About a year ago KGI Asia said it was retaining a 'neutral'' recommendation on MediaNation, one of the leading outdoor advertising companies operating in the mainland and Hong Kong. Although China operations were expected to continue to improve, KGI was concerned that with its aggressive expansion plans and new operations, MediaNation's high operating costs would continue to be a burden.
Recent results had revealed an interim loss of HK$78.2 million from $9.7 million in the first half of the company's financial year. Turnover fell to $179 million, a year-on-year decline of 12.4 per cent. Cost of revenue grew 18.6 per cent to $194.2 million and operating costs 47.3 per cent to $75.1 million.
Turnover from mainland operations increased 17.6 per cent to $129.5 million, not enough to compensate for falls in Hong Kong. This was attributed to a weak local economic environment and advertising market.
In February this year MediaNation announced that it would close its loss-making i-Result Business operating in the mainland and revealed a top management reshuffle. The stock fell to just 8.5 HK cents. In January last year, its price at the initial public offering was $2.60.
In March it reported a loss of $252.78 million for last year compared with a profit of $3.46 million in 2001.
In May MediaNation announced a loss attributable to shareholders of $46.2 million for the quarter to March 31 as business in Hong Kong fell 26.8 per cent. The group continued to show improvement in revenue for its mainland bus advertising business, but the Hong Kong bus advertising business was slow.