Star  Publications  Berhad  announced  that  its  sub-subsidiary,  Cityneon Holdings  Ltd  had  entered  in  an  agreement  with  Philadelphia  Investments Limited to acquire the entire share capital of Victory Hill Exhibitions Ltd for S$21m in the form of both cash and shares. Cityneon has proposed to offer up  to  88,525,400  rights  shares  on  a  renounceable  basis  to  entitled shareholders at the rights issue price of S$0.18 per rights share. This is on the basis of one rights share for every one share held by shareholders at the  record  date.  Victory  Hill  Exhibitions  primarily  develops  and  produces exhibitions including the exhibitions services for Marvel. (Source: Bursa Malaysia)

Comments: We are positive on this news as it will help to provide additional source  of  income  and  diversify  the  group’s  existing  businesses.  Cityneon contributes about 20% to the group’s total revenue and 6% to PBT. With a S$23.8m cash pile as at end-Dec14, the cash portion can be absorbed by Cityneon.  Pending  a  management  meeting,  we  maintain  our  FY15-17E forecasts as well as our HOLD recommendation on Star Publications with an unchanged target price at RM2.22, based on 11x 2016E EPS.

Source: Affin Hwang Capital Research - 3 Apr 2015