Kenanga Research said the property segment “may potentially emerge as a key earnings anchor in future”.
PETALING JAYA: Star Media Group Bhd
(SMG) has recorded a sequential improvement in top line as well as pre-tax margin and profit at its property segment in the third quarter ended Sept 30, 2023 (3Q23), says Kenanga Research.
The research firm said this implies the property segment “may potentially emerge as a key earnings anchor in future”.
“We are encouraged by the sustained turnaround at the property segment since the second quarter of this year (2Q23) following the Star Business Hub (SbH) project’s launch,” it said in a report on the media group.
To recap, the project has an estimated gross development value of RM130mil and comprises five office complexes and warehouses located in Bukit Jelutong, Shah Alam.
“We believe the successful execution of this project will catalyse the group to deploy additional resources from its war chest to fund its diversification into property development,” it added.
Kenanga Research said this may also compel SMG to monetise and develop its valuable land bank, which includes assets at Bayan Lepas, Penang, and Shah Alam, Selangor.
Moving forward, it said the softening of US dollar against the ringgit may provide some relief to the group’s newsprint and content costs.
“The latter has now retraced to RM4.65 per US dollar after having peaked at RM4.80 in late October this year.
“Additionally, we expect a seasonal uplift in advertising expenditure (adex) to boost the group’s earnings in 4Q23,” it said.
Meanwhile, the media group’s revenue for 3Q23 was recorded at RM54.9mil, boosted by the print segment on the back of a cover price increase as well as higher adex from a new product, Majoriti 7, which was launched in the later part of 2022.
Pre-tax profit for the latest quarter was at RM0.4mil compared with RM1.9mil in 3Q22, while nine-month pre-tax profit stood at RM2.8mil.
In a filing with Bursa Malaysia, SMG said it will continue with its prudent management strategy while focusing on revenue enhancement initiatives and operational efficiency improvements.
“As market conditions remain challenging, which resulted in contraction of industry revenue, the group continues to sustain its revenue and overall financial performance while remaining financially prudent,” SMG said.
