HAVING bled the company since its founding, the recent revelation by the Star Media Group Bhd is shutting down its video-on-demand service Dimsum Entertainment by Sept 30 is surely music to the ears of its investors.
Even to many lay people, common sense would tell that there is little avenue for Dimsum to take on bigger rivals in the likes of Netflix Malaysia or home-grown Astro Malaysia Holdings Bhd.
To re-cap, Dimsum was launched in 2016 and has since expanded to Brunei, Malaysia and Singapore. Its library of content includes movies, dramas, documentaries, variety, animations and children shows from China, Japan, Taiwan, Hong Kong, Thailand, South Korea, Singapore, Thailand, Indonesia and Malaysia.
“We view this move positively and welcome it sooner rather than later,” opined Hong Leong Investment Bank (HLIB) Research analyst Syifaa’ Mahsuri Ismail.
“The OTT space is a very competitive space and Dimsum OTT (over-the-top) has not been able to gain significant traction since its launch (Nov 2016) with only 1.1 million subscribers as at Dec 31, 2019 (note that this number is inflated as it includes subscribers as well as free users).”
While the Dimsum OTT is currently still in gestation period, the research house is adamant that an exit from the segment will prevent Star Media from bleeding further while allowing it to reallocate its resources optimally to its main business operations.
“Recall that Star Media posted a core net loss of -RM70.3 mil in FY2020. The group was in a dire need of a major business restructuring and cost optimisation to remain a sustainable business in the long term,” added HLIB Research.
Ironically, the shutdown of Dimsum marks the first major corporate restructuring effort from the media group since its new CEO Alex Yeow (previously group CEO and executive director of Tropicana Corp Bhd) came on board on March 1.
Separately, Star Media also witnessed some boardroom changes in recent times. Last month, it appointed former Housing and Local Government Minister Tan Sri Chor Chee Heung to succeed Datuk Fu Ah Kiow who resigned on March 1.
Outlook-wise, HLIB Research expects the latest development as a good move by Star Media to commence its restructuring and cost optimisation efforts.
“The recent changes in the senior management of the group could potentially bring fresh perspective to the group’s business and may be able to drive it in a new business direction,” justified the research house.
“However, we reckon that more will need to be done for the group to turnaround.”
All-in, HLIB maintained Star Media’s “hold” rating but added its target price to 45 sen (from 32 sen previously).
At 10.13am, Star Media was up 0.5 sen or 1.18% at 43 sen with 1.3 million shares traded, thus valuing the company at RM318 mil. – April 6, 2021
