Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Star Publications (Malaysia) Bhd
(July 5, RM3.40)
Maintain buy at RM3.38 with fair value of RM3.95: Star Publications (Star) announced yesterday that it will acquire a 4.99% stake in Catcha Media Bhd's (Catcha) enlarged issued and paid-up capital as part of the latter's private placement, according to a Bursa announcement.
Catcha, a media owner and operator of magazine publishing business and an online media business, aims to raise RM17.25 million in its IPO. It is en route to be listed on Bursa Malaysia's ACE market on July 22, 2011.
Under the proposed acquisition, Star will be paying RM4.977 million for 6.636 million Catcha shares, the maximum equity shareholding allowed under Catcha's IPO structure.
Based on Catcha's FY10 profit after tax of RM8.1 million, this translates into a price-earnings ratio of 12.3 times.
Catcha publishes 14 magazine titles, while the online media segment involves the sale of Internet advertising space to Malaysian brand owners and advertising agencies. In addition, Catcha has exclusive sales rights for leading Malaysian website Lowyat.net.
We are mildly positive about Star's latest acquisition. While Catcha offers Star exposure to the high-growth Internet advertising expenditure, we believe an investment in a 'purer' Internet company could have been better. Online media contributes 76% to group earnings before interest and tax (Ebit), based on Catcha's 1HFY11 results. Internet adex in Malaysia recorded a growth of 29%, higher than the 14% for newspapers, for 2010.
Catcha is estimated to command a sizeable 26% market share of the country's online advertising segment, according to independent business research and consulting firm Frost & Sullivan.
We make no change to our earnings forecast and maintain 'buy' with an unchanged fair value of RM3.95 per share, at a 15% discount to our discounted cash flow value. We continue to like Star for its stronghold on the print adex segment, as backed by continuing advertiser preference for English print, stable circulation and market leadership in ad rates. ' AmResearch, July 5
This article appeared in The Edge Financial Daily, July 6, 2011.
Company Name: STAR PUBLICATIONS (M) BHD
| Research House: AMMB | Price Call: BUY | Target Price: 3.95 |
Star Publications (Malaysia) Bhd
(July 5, RM3.40)
Maintain buy at RM3.38 with fair value of RM3.95: Star Publications (Star) announced yesterday that it will acquire a 4.99% stake in Catcha Media Bhd's (Catcha) enlarged issued and paid-up capital as part of the latter's private placement, according to a Bursa announcement.
Catcha, a media owner and operator of magazine publishing business and an online media business, aims to raise RM17.25 million in its IPO. It is en route to be listed on Bursa Malaysia's ACE market on July 22, 2011.
Under the proposed acquisition, Star will be paying RM4.977 million for 6.636 million Catcha shares, the maximum equity shareholding allowed under Catcha's IPO structure.
Based on Catcha's FY10 profit after tax of RM8.1 million, this translates into a price-earnings ratio of 12.3 times.
Catcha publishes 14 magazine titles, while the online media segment involves the sale of Internet advertising space to Malaysian brand owners and advertising agencies. In addition, Catcha has exclusive sales rights for leading Malaysian website Lowyat.net.
We are mildly positive about Star's latest acquisition. While Catcha offers Star exposure to the high-growth Internet advertising expenditure, we believe an investment in a 'purer' Internet company could have been better. Online media contributes 76% to group earnings before interest and tax (Ebit), based on Catcha's 1HFY11 results. Internet adex in Malaysia recorded a growth of 29%, higher than the 14% for newspapers, for 2010.
Catcha is estimated to command a sizeable 26% market share of the country's online advertising segment, according to independent business research and consulting firm Frost & Sullivan.
We make no change to our earnings forecast and maintain 'buy' with an unchanged fair value of RM3.95 per share, at a 15% discount to our discounted cash flow value. We continue to like Star for its stronghold on the print adex segment, as backed by continuing advertiser preference for English print, stable circulation and market leadership in ad rates. ' AmResearch, July 5
This article appeared in The Edge Financial Daily, July 6, 2011.
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