(TheEdgeDaily)KUALA LUMPUR: Maybank Investment Equities Research and AmResearch Sdn Bhd have maintained their “Sell” recommendation on Star Publications (M) Bhd at RM3.18 with target prices of RM2.54 and RM2.40, respectively.
http://www.theedgemalaysia.com/business-news/16807-maybank-research-amresearch-maintain-sell-call-on-star.html
Most of students of Warren Buffett will be attracted by newspaper stocks because of him making a big fortune in his Washington Post investment. However, Internet development has posted extremely tough conditions to newspaper operators. I have been following the Star for a while though this stock has NOT been exciting as they are quite poor with their capital management -- not return[ing] money to shareholders when they don't have good idea to deploy their cash. They got itchy trying regional expansion as domestic market is just too small.
The Star announced they acquired 20% of 701 SOU Hong Kong, a new online directory services provider in China for S$5 million (RM12.2 million) from SPH Interactive International (SPH). SPH is one of the successful leading newspaper companies in Singapore.
This is how the online directory look like.
This product launched in China last November, 701Sou.com is attracting an average monthly visitor rate of six million and a return visitor rate in excess of 28per cent.
The start up losses unlikely to dent any of the Star earning but they are sending a very dissapointing message to those hoping to reap higher dividend. They think the Star will declare 0.14 dividend in FY 09(due to softer adex and funding Singapore event management company Cityneon) vs. previous FY of 0.21. If the stock price reaches their target price of around RM 2.50, the worst case scenario of dividend yield will be 5.6% while normalized level will be around 8.4%.
If one has too much cash in FD, this is not a bad place to put some money at RM 2.50.
1 comment:
With Buffett & Munger realising the newspaper industry is not going well, I'd rather not put my money here.
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