Star: Bottom-line improved

Result Update

For QE30/6/2014, Star's net profit rose 142% q-o-q or 38% y-o-y to RM39 million while revenue increased by 30% q-o-q or 9% y-o-y to RM275 million. Revenue increased q-o-q due to higher revenue contribution from the Print and Event segment. PBT was higher q-o-q as PBT in 1QFY14 was affected by the holding back of spending from advertisers due to MH370 incident as well as VSS expenses.


Table 1: Star's last 8 quarterly results


Chart 1: Star's last 31 quarterly results

Valuation

Star (closed at RM2.60 yesterday) is now trading at a PE of 13 times (based on last 4 quarters' EPS of 19.5 sen). At this multiple, Star is deemed fairly valued.

Technical Outlook

Star is in a downward channel with resistance at RM2.80. Until it has surpassed the RM2.80 mark, Star will remain within the downward channel.


Chart 2: Star's weekly chart as at Aug 18, 2014 (Source: Tradesignum)

Conclusion

Based on improved financial performance, I revised Star's rating from a SELL to a HOLD.  Those who have bought the stock at the recent low of RM2.20, may take profit at RM2.80 mark.

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.