Investment Highlights

• We maintain our UNDERWEIGHT recommendation on Star Media Group (Star) with unchanged forecasts and fair value of RM0.31/share, pegged to a PB of 0.3x.

• Key updates from Star’s 1QFY20 briefing are as follows:

- Product verticals launched since 2H19: In line with Star’s three-pronged strategy announced at its1QFY20 briefing last year (see our report To introduce ‘dynamic’ paywall’ on Star Online dated 14 June 2019), the group has since launched many product verticals to diversify its revenue streams in 2019 as well as additional revenue streams introduced this year (Exhibit 1).

One of the key initiatives was the introduction of The Star Digital Access on 11 March 2020, where the group said that its readership was not affected by the dynamic paywall in place and continued to rise YTD. However, we believe that this was also due to the 30-day free trial followed by an introductory fee of RM1.90 for one month which supported its readership numbers.

- New initiatives during MCO: Since the MCO came into effect on 18 March 2020, Star has come up with differentiated offerings to adapt to the “new normal” where -traditional media segments were impacted. Some of the initiatives are:

o Covid-19 special ad packages targeting different industries and CSR messaging;

o More webinars and virtual fairs instead of on-ground events which were curbed by Covid-19 containment measures. Examples are virtual education fair, digital property fair and webinars for Star Outstanding Business Award (SOBA) and corporate clients;

o Delivery listings on print and digital at affordable prices targeted for SMEs such as food, delivery services, Ramadan listings;

o Targeting new opportunities such as from the sanitization industries;

o Offer paid research services such as market analysis and end-to-end research by leveraging data & analytics from its platforms;

o Marketplace such as Kuali Shop, dimsum’s Watch & Shop and Star Mall

Source: AmInvest Research - 3 Jul 2020