Clear Media Limited Overview
We think that Clear Media Limited (“100:HK” or the “Company”) is undervalued. Clear Media Limited is an underfollowed company that owns the biggest network of outdoor advertisements in China.
The Company is an outdoor media company in China. The principal activity of the Company is an investment holdings company. It is engaged in the display of advertisements on bus shelters, unipoles and bus bodies. The Company created a bus shelter advertising network covering nearly 30 key cities in China, which include Beijing, Guangzhou, Shanghai, Chengdu, Nanjing, Shenzhen, Hangzhou, Xi’an Jinan, Shijiazhuang and others. The Company’s subsidiaries include China Outdoor Media Investment Inc., China Outdoor Media Investment (Hong Kong) Company Limited and WHA Joint Venture. The Company offers its services to sectors including beverages, telecommunications, food, and cosmetics and toiletries, among others.
Despite the fact that Clear Media has such a dominant position in China with no debt, the Company trades at an 7.0x EV/EBIT multiple, a significant discount to the industry’s EV/EBIT multiple of 26.2x. Given its dominant position, stability and catalyst, Clear Media deserves to trade at a higher multiple, in the 10.0x to 15.0x EV/EBIT multiple range, which still places it at a lower valuation than the industry.
As a result, we think Clear Media should be worth around HKD 13.60, compared to HKD 7.00, implying 94% upside from today’s trading levels.
A short write-up of Clear Media Limited was done previously as seen here.
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