Results

• Above expectations – FY15 revenue of RM1019.0m was translated into PATAMI of RM133.0m (18.02 sen/share).

Results

• came in above ours and streets’ estimates, making up 116% and 117% of full year forecasts, respectively.

Deviations

• Higher than expected contribution from event segment and operating income.

Dividends

• Declared second interim dividend of 9 sen/share, bringing total FY15 DPS to 18 sen/share. This translates to a dividend yield of 7.5% based on current share price. Ex-date 29-Mar-16, Payment-date 18-Apr-16.

Highlights

• FY15 review. Registered slight increase in revenue by 0.5% to RM1019.0m. A mixed bag of results – revenue of print and radio segment declined 8% and 5% yoy, respectively. Whereas event and TV segment charted double-digit growth of 28% and 10% yoy, respectively.

• The group’s PBT was 11% higher yoy mainly on the back of VSS expenses and impairment losses incurred in 2014 amounting to RM37.5m.

• Cityneon will explore opportunities in other SEA countries and domestically. Cityneon’s VHE is expected to open at least 3 exhibitions in FY16 – Avengers in Las Vegas and Paris as well as the Transformers Exhibition in Las Vegas.

• 2016 media outlook remains challenging. We expect Adex to continue to be soft at least in 1HFY16. Euro 2016 and Rio 2016 Olympics should lead to higher adex in 2HFY16.

Risks

• Weak Adex growth; High newsprint cost; Threat of new players; Depreciation of RM vs. US$; and Regulatory risk.

Forecasts

• Unchanged pending analyst briefing this week on the 4th March 2016.

Rating

HOLD

• For the immediate term, we see Star’s earni ngs being affected by cautious Adex growth outlook caused by weak consumer sentiment and sluggish economy. We believe with Star’s efficient cost management and sufficient cash, the group will be able to uphold its dividend payment to investors.

Valuation

We retain our HOLD call and TP of RM2.31 based on unchanged targeted dividend yield of 6.5%.

Source: Hong Leong Investment Bank Research - 29 Feb 2016