Companies: CHS    TLR   

The Local Radio Company may have recently announced that after 11 months of the current year sales are running 24 per cent up on 2003/04, but broker Charles Stanley remains sceptical.

Pointing out that the same trading update also indicated that like-for-like revenues have risen by just two per cent, analyst Paul Bates is concerned that the company has endured a ‘flat’ second half. ‘This is not a bad performance in a weak market,’ Bates continues, ‘however, while the company is expecting to be profitable at the EBITDA level we are no longer expecting an operating profit.’

Arguing that the shares are now ‘over-valued on an asset basis’, Bates has his full year forecasts and says reduce.

Despite publication of another profits warning, however, Bates is more upbeat when it comes to fellow media business Chrysalis. This optimism stems from the fact that, while the company endured a torrid 2004/05, prospects for the future seem a little brighter.

Chrysalis’ radio division, for instance, is said to have benefited from a better-than-expected performance in September. The group’s music division, meanwhile, has been bolstered by the successful release of a new album from David Gray.

Reasoning that the events of the past 12 months have given ‘ammunition to those seeking a break up of the group’, and that ‘any structural change would release significant value’, Bates advises corporate clients to accumulate.