Saturday, December 14, 2013

Star Publications : Star will get brighter (CIMB)

Star Publications
Current RM2.43
Target RM2.54
Star will get brighter

Despite its poor earnings performance due to an unavoidably weak print business, we believe Star is heading in the right direction. Most importantly, revenue from its digital platforms is improving.

We cut our FY14-15 EPS as we now believe its new businesses will take longer to turn profitable. Our target price dips accordingly, still set at 12.5x CY15 P/E (20% discount to our market target). Under our new rating structure, Star is a Hold (previously Neutral). Dividend yields of about 5% should compensate for its poor earnings while investors wait for its new businesses to bear fruit.

Plans in place for 2014
In 2014, the group will continue to concentrate on its digital platforms such as radio, TV and online offerings. Management acknowledged that it has to sell the company as an integrated solutions provider to advertisers with the ability to offer various advertising avenues. Apart from that, due to the country‘s Malay demographic shifts, Star aims to focus on the Malay segment via platforms like Suria FM and mStar Online. It is also expected to invest more in the property segment by organising more events like property-award dinners and affordable-housing expos, in addition to its annual property expo which mainly showcases premium housing. While adex growth has not been good, circulation is stable and its radio segment has been performing well, with its audience rising.

Leaner structure
About 259 employees or 80% of the company‘s target have applied for the company‘s voluntary separation scheme (VSS). While it will be a costly RM38m exercise, a lean cost structure is necessary in a competitive environment. When the exercise is completed, the group could save RM20m a year.

Hands-on new CEO
Datuk Seri Wong Chun Wai was appointed Group CEO/Managing Director in Nov 13. He seems to have a clear vision of the company‘s business direction. His ultimate aim is to transform Star from predominantly a print media company into an ―IT‖ company. Judging from his answers to analysts‘ queries, his long tenure with the company (three decades) and his rise from the ranks (started out as a reporter), we feel that he will adopt a very hands-on management style.

Source/Extract/Excerpts/来源/转贴/摘录: CIMB-Research,
Publish date: 10/12/13

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