LITTLE wonder that the Star Media Group Bhd, publisher of the nation’s largest English-daily The Star, shot up 54.5% from 33 sen on April 3 to 51 sen yesterday (April 25) after having much difficulty to break out from 30-35 sen zone for more than a year now.
Part of the answer could lie on the very fact that The Edge Communications Sdn Bhd and its owner Tan Sri Tong Kooi Ong have emerged as substantial shareholders in Star Media with a combined stake of 5.43% after having acquired 39.34 million shares on April 18.
Nevertheless, the shareholding dwarfs the 43.1% held by MCA – a component party of Barisan Nasional (BN) which today forms the key alliance with Pakatan Harapan (PH) to spearhead Prime Minister Datuk Seri Anwar Ibrahim’s unity government.
At the time of writing, Star Media was up 11 sen or 21.57% to 62 sen which makes the counter the most actively traded stock thus far with 76.83 million shares exchanged hands, thus valuing the company at RM458 mil.
Star Media’s filings with Bursa Malaysia show that Tong owns a direct interest of 1.84 million shares or 0.25% stake as well as 37.5 million shares or 5.17% indirect interest through The Edge Communications.
In an internal memo to staff, Tong said the acquisition is purely an investment.
“This is an investment in a company whose share price and capitalisation have for several years been well below the cash it has, and the value of its property assets. It has no debt and is clearly under value,” he pointed out.
Recall that on Jan 26, Hong Leong Investment Bank (HLIB) Research said it saw limited downside for Star Media despite the possible economic slowdown of the media sector in 2023.
In a technical tracker note, the research house said it expects Star Media’s share price to advance further to between 35 sen and 42 sen.
“Since the onset of COVID-19, Star’s share price has eased 38% from a high of 49 sen to 30.5 sen (back on Jan 25), implying a 34% discount against its net cash per share (NCPS)(of 46.8 sen) and a 66% discount against its net tangible assets per share (NTA) (of 90 sen),” observed analyst Sam Jun Kit.
“Besides, the market has yet to fully appreciate its huge undervalued list of properties, notably the industrial land bank in Bayan Lepas, Bentong and Shah Alam, booked at 1997-2004’s valuations.
“Hence, should there be a revaluation or disposal of its properties, we reckon Star Media’s NTA/NCPS will be even higher, making it a more palatable investment name,” projected Sam.
On Dec 16, CGS-CIMB Research has ceased coverage of Star Media with the last target price of 44 sen and an “add” rating when its stock was traded at 29.5 sen.
As for Tong’s media venture, it is worthwhile to recall that Nexnews Bhd, a listed company that he controlled (delisted in July 2020 after a name change to Berjaya Media Bhd) had in 2001, abandoned plans to merge The Edge and The Sun, a daily English newspaper controlled by tycoon Tan Sri Vincent Tan Chee Yioun who is the patriarch of the Berjaya Group..
This took place after Anwar’s falling out with the then-prime minister Tun Dr Mahathir Mohamad. Back then, Tong was seen to be close to Anwar.
A few years later, The Edge and The Sun again forged another collaboration but it ended when in January 2008, Berjaya Corp Bhd acquired close to 36% interest in Nexnews from Tong for RM139.24 mil in what the Berjaya founder described as “purely a business transaction”. – April 26, 2023
