It only has 3% market share in China's TV ad industry.
According to Maybank Kim Eng, SH estimates it has a 3% market share in the CNY100b TV advertising industry in China.
The top five players, all foreign-owned, have a combined share of c.30%, while the top 10 account for less than 50% of the advertising market. This is a marked contrast to the situation in developed economies such as the US, where the top five agencies make up 70% of the advertising market; in Japan, the top three accounts for 40% of their market. Maybank believes SH will be able to gain market share from smaller peers and expand its coverage of programmes and channels.
The company has a strong balance sheet with cash of CNY1.44b at the end of 2012, up by CNY530m from end-2011 but largely supported by an increase of CNY758m in accounts payable, for deferring payments to its major vendor CCTV.
After factoring in a further CNY50m for the final payment related to its property purchase and an estimated capex of CNY50m for new media investment and integration, management thinks net cash will total circa CNY900m by end-FY13F, or HKD2 per share (35% of current market cap).
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