• Maintain HOLD (TP: RM0.44). Star’s 9MFY24 top-line grew by 13.4% YoY, primarily driven by the property development and investment segment, supported by higher progress billings from the Star Business Hub (SBH) project, along with improved performance from the radio segment. Correspondingly, the group’s core net profit of RM9.3mn (>100% YoY) exceeded our expectations but fell short of consensus estimates, representing 106% and 57%, respectively. The deviation was primarily due to higher-than-expected contribution from radio and property business. We maintain a HOLD rating with a slightly higher TP of RM0.44 (from RM0.43), reflecting the roll-forward of our valuation base to FY25 and earnings revision. Our valuation is based on a 0.52x PBR (5-year historical forward average) applied to the FY25 BVPS of RM0.85.

• Key highlights. Segment-wise, revenue from the print, digital, and events segment fell by 6% YoY in 9MFY24, attributed to reduced client marketing spend amid a challenging business environment. Meanwhile, the radio broadcasting segment posted a 3% YoY growth supported by higher commercial airtime, sponsorship, and digital revenue. The property development and investment segment saw a significant improvement, with revenue up by 100% in 9MFY24. This growth was driven by higher progress billings from the SBH project and higher property leasing income.

• Earnings Revision. We have revised our FY24F earnings forecast upward by 25.5%, reflecting higher growth assumptions for the radio and property segments. Meanwhile, our FY25F and FY26F earnings projections were adjusted modestly by 5.1% and 6.4%, respectively, as we maintain a conservative outlook on Star's prospects. (refer to Table 2).

• Outlook. While we expect the property segment to remain a positive contributor to Star’s earnings, we remain cautious about the print segment, which continues to be its largest earnings driver. We do not discount the possibility of margin erosion in the medium term due macroeconomic headwinds, and subdued adex growth in the newspaper segment. However, we anticipate a slight revenue improvement in this segment for 4Q24, driven by higher adex during seasonal festivities.

Source: BIMB Securities Research - 20 Nov 2024