Period 3Q12/9M12
Actual vs. Expectations The 9M12 net profit of RM110.9m came in below expectations
and accounted for merely 66.1% of ours and 61.2% of the consensus’ full year estimates.
The main culprit was due mainly to the higher operating expenses and finance
cost.
Dividends No dividend
was announced during the quarter.
For the full financial year, we expect STAR to declare a
total dividend of 18.0 sen in FY12.
Key Result Highlights
YoY, the revenue rose by +2.5% to
RM786m due to better revenue from the events division (+30.6% to RM146m) but
this was partially offset by the lower print (-3.3% to RM591m) and radio (-0.6%
to RM41m) divisions. The higher turnover in the events division was mainly due
to the revenue growth in the interior architecture and thematic business.
Meanwhile, the lower print segment revenue was mainly attributed to softer
advertising revenue caused by the poor adex sentiment. The group’s PBT was
lower by 19.1% to RM151m as a result of higher operating expenses and losses at
Li TV.
QoQ, the group’s
revenue fell by 14.4% to RM256m, no thanks to the lower performance in the
print (-6.1% to RM195m) and events (-42.1% to RM44m) segments. The lower
turnover coupled with a higher operating cost and effective tax rate resulted
in the group’s PAT falling 22.5% to RM34.3m.
Outlook STAR’s
adex outlook remains bleak in 4Q12 given that the group’s gross newspaper adex
has continued to fall by 11% YoY to RM77.1m in October. Meanwhile, the group
also does not expect its events segment to turn around in 4Q12.
Change to Forecasts
Post the 3Q12
results, we have lowered our FY12, FY13 and FY14 net profits by 10.2%, 4.1% and
4.4% to RM150.6m, RM171.8 and RM184.1m respectively after increasing our
operating cost assumptions.
Rating Maintain MARKET PERFORM
Hampered by a lack of
near-term growth catalysts but the attractive dividend yield could cushion the downside
risk.
Valuation We have lowered our TP to RM3.11 (from RM3.15 previously)
based on an unchanged targeted -1SD, implying a FY13 PER of 13.4x.
Risks The CY13 gross adex growth coming in below our
expectation of RM12.4b (+8% YoY).
Source: Kenanga
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