By Lawrence Yong
Star Publications (M) Bhd’s move to acquire three internet portals for RM13.5 million was seen as a positive move for the company as it helps fastrack the traditional publisher into new media and claw back lost revenue, analysts said.
The cash-rich company, whose main earnings comes from publishing Malaysia’s English-language daily The Star, said on Friday that it has agreed to buy 90% of Ocision Pte Ltd, a company jointly owned by Ng Say Joe, Tan Swee Yeong and Crystal Horse Investments Pte Ltd. Upon completion, Ng Say Joe will retain a 10% share in Ocision, which owns and operates three internet portals, namely iBilik.com, Propwall.com and Carsifu.com. The former two are among the most used websites for room-seekers and property dealers in Malaysia.
“With the migration of Adex money from ‘Classified’ to online, Star will now be able to capture this online source of revenue,” a Hong Leong Investment Bank (HLIB) research report noted.
Star’s Ocision buy translates into a price-to-revenue ratio of 10.3 times, if based on the company’s 2011 revenue of RM1.18 million. The company reported losses of RM43,000 for 2011. In comparison, HLIB said that a leading Malaysian job classifieds portal JobStreet.com had a price-to-revenue ratio of 7.2 times.
HLIB said that with its net cash position of RM174.3 million at the end of 1Q13, the purchase would have minimal impact on Star’s balance sheet.
Star’s share price have fallen about 20% in the last six months and was trading flat at RM2.60 on Bursa Malaysia on Monday. Major shareholders, including the Employees Provident Fund (EPF) have been seen cutting their stake in the company.
Two weeks ago, Star denied at its annual shareholders’ AGM that the company faced a political setback after the recent 13 general elections, in which voters swung away from one of the Star’s major shareholders, Malaysian Chinese Association (MCA), a component party of ruling coalition party Barisan Nasional.
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