67 billion recorded for 1H03.
In terms of profitability of each sector in the Internet advertising market in US, consumer product advertising remains the most profitable sector, taking as much as 49% of 1H04
revenues, compared to only 35%
An advertising space at the old Government during the same period last year. office building Pusat Bandar Damansara junction.
C & M Bulletin 3rd Quarter 2004 17
FEATURES
US Internet Advertising: 1H 2000 - 2004
2.5 2.37 2.09 2 1.85 1.67 1.46 1.5
1 $ billion
0.5
0 2000 2001 2002 2003 2004
Of the consumer related In contrast, during the same period advertisements, retail led generating in 2003, retail revenue constituted 40% of the revenue, followed by 44% of the market share, followed by automotive and leisure (which 20% for automotive, 15% for includes travel, hotel and hospitality) entertainment, 13% for leisure and at 16%, entertainment (music, film, 8% for packaged goods. TV entertainment) at 15% and packaged goods at 7%.
US Internet Ad Revenues Comparison (Consumer Category)
50 44 45 40 40 35 30 25 20 20 16 15 15 16 15 13 10 7 8
% of consumer revenues 5 0 Retail Automotive Entertainment Leisure Packaged Goods
1H 04 1H03
Resources : Papers from Worldwide Audience Measurement Seminar, ESOMAR (http:www.esomar.org) Pricewaterhousecoopers IAB Internet Advertising Revenue Report 2004 Second Quarter and First Six Month Results (http://www.iab.net)
C & M Bulletin 3rd Quarter 2004 18
ADEX MONITOR
Malaysia Adex : January – August 04
The outlook for adex in Malaysia is year alone, Malaysia Adex has poised to grow positively this year. exceeded the RM2 billion mark (at Nielsen Media Research predicts RM2.01 billion), a record breaking that the adex is projected to reach feat. This is an impressive 23.8% RM4.48 billion, a growth of 18.3% by growth over the same period last year end. Up to the first half of this year.
Malaysia Adex: 2004
5 5 4 4 3 3 2 4.48
2(billion) RM 2.80 1 2.05 1 0.97 0 Jan Jun Aug Dec (projection)
Source: The Star, Nielsen Media Research Report
There are many factors that have election campaign in March also encouraged the advertising industry helped boost the adex industry by an growth this year. Encouraging local additional revenue of RM95.5 million. and global developments has promoted further support to the The other advertising campaign growth. In June, the advertising worth mentioning is the Malaysian scenario is much encouraged by the Airline’s promotional fare campaign Euro 2004 soccer championship. and the “Global going beyond expectation” campaign. New advertising medium were also introduced such as the Euro 2004 Telecommunications companies short messaging services (SMS) remained one of the top advertisers, contest to further enhance the at RM342.4 million as of August this viability of the advertising industry. year. The highest contributors to the advertising industry are mobile Governmental campaigns also interactive and mobile line services helped boost the advertising industry as well as residential estate – “Tak Nak!” anti-smoking and categories. SOCSO campaign. The general
C & M Bulletin 3rd Quarter 2004 19
ADEX MONITOR
Adex by Sector
ADEX BY SECTOR RM (million) % MISCELLANEOUS 400.7 14 COMMUNICATION 399.5 14 RETAIL 248.1 9 TOILETRIES 246.4 9 FINANCE 162.6 6 AUTOMOTIVE 131.4 5 SERVICE 124.0 4 BEVERAGE-NON ALCOHOLIC 111.5 4 MEDIA 102.0 4 ENTERTAINMENT 101.1 4 REAL ESTATE 96.4 3 FOODSTUFF 95.8 3 GOVERNMENT,SOCIAL & POLITICAL ORG. 95.5 3 EDUCATION & LEARNING 73.5 3 PHARMACEUTICAL 66.0 2 TRAVEL & TOURISM 65.0 2 HOUSEHOLD & OUTDOOR APPLIANCES 51.9 2 HOUSEHOLD PRODUCTS 51.6 2 TRANSPORTATION 45.8 2 APPAREL & ACCESSORIES 45.4 2 INFORMATION TECHNOLOGY 40.1 1 BEVERAGE-ALCOHOLIC 30.5 1 OFFICE & BUSINESS EQUIPMENT 22.6 1 INDUSTRIAL 21.8 1 TOTAL 2,829.2 100
Communications remains the top services registered whopping growth contributor in advertising as at of 253% and 87% respectively. August this year, contributing 14% of total market share, equivalent to In August 2004, mobile interactive RM399.5 million. Communications services advertising recorded 41% sector has three main sub-sectors of with the Communications sector at telecommunications (RM342.4 RM165.5 million. Mobile line services million), ISP (RM30.2 million) and advertising revenue recorded others (RM26.9 million). RM138.9 million, or 35% of the total Communications sector. AC Nielsen also cited that new technologies such as General Other major contributors include Packet Radio System (GPRS) and retail goods at RM248.1 million, Multi-Media Messaging (MMS) toiletries at RM246.4 million; both services have boosted mobile contributed 9% of the advertising interactive and mobile line services market. Meantime, the finance sector advertising. As of 1H 04, both contributed RM162.6 million and mobile interactive and mobile line automotive RM131.4 million; both at 6% and 5% respectively.
C & M Bulletin 3rd Quarter 2004 20
ADEX MONITOR
Adex by Media
Adex from Jan - Aug Media 2003 2004 YOY % % Share % Share RM (million) RM (million) Change Television 599.4 26.0 815.5 29.1 36.1 Print 1,577.1 68.5 1,844.8 65.9 17.0 Radio 95.1 4.1 107.0 3.8 12.5 Cinema 7.3 0.3 9.1 0.3 24.7 Point-of-Sale 22.5 1.0 21.3 0.8 -5.3 TOTAL 2,301.4 100.0 2,797.7 100.0 21.6
Up to the month of August this year, In comparison to the advertising total advertising expenditure is scene during the same period last RM2.8 billion. This is also the first year, it can be observed that time in the history of advertising in television advertising achieved Malaysia that the adex has growth of 36.1% or RM815.5 million surpassed the RM2 billion mark. compared to RM599.4 million in This occurred during first half of the August 2003. Point-of-sale year 2004. advertising revenue, however, decreased 5.3% from RM22.5 million However, there is no surprise on the to RM21.3 million this August. market share of adex via medium Interestingly, cinema advertising also breakdown as print advertising achieved better revenue based on continued to command the largest year-on-year comparison of 24.7% market share at RM1.8 billion or from RM7.3 million to RM9.1 million. 65.9%. Television advertising took up 29.1% of market share or Terrestrial television advertising also RM815.1 million while radio took another first where its growth remained at 3.8% contributing exceeded newspaper advertising RM107 million for advertising. Point- growth for the first time. With the of-sale and cinema advertising were introduction of the two new terrestrial worth RM21.3 million or 0.8% of TV channels, 8TV and Channel 9, market share and RM9.1 million or the growth for television advertising 0.3% market share respectively. charted nearly 40% growth year-on- year at RM815 million for 2004.
C & M Bulletin 3rd Quarter 2004 21
ADEX MONITOR
Television Adex
TV Adex (Aug '04-'03 Comparison )
400 353.9 313.8 300 235.9
200 170.4
RM (million) 94.9 91.7 100 78.1 37.5 15.4 23.6 0 TV 1 TV 2 TV 3 NTV7 Channel 9 8TV
2004 2003
Total television advertising up to the 11.6% of television advertising share period of August this year was followed closely by 8TV at 9.6%, RM815.7 million. As per the norm, totaling to RM78.1 million. TV3 took up the bulk of market share of television advertising at RM353.9 However, in terms of year on year million or 43.4%. percentage growth comparison, NTV7 recorded the highest growth of NTV7 recorded a strong growth of 38.4% whereas TV1 recorded a 28.9% or RM235.9 million. TV2 trails negative growth of 34.7%. at third place at RM94.9 million or
RM (million) Terrestrial TV Channels YOY % Change 2004 2003 TV 1 15.4 23.6 -34.7 TV 2 94.9 91.7 3.5 TV 3 353.9 313.8 12.8 NTV7 235.9 170.4 38.4 Channel 9 37.5 n/a n/a 8TV 78.1 n/a n/a TOTAL 815.7 599.5 36.1
C & M Bulletin 3rd Quarter 2004 22
ADEX MONITOR
In terms of number of number of 59,850 for RTM2 and advertisements, TV3 has the most 27,169 for RTM1 respectively. number of advertisements at 143,294, followed by NTV7 at TV3 also remains a favourite with 115,413. 8TV surprisingly came in 51% of total market share, followed third at 70,425 advertisements, by TV2 at 22%. The adex for followed closely by another new newcomers, 8TV and Channel 9 are comer to terrestrial television, progressing positively at 5% and 3% Channel 9 with 60,203 viewership respectively. advertisements. Both RTM channels has a total
TERRESTRIAL TELEVISION VIEWSHIP Jan - Jun 2004 TV3 51% TV2 22% NTV7 14% TV1 13% 8TV 5% Channel 9 3%
Source: Nielsen Media Research, media presentation, Kuala Lumpur 24 Sept ‘04
Top television programs for TV3 are Do Re Mi ”. One-off television Senario , Misteri Nusantara and other programs such as 8TV’s “ Malaysian reality TV shows. TV2 top television Idol ” and RTM1’s tabling of National programs are Gerak Khas and the Budget also received high showing of an evergreen favourite, viewership. the P. Ramlee’s classic “ Laksamana
TOP SATELLITE CHANNELS Jan - Jun 2004 TV3 Wah Lai Toi NTV7 TV2 Vaanavil National Geographic Ria Phoenix Star Sports Discovery Source: Nielsen Media Research, media presentation, Kuala Lumpur Sept ‘04
C & M Bulletin 3rd Quarter 2004 23
ADEX MONITOR
Radio Adex
Radio Adex 2004 (Jan-Aug)
30 25.1 25 17.8 20 16.0 15 13.1 12.6 10 7.9 6.5 RM(million) 5 1.7 1.4 1.3 1.1 0.5 0.4 0.3 0.2 0.1 0 THR hitz.fm My FM Mix FM Era Era FM redi 988 redi Sinar FM Sinar red 104.9 red Light Light & Easy RM RM Selangor RM Saluran 6 RM Saluran 1 RM Saluran 5 RM Saluran 4 RM Saluran RM RM Kuala Lumpur RM Saluran Muzik RM Saluran
Radio Adex 2004 (Jan-Aug)
25 19.8 20 15.3 15 12.0 12.8 11.7 9.3 10 6.3 RM (mil) RM 5 1.6 2.3 1.8 0.4 0.5 0.4 0.7 0.2 0 THR hitz.fm My FM Mix FM Era Era FM redi 988 redi red 104.9 red Light Light & Easy RM RM Selangor RM Saluran 6 RM Saluran 1 RM Saluran 5 RM Saluran 4 RM Saluran RM RM Kuala Lumpur RM Saluran Muzik RM Saluran
Malay language radio station, Era Similarly, other ASTRO radio FM still remained a top radio channel stations are also doing well such as for advertising up to August this year My FM (RM17.8 million), Mix FM at RM25.1 million. (RM16 million) and hitz.fm (RM13.1 million).
C & M Bulletin 3rd Quarter 2004 24
ADEX MONITOR
RM (million) YOY % Radio Stations 2004 2003 Change Era FM 25.1 19.8 26.8 My FM 17.8 12.0 48.3 Mix FM 16.0 6.3 154.0 hitz.fm 13.1 12.8 2.3 RM Kuala Lumpur 12.6 15.3 -17.6 THR 7.9 0.4 1,875.0 Light & Easy 6.5 11.7 -44.4 RM Saluran Muzik 1.7 0.5 240.0 red 104.9 1.4 0.4 250.0 RM Saluran 6 1.3 0.7 85.7 RM Selangor 1.1 1.6 -31.3 RM Saluran 1 0.5 2.3 -78.3 RM Saluran 5 0.4 1.8 -77.8 RM Saluran 4 0.3 0.2 50.0 redi 988 0.2 9.3 -97.8 Sinar FM 0 n/a n/a TOTAL 106.0 95.1 11.5
The overall year-on-year percentage recorded 250% growth from RM0.4 growth for radio adex for the period million to RM1.4 million this year, of January till August is at 11.5%. whereas RTM’s RM Saluran Muzik However, it is interesting to note that recorded a 240% growth from RM0.5 Time Highway Radio (THR) recorded million last year to RM1.7 million. a whopping 1,875% growth from RM0.4 million in 2003 to RM7.9 However, the other RTM radio million adex in August this year. The stations did not do too well. RM listenership for THR also increased Saluran 1, RM Saluran 5, RM due to its extension of coverage to Selangor recorded -78.3%, -77.8% Sabah and Sarawak. and a negative growth of 31.3% growth respectively. Redi988, the Other radio stations are also doing Chinese medium radio station under well in terms of percentage growth Rediffussion also recorded a comparison. Rediffussion’s red104.9 massive negative growth of 97.8%.
C & M Bulletin 3rd Quarter 2004 25
GLOSSARY
Adex Advertising Expenditure
C & M Sector Communications & Multimedia Sector
CASP Content Applications Service Provider
CPI Consumer Price Index
DJIA Dow Jones Industrial Average
EDGE Enhanced Data Rates for GSM Revolution
GPRS General Packet Radio System
HSI Hang Seng Index
Index A compilation of statistical data that tracks changes in the economy or in financial markets.
ISP Internet Service Provider
KLCI Kuala Lumpur Composite Index
KLSE Kuala Lumpur Stock Exchange
Last Price Price at which the security was traded most recently
Market The market capitalisation is equal to the number of shares Capitalisation outstanding times the stock price at the period end.
MMS Multi-Media Messaging
MSC Multimedia Super Corridor
PPI Producer Price Index
STI Straits Times Index
C & M Bulletin 3rd Quarter 2004 26