Journey to Wealth
Star Publications ('STAR') - No surprises in 2Q12 results
Period 2Q12/1H12
Actual vs. Expectations
The 1H12 net profit of RM76.7m came in within ours but below the street's expectations. The result accounted for 45.3% of ours and 41.2% of the consensus' full-year estimates. Note that, 1H net profit was generally accounted for about 46%-51% of the full-year result based on the historical trend.
Dividends Announced first interim dividend of 9.0 sen (6.0 sen interim dividend + 3.0 sen special dividend) as expected with an ex-date set on 26 Sept. We expect STAR to declare a total 18.0 sen dividend in FY12.
Key Result Highlights
YoY, the revenue rose marginally by +1.4% to RM529.4m, due to better revenue from the radio (+5.9%) and event segments (+19.6%) but this was partially offset by lower print (-3.4%) division. The group's PBT margin was lowered by 55bps to 19.9% as a result of higher operating expenses and losses at Capital FM. The lower PBT margin coupled with a higher effective tax rate (27.3% vs 26.6%) led the group's PAT lowered by 19.7% to RM76.7m.
QoQ, the revenue surged by 30.2% to RM299.5m, thanks to better performance in the print (+9.8% to RM207m) and radio (+18% to RM14m) segments. The quarterly turnover improvement was in line with the industry trend. In tandem with the strong revenue growth coupled with a lower effective tax rate, the group's PAT was up by 36.3% to RM44.2m.
Outlook Cautiously optimistic. STAR's adex outlook should remain positive in 3Q12 due to Hari Raya festival and 2012 London Olympics. The 4Q12 outlook, however, remains bleak at this juncture given the uncertainty of the General Election and the persisting Europe debts dilemma.
Change to Forecasts
Post 2Q12 result, we have fine-tuned our FY12, FY13 and FY14 net profits by lowering -0.6%, -0.7% and -0.8% to RM169m, RM182m and RM197m, respectively.
Rating Maintain MARKET PERFORM
Lack of near-term growth catalyst but the attractive dividend yield could provide some cushions to the stock.
Valuation Maintained TP at RM3.22 based on an unchanged targeted PER of 13.1x (-1SD).
Risks CY12 gross adex growth coming in below our expectation of RM11.8b (+10.0% YoY).
Source: Kenanga
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