There is no urgency for Next Media to divest any further if the planned sale goes ahead.
Next Media’s print media business contributed roughly HK$500M in pretax earnings for FY11/12, and HK$600M for FY10/11. We could safely assume that it’s now trading at 4~5 times over perspective profit after cutting off the bleeding multimedia segments, which is lower than all HK peers.
If Next Media is to trade on 7 times over perspective earnings, as SCMP does, it would have carried a market capitalization of roughly HK$3.5B. The thing is most of the local media plays are backed by generous dividend payouts.
It all depends on what Fat Lai wants to do next. He is peerless when it comes to outrageous managerial decisions. After its failed TV venture, Next Media has to sit on a management discount for a while.
I guess Fat Lai will turn to less expensive internet ventures, such as the likes of House News, or even DBC. But it can hardly be as disastrous as its Taiwan TV move.