13th July 2013
"Its SOP-based target price of Catcha Media's 96 sen per share implies a whopping 62 per cent discount of current share prices."
KUALA LUMPUR: The stock market yesterday failed to respond to Catcha Media Bhd’s RM60 million merger deal with Youth Asia Sdn Bhd.
Catcha Media Bhd sealed an agreement with Youth Asia on Thursday to form the country’s largest digital advertising business.
In a stock filing, Catcha Media said it has completed the final stage of the deal, which will see Youth Asia’s Says.com and Catcha Media’s publication and digital business merging into a newco.
Catcha Media will hold a 70 per cent stake in the newco and Youth Asia the remaining.
Youth Asia is the owner of Says Sdn Bhd, which in turn holds Says.com, an online advertising platform that serves more than 80 brands such as Nike, Coca-Cola and Maxis. It has a strong presence in Malaysia, India, the Philippines and Singapore.
It posted an encouraging financial performance for the financial period of January 1 to December 31 last year with an after-tax gain of RM2.5 million.
In a statement yesterday, Catcha Media chief executive officer Patrick Grove voiced his strong confidence on the future of digital marketing in Malaysia.
The merger exercise has enabled Catcha Media to leverage on its partner’s media expertise, which will be positive to the company.
However, the markets seemed downbeat with the deal.
Catcha Media traded unchanged and closed at 59 sen yesterday. The stock was thinly traded with only 108,000 shares changing hands.
In fact, Catcha Media share price has never closed above 74.5 sen in the past year, despite chalking net profits since its listing and aggressive expansion drive.
In a note in May this year, CIMB Research regarded the company as severely undervalued with zero value given its advertising and e-commerce business, as well as its fundamental strength.
It is worth noting that its current market capitalisation of RM79.4 million is just slightly higher than the value of its 29.18 per cent stake in Australia-listed iCar Asia Ltd.
In fact, CIMB Research said the Catcha Media management does not rule out the possibility of privatisation if its share price remains low.
Its SOP-based target price of Catcha Media's 96 sen per share implies a whopping 62 per cent discount of current share prices.
Apart from that, RHB Research, one of the country's largest securities firms, has a positive view on the counter as well.
Analyst Jerry Lee told Business Times in May its share price performance will improve once it builds up reputation in the market.
The firm has put a "buy" call on the counter, with a target price of 65 sen.
[Source]
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