STAR (6084) - Star Publications - Turning the page to 2015
Target RM2.56 (Stock Rating: HOLD)
Star remains cautious about the 2015 outlook for adex given the weak consumer sentiment. In a briefing this morning, management again highlighted its strategies to grow the digital and event segment in order to offset the persistent weakness in the print segment. We maintain our Hold call on the stock as we expect the structural shift in adex to the digital platform to gain momentum and consumer sentiment to stay poor due to uncertainty in the domestic economy. While the stock offers an attractive FY15 yield of 7.0%, we prefer Astro for its better exposure to and stronger growth prospects in the domestic media sector. We maintain our FY15-17 EPS forecasts and RM2.56 target price (11.3x CY16 P/E, 25% discount to target market P/E of 15x)
What Happened
Star hosted its 4Q14 results and FY15 outlook briefing for some 25 analysts and fund managers. The company was represented by Group CEO Datuk Seri Wong Chung Wai, Group COO Calvin Kan, Group CFO Ragesh Rajendran and its senior management team. Management discussed Star’s earnings drivers following its solid 4Q14 performance, and its cost saving strategy. It expects adex to remain weak in 1H15 as advertisers hold back spending ahead of Goods and Service Tax (GST) implementation. However, management is cautiously optimistic that adex will recover in 2H15 as consumer anxiety about GST subsides.
What We Think
While there were no surprises from the briefing, we were encouraged by the group's efforts to diversify into the digital, event and other platforms. Moreover, Star’s strategy is gaining traction as it plans to detach the property classifieds from the print segment into a separate business unit due to attractive growth prospects. We understand that the “Star Property” portal has become the leading digital platform for property in Malaysia with total monthly unique visitors of 316k in Dec 2014, exceeding “iProperty” and “Property Guru”. In addition, we expect the event segment to record decent growth in FY15 as the company is actively bidding for more events and expanding in other markets domestically and across Southeast Asia. Furthermore, we expect Star to benefit from the lower newsprint prices and further cost rationalisation this year to improve the group's operating efficiency.
What You Should Do
Stay invested for its attractive FY15 yield of 7.0%. We see Star's growth prospects improving as it expands its reach beyond the print platform.
Source: CIMB Daybreak - 04 March 2015
Target RM2.56 (Stock Rating: HOLD)
Star remains cautious about the 2015 outlook for adex given the weak consumer sentiment. In a briefing this morning, management again highlighted its strategies to grow the digital and event segment in order to offset the persistent weakness in the print segment. We maintain our Hold call on the stock as we expect the structural shift in adex to the digital platform to gain momentum and consumer sentiment to stay poor due to uncertainty in the domestic economy. While the stock offers an attractive FY15 yield of 7.0%, we prefer Astro for its better exposure to and stronger growth prospects in the domestic media sector. We maintain our FY15-17 EPS forecasts and RM2.56 target price (11.3x CY16 P/E, 25% discount to target market P/E of 15x)
What Happened
Star hosted its 4Q14 results and FY15 outlook briefing for some 25 analysts and fund managers. The company was represented by Group CEO Datuk Seri Wong Chung Wai, Group COO Calvin Kan, Group CFO Ragesh Rajendran and its senior management team. Management discussed Star’s earnings drivers following its solid 4Q14 performance, and its cost saving strategy. It expects adex to remain weak in 1H15 as advertisers hold back spending ahead of Goods and Service Tax (GST) implementation. However, management is cautiously optimistic that adex will recover in 2H15 as consumer anxiety about GST subsides.
What We Think
While there were no surprises from the briefing, we were encouraged by the group's efforts to diversify into the digital, event and other platforms. Moreover, Star’s strategy is gaining traction as it plans to detach the property classifieds from the print segment into a separate business unit due to attractive growth prospects. We understand that the “Star Property” portal has become the leading digital platform for property in Malaysia with total monthly unique visitors of 316k in Dec 2014, exceeding “iProperty” and “Property Guru”. In addition, we expect the event segment to record decent growth in FY15 as the company is actively bidding for more events and expanding in other markets domestically and across Southeast Asia. Furthermore, we expect Star to benefit from the lower newsprint prices and further cost rationalisation this year to improve the group's operating efficiency.
What You Should Do
Stay invested for its attractive FY15 yield of 7.0%. We see Star's growth prospects improving as it expands its reach beyond the print platform.
Source: CIMB Daybreak - 04 March 2015
