Star unveils its long-term vision

Star unveils its long-term vision
Business & Markets 2013
Written by CIMB Research
Wednesday, 12 June 2013 10:38


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STAR PUBLICATIONS (M) BHD []
(June 11, RM2.79)
Maintain outperform at RM2.81 with a revised target price of RM3.12 (from RM2.92): Star introduced its new director of operations at the first quarter (1Q) analysts’ briefing, showing that it is serious about turning the newspaper into an integrated media company. This was a positive surprise and we believe the company will be successful in rolling out its vision.

The stock remains an “outperform” but with a higher target price. We retain our earnings forecasts. Our valuation basis is now 12.5 times price-earnings ratio (11.7 times previously) for the financial year ending December 2014 (FY14) or a 20% (25% previously) discount to our target market multiple as we view its vision to be an integrated media play positively. The 20% discount is in line with historical patterns. Business transformation and product rollouts are catalysts for the stock.

Star hosted about 30 analysts and fund managers on Monday to talk about its 1QFY13 results and its long-term outlook. The briefing was hosted by Datuk Seri Wong Chun Wai, who is in charge of editorial policy for its print newspaper, CFO Rajesh Rajendran and Roshan Thiran, who recently joined as group director of operations. Management talked about its recent acquisition of Ocision Sdn Bhd, which will help boost the company’s online classified product, newsprint cost and the company’s long-term vision. Star is in the process of turning itself into an integrated media group from a traditional newspaper company. All divisions now report to Roshan and his objective is to sell Star as a holistic product instead of different business divisions (print, online, radio and so on). Though this is only the start, management is excited about its prospects and will launch new media products over the next few months.


This was the first time it has revealed its plans in detail to a group of analysts. While its plans are ambitions and management is excited, we believe the company will face competition from MEDIA PRIMA BHD []. Investors should accumulate Star shares as we expect advertising expenditure to pick up now that the election is over. — CIMB Research, June 11


This article first appeared in The Edge Financial Daily, on June 12, 2013.

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