STAR (6084) - Star Publications - Starting to shine
Target RM2.56 (Stock Rating: HOLD)
We are positively surprised by Star’s performance as FY14 core net profit exceeded expectations, coming in at 109% of our and consensus full-year estimates. Despite lower print contribution in FY14, core net profit grew by 4.2% yoy, driven by stronger contribution from the event segment and better cost management. Given the stronger earnings contribution from the event segment, we raise FY15-16 EPS forecasts by 5-7%. We maintain a Hold rating with a higher target price of RM2.56, based on 11.3x CY16 P/E, still at 25% discount to our target market P/E of 15x. While the stock offers an attractive 7.2% FY15-16 yield, we prefer Astro for exposure to the media sector.
4Q14 review
Revenue in 4Q14 fell by 2.9% yoy to RM280.9m from RM289.2m last year due to lower contribution from the print and broadcasting segments. Management highlighted that the overall adex spending was negatively impacted by poor consumer sentiment due to uncertainty in the domestic economy and potential rise in the cost of living. Star recorded a stronger core net profit of RM47.5m in 4Q14 (vs. RM44.2m in 4Q13) after adjusting for impairment losses on goodwill, the radio licence for Capital FM, film rights and investment in associates amounting to RM26m. Star declared a second interim dividend of 9 sen, which brings it to a total dividend of 18 sen for FY14, in line with our expectation.
Expanding beyond print
Star is moving in the right direction by focusing on growing its event, TV and broadcasting segments in order to reduce its dependency on print. We think that the strategy is gaining traction given that its event segment’s PBT grew by 65% yoy to RM19.1m from RM11.5m a year ago, driven by more projects secured by Cityneon and additional shows organised by I.Star Ideas Factory. The event segment also benefited from better operating efficiency following the cost rationalisation exercises that were carried out at the end of 2013.
We maintain a Hold rating
We believe that Star’s financial position remains strong with net cash of RM352m. The stock offers an attractive FY15-16 dividend yield of 7.2%. Overall, we still prefer Astro for exposure to the media sector due to its lower reliance on adex volatility and defensive operating structure. We will provide more information following the analyst briefing next week.
Source: CIMB Daybreak - 02 March 2015
Target RM2.56 (Stock Rating: HOLD)
We are positively surprised by Star’s performance as FY14 core net profit exceeded expectations, coming in at 109% of our and consensus full-year estimates. Despite lower print contribution in FY14, core net profit grew by 4.2% yoy, driven by stronger contribution from the event segment and better cost management. Given the stronger earnings contribution from the event segment, we raise FY15-16 EPS forecasts by 5-7%. We maintain a Hold rating with a higher target price of RM2.56, based on 11.3x CY16 P/E, still at 25% discount to our target market P/E of 15x. While the stock offers an attractive 7.2% FY15-16 yield, we prefer Astro for exposure to the media sector.
4Q14 review
Revenue in 4Q14 fell by 2.9% yoy to RM280.9m from RM289.2m last year due to lower contribution from the print and broadcasting segments. Management highlighted that the overall adex spending was negatively impacted by poor consumer sentiment due to uncertainty in the domestic economy and potential rise in the cost of living. Star recorded a stronger core net profit of RM47.5m in 4Q14 (vs. RM44.2m in 4Q13) after adjusting for impairment losses on goodwill, the radio licence for Capital FM, film rights and investment in associates amounting to RM26m. Star declared a second interim dividend of 9 sen, which brings it to a total dividend of 18 sen for FY14, in line with our expectation.
Expanding beyond print
Star is moving in the right direction by focusing on growing its event, TV and broadcasting segments in order to reduce its dependency on print. We think that the strategy is gaining traction given that its event segment’s PBT grew by 65% yoy to RM19.1m from RM11.5m a year ago, driven by more projects secured by Cityneon and additional shows organised by I.Star Ideas Factory. The event segment also benefited from better operating efficiency following the cost rationalisation exercises that were carried out at the end of 2013.
We maintain a Hold rating
We believe that Star’s financial position remains strong with net cash of RM352m. The stock offers an attractive FY15-16 dividend yield of 7.2%. Overall, we still prefer Astro for exposure to the media sector due to its lower reliance on adex volatility and defensive operating structure. We will provide more information following the analyst briefing next week.
Source: CIMB Daybreak - 02 March 2015
