Friday 29 Mar 2024
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KUALA LUMPUR (Dec 10): CIMB Research said today Star Media Group Bhd's land bank is the crown jewel of the newspaper publisher because there is a lot to be reaped once the lucrative asset is monetised.

In a note today, CIMB analysts Mohd Shanaz Noor Azam and Kamarul Anwar said a delay in plans to diversify into property business is a key downside risk for Star.

"The group is committed to monetising its land bank, which we estimate has a market value equivalent to 99% of market cap (capitalisation). While the print business continues to decline, we are encouraged by Star's commitment to reduce its print exposure and obtain more digital adex (advertisement expenditure).

"Star plans to expand video-on-demand (VoD) service dimsum to other regional countries and introduce advertisements/product placements in the service. The group targets for dimsum to break even in four to five years after launching in end-2016," the analysts said.

They said CIMB maintained its "add" call on Star shares with an unchanged target price (TP) of RM1.14. At Bursa Malaysia today, Star shares were trading unchanged at 71 sen at 10:34am for a market capitalisation of RM523.89 million.

Meanwhile, Hong Leong Investment Bank Bhd analyst Rachael Hong Hui Chee said the research firm maintained its "hold" call for Star shares with an unchanged TP of 62 sen.

"Traditional media continues to face the digital disruption. Outlook of the company remains subdued with challenges from the declining newspaper circulation, weak consumer sentiment and economic uncertainty. While we are positive on the group's digital transformation, we expect the monetisation of their digital platform to take time to bear fruit," Hong said.

CIMB and Hong Leong said they issued their notes on Star today following Star's analysts and fund managers briefing last week.

Today, the CIMB analysts said: "We attended Star Media Group's 3QFY18 results briefing hosted by Group CFO Ragesh Rajendran last Friday together with 20 analysts and fund managers. There were no surprises as management emphasised its plan to become a 'digital-centric' media player and said it needed to work on improving efficiency in the legacy print business."

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