KUALA LUMPUR (Nov 29): Hong Leong Investment Bank Research (HLIB), CGS-CIMB Research, MIDF Amanah Research and Maybank Investment Bank Research have cut their respective target prices (TPs) on Star Media Group Bhd after it reported a lower net profit for 3QFY19.

In a note released today, HLIB cut Star's TP to 40 sen from 46 sen previously.

"Star posted core earnings of RM1.5 million in 3Q19 (+67% q-o-q, 3Q18: -RM1.7 million) bringing 9M19 core profit after tax (PAT) to RM5.1 million (-55% y-o-y)," it said.

HLIB said the results were below expectations and cut its FY19- FY21 forecast on the group by 27% to 33% to take into account weaker contributions from all segments as the research house expects muted advertising expenditure (adex) sentiment.

CGS-CIMB lowered its TP as much as 23 sen to 64 sen, from 87 sen previously.

"After removing forex (foreign exchange) losses, Star's 9M19 RM5.7 million core net profit constituted a mere 50% of our FY19F net profit forecast, and 54% of Bloomberg consensus," CGS-CIMB said in a note today.

It noted that the shortfall was mainly the result of Star's depreciation and amortisation changes, which came in higher than CGS-CIMB's expectation. "That, along with the media business's nature of high operating leverage, sent Star's 9M19 core net profit plummeting 49.6% y-o-y," CGS-CIMB added.

In a note today, MIDF Research revised its TP on Star to 36 sen from 54 sen previously.

"Revenue from the group's two main business segments, namely print and radio, continue to be negatively impacted by the changing dynamics and unfavourable adex of the media industry," it noted.

"Star 3QFY19 normalised earnings plummeted by 142.9% y-o-y to RM700,000 due to worsening performance from its print segment," MIDF Research noted.

MIDF Research said the print and radio segment's profit before tax (PBT) dropped 69.2% y-o-y and 45.4% y-o-y to RM6.5 million and RM600,000 respectively.

Meanwhile, Maybank Research has reduced its TP on Star to 50 sen, 12 sen lower than 62 sen previously.

"9M19 profit after tax and minority interests (PATMI) fell short of our/consensus expectations mainly due to underperformance in radio and events earnings, but was compensated by higher-than-expected print and new media earnings," it said.

Maybank Research said in a note today, it believes that the print segment for the group was dragged by its over-the-top (OTT) segment, dimsum. "Excluding dimsum, the print segment reported a profit of RM6.7 million for 3Q19," Maybank Research added.

At 12pm, Star shares fell 2.22% or 1 sen to 44 sen, for a market capitalisation of RM324.97 million.