Stock Name: STAR
Company Name: STAR PUBLICATIONS (M) BHD
Star Publications (M) Bhd
(July 20, RM3.43)
Maintain hold at RM3.41 with target price of RM3.69: Star will invest RM35 million for 51% of Li TV Holdings Ltd. Li TV owns and operates Li, Life Inspired, a pan-Asian lifestyle TV channel. It is loss-making but is not expected to materially impact Star's earnings. While we are encouraged that Star is continuing to diversify its media assets, it remains to be seen if Li TV can contribute meaningfully going forward. We maintain our 'hold' call.
Star is subscribing for 50% of Li TV for RM30 million (in new shares) and acquiring the other 1% for RM5 million from Juita Viden.
The remaining 49% is held by Juita Viden. Juita Viden is a content aggregator and has brought the Fear Factor and Deal or No Deal franchises to Malaysia.
As it plans to expand into China, Thailand, South Korea, Vietnam and Macau, its net loss may expand to some RM10 million this year before breaking even in 2013. Less 49% minority interest, the impact to Star's earnings on an annualised basis will be at most RM5.1 million net loss or less than 3%. Therefore, we leave our earnings estimates unchanged.
While we are positive that Star is continuing to diversify its media assets, we are aware that vernacular content is more popular in the countries that Li TV is in or plans to expand to, save for Singapore. Case in point, eight out of the 10 most watched channels in Malaysia are vernacular-based. It remains to be seen if Li TV can contribute meaningfully to Star going forward.
While we are cautiously positive, we will only re-rate Star should Li TV, its previous acquisitions (80% of Capital FM and 5% of Catcha Media) and oncoming acquisitions add value by contributing meaningfully. We understand that Star will next be focusing on acquiring outdoor companies. Until then, Star remains a 'hold'. ' Maybank IB Research, July 20
This article appeared in The Edge Financial Daily, July 21, 2011.
Company Name: STAR PUBLICATIONS (M) BHD
| Research House: MAYBANK | Price Call: HOLD | Target Price: 3.69 |
Star Publications (M) Bhd
(July 20, RM3.43)
Maintain hold at RM3.41 with target price of RM3.69: Star will invest RM35 million for 51% of Li TV Holdings Ltd. Li TV owns and operates Li, Life Inspired, a pan-Asian lifestyle TV channel. It is loss-making but is not expected to materially impact Star's earnings. While we are encouraged that Star is continuing to diversify its media assets, it remains to be seen if Li TV can contribute meaningfully going forward. We maintain our 'hold' call.
Star is subscribing for 50% of Li TV for RM30 million (in new shares) and acquiring the other 1% for RM5 million from Juita Viden.
The remaining 49% is held by Juita Viden. Juita Viden is a content aggregator and has brought the Fear Factor and Deal or No Deal franchises to Malaysia.
As it plans to expand into China, Thailand, South Korea, Vietnam and Macau, its net loss may expand to some RM10 million this year before breaking even in 2013. Less 49% minority interest, the impact to Star's earnings on an annualised basis will be at most RM5.1 million net loss or less than 3%. Therefore, we leave our earnings estimates unchanged.
While we are positive that Star is continuing to diversify its media assets, we are aware that vernacular content is more popular in the countries that Li TV is in or plans to expand to, save for Singapore. Case in point, eight out of the 10 most watched channels in Malaysia are vernacular-based. It remains to be seen if Li TV can contribute meaningfully to Star going forward.
While we are cautiously positive, we will only re-rate Star should Li TV, its previous acquisitions (80% of Capital FM and 5% of Catcha Media) and oncoming acquisitions add value by contributing meaningfully. We understand that Star will next be focusing on acquiring outdoor companies. Until then, Star remains a 'hold'. ' Maybank IB Research, July 20
This article appeared in The Edge Financial Daily, July 21, 2011.
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