Digital Media Counters

I believe some of you have already notice the potential earnings and prospects of local digital media counters. There are not many digital media counters in Malaysia, just a handful of them, like AMEDIA, CACHA, DIGISTA and MMODE. 

Between them, 2 of the long listed counters, DIGISTA and MMODE have went up 3 to 4 times recently, where AMEDIA and CACHA are just listed recently. Have you invest any of them?

In fact, they are not really the pure media counters. They are the mixture of media and technology. They need to continuously to develop their technology and follow the leader's step out there to improve to their products, services and income. Unlike traditional media counter, these digital media counters have to allocate quite a portion of the profit for technology development. That's why you don't see them distribute much dividend to the shareholders, some of them even no dividend at all.

Another similarity of these counters are the Price Per Earning Ratio (PER). Most of them are low PER counters, around 4-6. Compare to traditional media and technology counters, their PERs are obviously low.Why is that? Are they undervalue? If so, why all of them undervalue? 

Well, I guess this digital media industry is consider still new in Malaysia.  According to history, not many of the local company are success by involving in technology sector. Look at the bunch of technology counters, how many of them can go out of Malaysia and return with a lot of profits? Many of them are penny stocks. Well, I would say so far the most successful technology company belongs to Jobstreet, and that's already reflect on it's share price.

I'm not saying we are not creative, but we are lack of creative people to come up with bunch of ideas. Until today, our manpower outflow issue has yet to be rectified, due to our poor management of the country (The Government). Compared to technology leaders like US and Taiwan, we still have a long way to go.

So in short, since they are low PER, how good are these digital media counters? They are making money and they will make more money in the near future. The prospect of this sector is definitely good and the competition is yet to be stiff. I foresee they are safe to invest right now. 

The only risk is we are lack of relevant manpower in this industry. If we don't resolve this problem, I foresee the company development is most probably remain within the country. I mean there is a growth limitation in the near future.