The Group has decided to throw in the towel in the court case with Star Publications after trying to appeal for so many times but was dismissed by the courts. After the recent dismissal by the Federal Court, JAKS, after consultation with its legal advisors, has decided to release the payment on the bank guarantee of RM50.0m to STAR on 9 January 2019. As such, with its 51% equity interest in joint venture, the Group has said that RM25.5m will be charged off in FY2018. This comes as no surprise as we have already factored in the losses in our valuations. However, the timing of the write-down is now known and we cut our FY18 estimates by c.40% to account for this new development.

We are also wary over the various dilutive equity fund raisings done so far and the poor execution especially on its property business. All told, we maintain our TP of RM0.65, derived from higher c.60% discount to our SOTP estimates of RM1.60, effectively pegged at c.6x PER. Neutral call is also retained.

Source: PublicInvest Research - 17 Jan 2019