KUALA LUMPUR (Dec 31): AmInvestment Bank Bhd said today cheap valuations of media companies make them viable merger and acquisition (M&A) and privatisation targets, and that the research firm may upgrade the Malaysian media sector to "overweight" from "neutral" if privatisation and M&A opportunities arise as the industry contends with Covid-19 pandemic-driven challenges.

AmInvestment analysts wrote in a note today that the research house’s Malaysian media sector coverage comprises newspaper publishers Media Chinese International Ltd, Media Prima Bhd and Star Media Group Bhd.

"We maintain our 'neutral' recommendation on the media sector for 2021 as the operating environment has become even more challenging with the Covid-19 pandemic,” they said.

AmInvestment’s note shows that Media Chinese, Media Prima and Star Media's 2020 price-book value (PBV) ratios are estimated at 0.6 times, 0.5 times and 0.4 times respectively.

For 2021, Media Chinese, Media Prima and Star Media shares are expected to trade at PBV ratios of 0.7 times, 0.5 times and 0.4 times respectively, according to AmInvestment.

AmInvestment’s note shows that the research house's fair values for Media Chinese, Media Prima and Star Media shares stood at 16 sen, 25 sen and 27 sen respectively.

At Bursa Malaysia’s 12:30pm break today, Media Chinese’s share price settled down one sen or 5.56% at 17 sen, Media Prima was unchanged at 29 sen while Star Media was down 0.5 sen or 1.41% at 35 sen.