Star's FY11 results were largely within our andconsensus estimates, with core earnings representing 103% and 105% of bothforecasts respectively. The group announceda second interim DPS of 6.0 sen and a special tax-exempt 3.0 sen dividend.While Star's y-o-y adex growth of 1.8% fell short of our estimated 3%, we aretweaking up our FY12 earnings by a slight 2.4% as we believe the upcoming adex-friendlyglobal sporting events will boost overall adex growth. Our FV is nowRM3.33,based on an unchanged 13x FY12 PER. MaintainNEUTRAL.
Within estimates. Star's FY11 revenue and earnings of RM1.07bnand RM186.7m respectively were largely in line with our and consensusexpectations, representing 103% of our FY11 full year forecast. Its coreprint media segment registered subpar performance, as revenue fell 8% y-o-y to RM210.6m, which weattribute to its shrinking readership base. On the other hand, its radio unit and events andexhibition (EEIT) segments chalked up decent growth of 31% and 6%y-o-y respectively, largely contributed due to better adex share from 988 andSuria FM and interior design works undertaken at Resort World Sentosa in Singapore. On aquarterly basis, 4QFY11 revenue and net earnings both jumped 24% q-o-q owing tothe year-end festive seasons and resilient consumer spending, which continuedto spur adex.
Still generous ondividend. The group declared a second interim DPS of 6.0 sen and a specialtax-exempt DPS of 3.0 sen, bringing its FY11 DPS to 18.0 sen. Thisimplies a payout ratio of over 70%, which translates into a healthy dividendyield of 5.5%. After paying out thedividend of 9.0 sen (to be paid out on 28Mar 2012), Star's net cash should stand at RM427.2m, with its net cash pershare at RM0.58. Given its huge cash pile, we are positive on the group's dividend payout going forward,and continue to forecast a 75% payout ratio for FY13.
Revising forecasts.We believe the two upcoming adex-friendly events such as the 2012 Olympics andEuro 2012 football tournament will boost adex growth in Malaysia's mediasector. As such, we see 2012 adex growth ending at 2x our 2012 in-house GDP forecastof 5.2%. That said, we are revising our assumptions on Star's adex share for FY12,which leads to our earnings forecast being adjusted slightly upwards by 3%. We also take this opportunity tointroduce our FY13 numbers, whichreflect softer revenue and earnings y-o-y growth of 3.0% and 2.2% respectively.
Maintain NEUTRAL. Our forecast revision leads to an FV of RM3.33, versus RM3.23 previously,based on an unchanged 13x FY12 PER. Wemaintain our NEUTRAL call given the limited price upside, pendingconfirmation on the utilization of theproceeds from the group's proposed RM750m debt raising exercise.