STAR (6084) : Star Publications - Still cloudy skies
Target RM2.30 (Stock Rating: HOLD)
Management maintains its cautious adex spending outlook given the weak consumer sentiment. In a briefing this morning, management again highlighted its cost-saving initiatives and strategies to grow the digital segment amid ongoing weakness in print. We maintain our Hold call on the stock with a target price of RM2.30, based on 12.2x CY16 P/E (25% discount to target market P/E of 16.3x), as we expect the structural shift in adex to digital platform to gain momentum, coupled with weaker consumer sentiment. While the stock offers an attractive FY14 yield of 7.9%, we prefer Astro for better exposure and stronger growth prospects in the domestic media sector.
What Happened
Star hosted about 15 analysts and fund managers for its 3Q14 results briefing this morning. The company was represented by group CEO Datuk Seri Wong Chun Wai, group CFO Ragesh Ragendran, group COO Calvin Kan and group COO for Digital Roy Tan. There were no surprises from the briefing as management reiterated its cautious outlook on adex spending given the poor consumer sentiment and prolonged weakness in the print segment. Management expects 4Q14 adex to remain weak and the challenging outlook could persist until the implementation of the Goods and Service Tax (GST) in April 2015. In addition, it is also seeing aggressive package offerings from other media players as the competition tries to lock in sales ahead of the GST's implementation. Apart from that, management is guiding for a dividend of 6-9 sen in 4Q14, which is in line with our expectation of 18 sen for FY14.
What We Think
Although the decline in print circulation is bottoming, we see that the trend is still negative for the print segment given the structural shift in adex spending. Therefore, Star needs to grow its digital platform in order to stay relevant. The company is showing encouraging improvement for some of its digital assets. For example, the Star Property segment is gaining better traction and is now the second most popular property website after iProperty. We think that the property segment offers decent growth potential as we see more developers embracing digital advertising. Moreover, we think there is vast potential for Star to replicate this strategy in other segments, such as automotive and employment, to create a stronger digital asset proposition.
What You Should Do
Stay invested for an attractive FY14 yield of 7.9%. We see that Star is moving in the right direction as it expands its reach in digital media, beyond print.
Source: CIMB Daybreak - 24 November 2014
Target RM2.30 (Stock Rating: HOLD)
Management maintains its cautious adex spending outlook given the weak consumer sentiment. In a briefing this morning, management again highlighted its cost-saving initiatives and strategies to grow the digital segment amid ongoing weakness in print. We maintain our Hold call on the stock with a target price of RM2.30, based on 12.2x CY16 P/E (25% discount to target market P/E of 16.3x), as we expect the structural shift in adex to digital platform to gain momentum, coupled with weaker consumer sentiment. While the stock offers an attractive FY14 yield of 7.9%, we prefer Astro for better exposure and stronger growth prospects in the domestic media sector.
What Happened
Star hosted about 15 analysts and fund managers for its 3Q14 results briefing this morning. The company was represented by group CEO Datuk Seri Wong Chun Wai, group CFO Ragesh Ragendran, group COO Calvin Kan and group COO for Digital Roy Tan. There were no surprises from the briefing as management reiterated its cautious outlook on adex spending given the poor consumer sentiment and prolonged weakness in the print segment. Management expects 4Q14 adex to remain weak and the challenging outlook could persist until the implementation of the Goods and Service Tax (GST) in April 2015. In addition, it is also seeing aggressive package offerings from other media players as the competition tries to lock in sales ahead of the GST's implementation. Apart from that, management is guiding for a dividend of 6-9 sen in 4Q14, which is in line with our expectation of 18 sen for FY14.
What We Think
Although the decline in print circulation is bottoming, we see that the trend is still negative for the print segment given the structural shift in adex spending. Therefore, Star needs to grow its digital platform in order to stay relevant. The company is showing encouraging improvement for some of its digital assets. For example, the Star Property segment is gaining better traction and is now the second most popular property website after iProperty. We think that the property segment offers decent growth potential as we see more developers embracing digital advertising. Moreover, we think there is vast potential for Star to replicate this strategy in other segments, such as automotive and employment, to create a stronger digital asset proposition.
What You Should Do
Stay invested for an attractive FY14 yield of 7.9%. We see that Star is moving in the right direction as it expands its reach in digital media, beyond print.
Source: CIMB Daybreak - 24 November 2014
