Star- losing its way

Result Update

For QE31/12/2012, Star's net profit rose 183% q-o-q or 93% y-o-y to RM97 million while revenue was mixed, up 15% q-o-q but dropped 2% y-o-y to RM294 million. The increased profit was due mainly to an exceptional gain of RM89.98 million from the disposal of Sec. 13 land in exchange for a building. If this gain is excluded, Star's pre-tax profit would drop to RM4.5 million.


Table 1: Star's last 8 quarterly results


Chart 1: Star's last 25 quarterly results

Segmental Result for 4Q2012 & FY2012

From Table 2 below, we can see that the Print & New Media segment's result improved by RM116 million over the previous year, due to the exceptional gain of RM89.98 million from the disposal of the Sec 13 land. Broadcasting segment had turned in a profit while Event, Exhibition, Interior & Thematic and Television Channel segments were still in the red.


Table 2: Sar's Segmental Results for QE31/12/2012 & QE30/9/2012

As compared to FY2011, we can see that Print & New Media segment improved by RM26 million after including the exceptional gain of RM89.98 million from the disposal of the Sec. 13 land!!! All the other segments suffered poorer performance (either lower profit or incurred a loss or increased losses).


Table 2: Sar's Segmental Results for FY2012 & FY2011

Valuation

Star (closed at RM2.61 yesterday) is now trading at a PE of 17 times (based on adjusted EPS of 15 sen for FY2012, not including the one-off gain from the disposal of the Sec. 13 land). At this multiple, Star is deemed fully valued.

Technical Outlook

Star broke its uptrend line, SS at RM2.90 in December 2012. It found support at the horizontal line at RM2.55.


Chart 2: Star's weekly chart as at Mar 7, 2013_12pm (Source: Quickcharts)

Conclusion

Based on disappointing financial performance, unattractive valuation and negative technical outlook, Star is now rated a SELL or AVOID.

Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Star.