KUALA LUMPUR (April 19): Kenanga Research has maintained its “underweight” rating on the media sector and said 1QCY2024 advertising execution (adex) — +14% year-on-year — exceeded house expectations due to stronger-than-expected recovery in the free-to-air television (FTA TV) segment, mainly catalysed by the nascent recovery in both business and consumer sentiment.

In a sector update on Friday, the research house said that except for cinema adspend, there was broad-based y-o-y expansion across the board, which was primarily led by the FTA TV and digital media segments.

“We upgrade our FY24 adex growth estimate to 10.8% y-o-y (from 0.2% y-o-y contraction).

“On the flipside, we believe traditional media is likely to miss out on the improved adex given its declining popularity among advertisers due its high cost per impression (vs digital media), non-interactive nature (vs a two-way format of digital media) and inability to personalise content (vs digital media that could do so by resorting to AI).

Moving forward, Kenanga said that adex growth will be moderate in 2QCY2024 as advertisers hold back in anticipation of the upcoming Paris Summer Olympics that will be held from July 26 to August 11.

“We maintain our Underweight sector recommendation as we are concerned that traditional media companies remain in the woods given its declining popularity of traditional media among advertisers due to its high cost per impression (vs digital media), non-interactive nature (vs a two-way format of digital media) and inability to personalise content (vs digital media that could do so by resorting to AI).

“We do not have any stock picks for the sector,” it said.