Maintain an overweight rating of the US media stocks

Morgan Stanley today released a study to maintain an "overweight" rating on NASDAQ:AMCN's shares.

The following is the full report:

The second quarter net revenue of the US media fell 5% to $63 million, a 2% lower than our expectation, but in line with the company's forecast of 63 million to 65 million dollars. The net loss of shares in ads per share was $0.08, and our forecast was $0.07.

In the second quarter, the U.S. media from the digital framework of the advertising revenue growth of 15% year-on-year, accounting for the total revenue of 53%, which is mainly due to sales time period of 6% year-on-year growth, and utilization rate increased by 3%. But the average price drop of 2% per cent on a year-on-year scale has had some adverse effects. Revenue from traditional media fell 11%, accounting for 29% of total revenue. Among them, the sale position fell 2% year-on-year, utilization rate fell 3%, while the average price fell 10%.

The main advertising components of the media include: car advertising accounted for 30%, financial services advertising accounted for 13%, high-end food and beverage accounted for 9%, consumer electronics accounted for 8%, industrial products accounted for 8%. As China's macroeconomic growth slows, advertising revenues for cars and financial services have declined year-on-year. Because of the decline in consumption, high-end food and beverage advertising chain decline.

The U.S. media recently extended the concession contract with Sinopec and got the approval of Sinopec to install the LED display at its gas station. The US media expects 1000 such LED displays to be installed by June 2014, which will significantly increase the company's advertising revenue for its gas stations. In the second quarter of 2013, sales of gas stations rose 2%, accounting for 3% of total revenue.

In the second quarter, the US media operating profit margin was 11%, compared with 9% in the first quarter and 4% in the same period last year. This was mainly due to a 3% per cent increase in concession costs, while sales and marketing costs grew 31% per cent year-on-year.

Air U.S. media forecasts, the third quarter net revenue will be 69 million to 71 million U.S. dollars, the chain growth of 8.9% to 12%, the year-on-year decline of 0.5% to 3.3%. The company also estimated that the concession fee will be about 43 million U.S. dollars, the chain down 7%, an increase of 3% year-on-year.