System transformation and cultural consumption upgrading drives the media industry into lasting prosperity. China's national power is rising fast, pushing for a booming media industry. "Vigorous Development and Prosperity" is also included in the 17th CPC National Congress report. Moreover, fast economic growth also promotes continuous upgrading of cultural consumption. In 2007, China's media and cultural industry created a value of RMB481.1 billion, up by 13.6% yoy, while revenue from advertising also grew by 17% yoy.

International experience: an emerging big power would calls for rise of a robust media industry. An emerging major power will inevitably bring about enhancement of cultural power, political power and overall national power, which builds on the support of robust media industry. And a robust media industry results from economy of scale and economy of scale after release of regulation. Cross region and cross media operation is the unavoidable road for major media enterprises, which is the same for Chinese media enterprises.

Three investment themes: facilitation of Olympics for advertising industry, technical innovation and digital TV, and change of asst and operational model.

Facilitation of Olympics for advertising industry. The Olympics Games are the grand event for the sports circle and also the banquet for advertising industry. At present, we estimate the growth of advertising industry in 08 at 20%.

Technical innovation and digital integration would enhance the value of cable network. At present, China has 115 million cable TV subscribers and 26.16 million digital cable TV subscribers. We estimate growth of digital cable TV subscribers for the future three years would exceed 50%.

Change of asset and operational model embodying economy of scale and economy of scope

We assign an industry rating of "neutral". Although we are optimistic about the future prospects of media industry, we are neutral towards value creation outlook of most public media companies. In the valuation system, the media industry is at the high end and thus we give out the investment rating of "neutral" to media industry. At the same time, we believe obvious structural investment opportunities exist for the above three investment themes. We give "buy" rating to Beijing Bashi, Shanxi Broadcast & TV Network Intermediary, Beijing Gehua CATV Network. Investment ratings for other public companies are detailed in the report.

[此贴子已经被作者于2008-8-19 16:08:41编辑过]