PETALING JAYA: Star Media Group Bhd
(SMG) expects its launch of more media products and move into property development to support growth of the group in 2023.
Group chief executive officer Alex Yeow Wai Siaw said despite overall advertisement expenditure (adex) in Malaysia having shrunk based on first quarter industry statistics, SMG does budget for a better financial year in 2023 backed by its diversification of products and businesses to absorb any slack in adex spend.
“With our two major initiatives to sustain and grow revenue, we do budget for a better year in 2023. Our two initiatives include launching more media products especially in the Malay language segment to increase advertisement revenue, and second is to diversify the group income by venturing into property development which we expect to contribute positively from the second half of 2023,” he said after the group’s AGM yesterday.
For its core media business, Yeow added SMG will focus on the Malay segment for incremental revenue in the year.
As part of SMG’s plan to diversify its revenue streams from its core media business SMG’s wholly-owned unit SMG Land Sdn Bhd has proposed to sell its factory and warehouse located within the Star Business Hub, an industrial development project in Bukit Jelutong, Shah Alam, Selangor, to Matang Bhd for RM33mil in a cash and equity deal.
The purchase consideration will be satisfied via the allotment and issuance of 357 million new Matang shares to SMG at an issue price of 8.09 sen per share, as well as a cash payment of RM4.12mil.
The corporate exercise will see SMG holding a 13% stake in Matang after the share issuance.
The deal will also allow Matang, a plantation company, to diversify into property development to raise its revenue and earnings.
“For property, we are maximising return from Group assets (land and cash) to diversify revenue and generate better returns. For plantation, it is an acquisition of shares in an existing and established company. It provides both stable and recurring income,” Yeow said.
Although both Matang and SMG have a common shareholder in the MCA, Yeow said the deal was a commercial exercise meant to maximise shareholder value which requires shareholders approval at an upcoming EGM.
He added if future opportunity is attractive to increase its stake in Matang, SMG’s management will certainly be keen to evaluate and propose to the board for consideration.
Yeow added SMG’s management are constantly reviewing divestment of non-core assets when there are good offers presented.
As at end financial year 2022 (FY22) some 85% of SMG’s RM216.84mil revenue was from print and digital and events segment while the remaining 15% was from the radio segment, its 2022 annual report noted.
SMG’s revenue for the financial year ended Dec 31, 2022 experienced an increase of approximately 16% compared to the financial year ended Dec 31, 2021. The increase reversed the declining trend for the previous nine financial years.
After two consecutive financial years of losses, the Group generated a profit after tax of RM6.9mil for the financial year ended Dec 31, 2022. This was the highest profit level achieved in the past five financial years.
Net assets per ordinary share of the Group stood at 90 sen, with cash reserves of approximately RM365mil. The Group currently does not have any debt.
The Group declared a 1 sen dividend per ordinary share, which was approved at the AGM yesterday.
The financial upturn in SMG’s performance last year has attracted investors’ interest with The Edge Communications Sdn Bhd and its owner Tan Sri Tong Kooi Ong emerging as substantial shareholders of SMG last month with a deemed interest of 5.428%.
The shares were acquired from the open market, filings with Bursa Malaysia showed. His emergence has attracted public interest and speculation but Yeow said there has been little development since the stake purchase announcement.
“Tong is a prominent veteran in the media industry. We certainly hope to learn from his vast experience. At this moment he has not officially reached out to the board or management,” said Yeow.
