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Dimsum a good entry point into broadcasting for Star Media Group

by November 22, 2016 General

PETALING JAYA: Analysts sees Star Media Group Bhd’s video-on-demand service as a good entry point into broadcasting due to its asset-light model and potential to scale up.

The move will also help the company deversify its revenue base.

Star Media Group recently launched a new Asian-focused over-the-top service called dimsum for a flat fee of RM15 per month, leveraging on its strong 1.5 million urban readership base.

“However, we do not expect significant contribution from dimsum in the next three years, given the lack of visibility on its subscription and content costs,” said CIMB Research said.

Dimsum offers Asian content on a subscription video-on-demand service from its curated library, sourced from all over the region. It offers content comprising mainly drama series from Taiwan, Japan, China, Thailand, South Korea, Singapore and Malaysia.

In the near term, CIMB expects earnings growth to be driven by the group’s Singapore-listed subsidiary Cityneon Holdings Ltd.

“We are excited about Cityneon’s earnings growth prospects, given that Victory Hill Exhibitions Pte Ltd (VHE) is on track to double the number of its exhibitions to six sets by the end of 2017.

“We expect Cityneon’s contribution to increase from 12% of total group net profit in financial year 2016 (FY16) to 26% in FY18, driven by new exhibitions in Las Vegas and China,” CIMB said.

AmInvestment Bank in its report said Cityneon should start bearing fruit from its exhibitions in Singapore and Las Vegas going into the fourth quarter of 2016.

“We note that the event/exhibition segment has yet to capture the full potential of its new intellectual property rights division as management had only launched one travelling exhibit in Paris and one permanent exhibit in Las Vegas by the third quarter of 2016.

“Moving forward, we expect Cityneon to add at least another four sets of exhibits by 2018,” it said.

Meanwhile, the disposal of its radio asset, Capital FM Sdn Bhd, to be completed in fourth quarter, will result in a gain on disposal of RM25mil.

CIMB has maintained its “add” call on the stock, with an unchanged sum-of-parts-based target price of RM2.70, premised on 13 times 2018 price-to-earnings ratio. The stock, it said, offers an attractive dividend yield of 7.4%.