STAR Media Group Bhd is often regarded as the bellwether stock to gauge the prospect of the print media industry – whether the industry is indeed a sunset industry amid the proliferation of full-fledged online news media or there is still light at the end of the tunnel.
That the future is bleak cannot be discounted as the publisher’s net loss surged 26-fold year-on-year (yoy) for its 9M FY2021 ended Set 30, 2021 to -RM106.7 mil (9M FY2020: RM4 mil).
Star Media’s results were dragged by one-offs amounting to RM83.2 mil comprising (i) the reversal of compensation income of RM50.5 mil awarded in FY2020 from the legal case with JAKS Resources Bhd; and (ii) impairment of property, plant, and equipment of RM32.7 mil.
If excluding the exceptional chunky items, TA Securities Research noted that Star Media’s core net loss narrowed 56.1% yoy to RM23.5 mil in 9M FY2021 which is within its but above consensus respective full-year forecast for a net loss of RM26.1 mil and RM32.8 mil respectively.
“While Star Media remained in the red in 3QFY21 with a core net loss of RM5.2 mil, we anticipate improvements in 4Q FY2021 alongside the re-opening of most parts of the economy,” projected analyst Wilson Loo in a results review.
“As the economy picks up, we expect accompanying improvements in business and consumer sentiment to bode well for adex (advertising expenditure).”
Moreover, TA Securities Research also viewed upside from Star Media’s on-going efforts to grow its digital revenue and optimising cost.
“This includes the recent shut down of dimsum, its loss-making video-on-demand service on end-September – a strategic decision amid the competitive over-the-top services market,” noted the research house.
“Meanwhile, we also view a potential catalyst to Star Media from value accretive merger and acquisition in media-related and/or unrelated businesses which the group continues to be on the lookout for.”
Despite such positivism, TA Securities Research reiterated its “sell” rating on Star Media with a target price of 35 sen pegged to a price-to-book value (P/BV) of 0.35 time.
However, CGS-CIMB Research retained its “add” call on Star Media with an unchanged target price of 50 sen as it reckoned the company’s share price “seems to have bottomed out”.
“We believe this could be a good opportunity to pick up the stock ahead of a series of potential catalysts awaiting the group,” opined analyst Kamarul Anwar. “Star Media has bid for the digital banking tender through a consortium, and the outcome is expected to be announced by 1Q 2022.”
Moreover, the economic re-opening could spur some ad buys with the advertising market “may be further jolted if a general election is called in 2022”.
“The memorandum of understanding (MOU) between the government and the opposition included a clause to bar Parliament’s resolution until end-July 2022 at the earliest,” added CGS-CIMB Research.
At 10.20am, Star Media was unchanged at 34.5 sen with 139,000 shares traded, thus valuing the company at RM255 mil. – Nov 19, 2021
