KUALA LUMPUR (Sept 27): Star Media Group Bhd (Star) fell 2.06% in thin trade this morning after Hong Leong IB Research downgraded Star to “Sell” at RM2.30 with a lower target price (TP) of RM1.47 (from RM1.98) and said it opines that the special dividend of 30 sen that went ex today had acted as a short-term support to Star’s share price.

At 9.10am, Star fell 4 sen to RM1.90 with 150,100 shares done.

In a note today, the research house said that sitting on disposal proceeds, Star is in the midst of looking for potential acquisition to fill the void left by CityNeon.

“We deem its effort to trim operating expenditure challenging in the absence of a concrete target amid unfavourable sector outlook.

“Despite its focus on the OTT venture, dimsum, we opine that the segment is overcrowded and is challenging for Star to outperform the market.

“Post disposal of Cityneon, we cut our FY17-19 earnings forecast by 60.5%, 57.2% and 52.7% to RM39.1 million, RM43.2 million and RM48.4 million respectively.

“Due to earnings uncertainties, we change our valuation methodology to P/BV from P/E valuation. We downgrade to Sell with a lower TP of RM1.47 (previously RM1.98) based on targeted PBR of 1.1x FY18 BVPS, an average PBR of regional peers.