By Xavier Kong
SASBADI Holdings Bhd saw a weaker first quarter ended Nov 30, 2019, reporting a net profit of RM4 mil, down 9% year-on-year (yoy), due to weaker contributions from its print publishing business, dampened by lower textbook sales.
AllianceDBS Research analyst Cheah King Yoong deemed the results to be within expectations, given that the first quarter is seasonally the strongest quarter for Sasbadi.
Revenue for the quarter also fell 8% yoy to RM26.4 mil, due to lower revenue from new textbook contracts.
“We expect the prospects of Sasbadi’s print publishing business to remain challenging in view of the restrictions on workbooks in school by the Ministry of Education, and the shift from an exam-based to an assessment-based education system with emphasis on class tests, projects, and presentations,” said Cheah.
Also noted was that the general consumer shift from print to digital publishing will continue to pose challenges to the print publishing industry as a whole.
However, Cheah also expects Sasbadi to register higher earnings in its 2020 financial year despite the challenging environment, on the back of an ongoing cost optimisation exercise, higher contributions from the company’s digital and Marshal Cavendish products, and new contributions from its English upskilling products.
As such, Cheah maintains a hold recommendation on Sasbadi, with an unchanged target price of 17 sen.
“We do not foresee any significant catalyst to re-rate the stock at this juncture in view of the continued challenging operating environment for the publishing industry,” said Cheah.
At 2.30pm, Sasbadi’s shares were last traded at 17.5 sen, down a sen, with 2.99 mil shares changing hands. – Jan 22, 2020
