Let’s talk about another stock that is on a 10 years downtrend 🌚 STAR MEDIA GROUP BERHAD (6084)
I promise this one will be better than the previous one 🤷
Firstly a little background of this company.
Star Media Group Bhd publishes, prints and distributes newspapers and advertises in print and electronic media. 📰
Star Media has 4 segments - Print and digital; Broadcasting, operates wireless broadcasting stations; Event and exhibition; and Television channel, provides technical operations and broadcasting support for the high definition television channel, operation of pay or cable television channel, distribution of films and sales of television channel airtime. 📺 📰
Most of their revenue is generated from the Print and digital segment. The group mainly operates in Malaysia and Singapore and generates majority of its revenue from Malaysia.
Previously this company has a market capitalization of 2 billion but now it fell all the way to around 384 million only a drop of around -80.8% 😨 and in the last 1 year the group’s share price dropped by 33.1%, it was 66.4 sen on Dec 11 2018 until now 44.5 sen as of 26 Dec 2019.
So is this company going to privatize? Well, Malaysian Chinese Association (MCA) which owns 43.1% of the group, will they take this chance to privatize the company? Analysts said that they do not think they will take the privatisation route. 🤔
What I feel is that they should take this chance to privatize this company based on their current valuation where their price as of writing this is 0.495 sen. It would be ideal for MCA to privatize the company knowing that their NTA is still 1.11.
Well on the other hand we also need to see if MCA has the money to privatize the company or not, no money no talk 🌚
That said Star has been a cash generating dividend company for MCA over the past few years. MCA received a total of RM349.71 million in dividends from Star between 2013 to 2017. However, in the last year that amount dropped to RM9.54 million which is based on their dividend of 3 sens per share.
Lets say if this company is going to be privatized the main question here is what price would it be, and should we as investors take this opportunity to buy in this company just for their assets?
Knowing that their net tangible asset is 1.11 but their price is 0.495 isnt there a margin of safety already? 🤔 So the only thing that is valuable about this company are their assets, based on its 2018 annual report, the company’s properties have a net book value of RM1.55 billion, which translates into RM2.10 per share.
Star media group owns 18 properties, their 17-storey office building, Menara Star, has the highest net book value of RM35.86 million. It was last revalued in 2001. However, according to CGS-CIMB Research’s Oct 26, 2018, report, the building is likely to be worth RM80 million.
Star’s properties in Penang has an office block for creative and events hub, a newsprint warehouse and a regional printing plant. Those are estimated to have a market value of RM118 million, according to CGS-CIMB Research. 🏣
Star media group also has four pieces of freehold industrial land that measure a total of 633,161 sq ft and have a net book value of RM43.27 million. Three of them are located in Bukit Jelutong, Shah Alam, while the fourth is in Bayan Lepas, Penang. The total market value of these tracts is estimated at RM121.71 million. 💰
However, some assets depreciates over the years and also the company might just sell some of their assets to pay off bank loan so we cant really see their NTA as a way to judge if this company is undervalued or not. 📉
Also as of 30th Sept 2019 they have a total of RM387.7 million in cash which is already equals to 52.5 sen per share but their stock price now is lower than this. 🤷
📍 Future prospects for Star Media
Prospects for Star is quite dull because it doesn’t matter how much value or information that they are pushing in their newspapers, not many advertisers want to advertise there already.
Social media such as facebook, Instagram, twitter, etc has better advertising power as more people tend to spend more time there and what’s more people like you can me also mostly read news and share them on social media platform.
This is the reason why their revenue will still continue to decline unless they take a different approach and diversify their sources of revenue.
In their Q3 ended Sept 30, 2019, Star’s net profit dropped by 84% year on year to RM250,000 while their revenue fell from RM91.12 million to RM79.58 million. So are you still interested in their company? 😏 😏
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