In a filing with Bursa Malaysia today, the group revealed that its revenue has dropped slightly by 1% to RM51.99 million from RM52.67 million in the previous quarter.
Its print, digital and events segment revenue suffered a 1% dip compared to Q1 FY2022, recording a profit before tax (PBT) of RM0.5 million this quarter from RM1.5 million in the same quarter last year.
Its other business segments performed similarly poorly.
The radio and broadcasting segment generated RM7.6 million in revenue for the quarter, 11% lower than the corresponding quarter in 2022.
Its PBT similarly dropped 64% from RM2.2 million in Q1 FY2022 to RM0.8 million, which the company attributed to lower commercial airtime due to seasonality factors.
The group’s property development and investment segment, however, managed to provide encouraging movement. Its loss before tax shrunk from RM1.1 million in Q1 FY2022 to RM0.5 million, which the company said was due to the increase in its properties’ occupancy rate.
The company did not announce any dividend for this financial quarter.
Pessimistic outlook
Following the sub-par quarterly results, Kenanga Investment Bank Bhd has downgraded the group’s outlook to “underperform” with a lower target price (TP) of 31.5 sen.
Kenanga previously had placed an “outperform” call on Star Media with a TP of 33.5 sen.
In its research note, Kenanga said that Star Media’s Q1 FY2023 results had missed their expectations as its margins were hit by sustained increase in printing costs.
“We cut our FY2023-2024F earnings forecasts by 28% and 16%, respectively, and lowered our TP by 6%,” the note said.
“We remain wary of Star Media’s prospects given its shrinking margins following the increase in printing costs, the antiquated nature of its core printing business (which) faces heavy competition from digital media, and the potential dilution of its core business following its attempts to diversify into other sectors,” Kenanga said.
Ensuring resilience
Moving forward, Star Media expressed confidence that the company can remain resilient despite the expected challenging local and international conditions this year.
“The Group remains resilient despite cautious consumer spending which has slightly impacted our financial performance.
“Geopolitical tensions among major economies and elevated costs of living and input costs are expected to impact spending by households and businesses,” the company stated in its quarterly filing.
Star Media proclaimed that it will focus on maintaining financial prudence and undertake revenue enhancement initiatives as well as improve its operational efficiencies.
In its efforts to diversify its businesses, the group has launched its maiden property development project, Star Business Hub, which is an industrial freehold development.
At the same time, the company said it will resume efforts to retain and sustain its investments in its digital transformation initiatives which include The Star Online, mStar and Majoriti.
As of noon, Star Media’s share price was up 1 sen or 2.44% to 42 sen, giving the company a market capitalisation of RM306.82 million.