Star’s 2QFY17 revenue plunges thanks to Cityneon disposal

KUALA LUMPUR: Star Media Group Bhd (Star) posted a revenue of RM129.4 million for the second quarter of 2017 (2Q17) which translates to a 29 per cent drop from RM183.1 million in the previous quarter (1QFY17).

According to industry analysts, this drop in revenue was mostly attributed to the exclusion of former Star asset, Cityneon Holding Ltd’s (Cityneon) contribution in the current quarter.

To recap, Star had previously disposed of its 52.51 per cent stake in Cityneon for a total cash consideration of S$115.6 million or RM356.8 million.

The move was seen as a positive development at the time as reports indicated that the gain on disposal for Cityneon was estimated to be around RM214.1 million.

However, in an earnings evaluation report, the research arm of Hong Leong Investment Bank Bhd (HLIB Research) reported that the disposal has had a significant impact on the group’s earnings as its 2QFY17 revenue would have soared by 28 per cent q-o-q to RM236.19 million had Cityneon’s contribution been included.

On a year over year (y-o-y) basis, the drop in 2QFY17 revenue translated to a 51 per cent drop which would have been only a 14 per cent drop had Cityneon’s contribution revenue been included.

While the disposal of Cityneon has impacted the group’s revenue stream going forward, the gain on disposal from it has in turned allowed the group to provide its shareholders with a special dividend of 30 sen per share alongside a first interim dividend of 6 sen per share.