NSTP set for delisting

PETALING JAYA: The New Straits Times Press (M) Bhd (NSTP) may soon say goodbye to its listed status but a group of minority shareholders could throw a spanner in the works.

Presently, Media Prima has completed its takeover of NSTP and now holds an 89.62% stake comprising 194.68 million shares of RM1 each in NSTP. However Media Prima will need to secure 90% of voting shares in NSTP before it can compulsorily acquire the remaining shares in NSTP. Furthermore, at least 10% of shareholders can block a de-listing of NSTP.

If one recalls, Media Prima’s first offer price of RM2 was rejected by shareholders.

Media Prima’s first offer to take NSTP private was on 16 Oct, 2009 when it proposed a conditional takeover of NSTP at RM2.

Investors reacted negatively. NSTP’s share price came down rather substantially as most investors saw Media Prima’s offer as unattractive and significantly undervaluing NSTP.

After the frosty response from NSTP shareholders, Media Prima announced on Nov 12, 2009 a revised takeover offer at RM2.40 a share to be satisfied by the issuance of six ordinary shares in Media Prima at an issue price of RM2 and one free warrant for every five offer shares accepted.

To further tempt NSTP shareholders, NSTP announced a tax-exempt special dividend of 40 sen. This time, shareholders approved.

As at the closing date, Media Prima had received an acceptance of 46.35%, which gives it a total of 89.64% of the voting shares in NSTP.

The fortunes of the NSTP group have been volatile, but analysts are now turning positive due to increasing advertising revenue and the synergies it will derive from Media Prima.

Certainly, there is room for improvement, especially with Malay-language newspapers having only 21% market share of total newspaper advertising expenditure (adex) although they make up almost half of total newspaper circulation in the country.

Industry adex growth for print media and TV is expected to grow by 8%, after a surprising 7% growth in 2009.

Major events such as FIFA World Cup and Commonwealth Games are added impetus to improving adex sentiment, alongside positive broad-based economic factors.

“In Malaysia, print is still the preferred advertising avenue with more than 50% of the adex market share of total industry, as opposed to other media forms.

“Having said that, TV could still sometimes better serve advertiser needs,” said an AmResearch analyst.

According to a Nielsen research conducted in 2009, the primary objective of advertising is to gain new customers, followed by consolidating market position.

“Print media tends to garner more advertising dollars at the expense of TV when companies engage in price competition through heavy discounting activities,” said the AmResearch analyst.

Like other newspaper companies, NSTP’s financial performance has been negatively impacted by the credit crisis as well as high newsprint prices, particularly in late 2008 and early 2009.

For the financial year (FY) ended 2009, however, revenue increased 0.9% to RM583.36mil while net profit rose 12.05% to RM38.15mil.

The net profit missed consensus estimates by 37%. It came from lower-than-expected operating margins and higher-than-expected tax rates.

“Moving forward, we believe NSTP should be able to sustain its earnings recovery, given the favorable economic outlook and its steady share of adex,” said OSK Investment Research analyst Norfauzi Nasron.

NSTP’s flagship English daily, the New Straits Times, saw circulation falling by 5,000 to 6,000 copies last year, although sales are firming now.

The circulation is hovering around 119,000 to 120,000 copies and it wants to push this up further with an improved product and more aggressive marketing.

Cheaper newsprint cost averaging US$580 per tonne, the continued recovery of the Malay newspaper segment, and further yield improvement are also factors that will continue to support earnings.

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