Sasbadi offers value proposition in spite of selling pressure
KOTA KINABALU: Since peaking the year at 68 sen in January, book publisher Sasbadi Holdings Bhd’s (Sasbadi) stock has seen selling pressure as its share price has dwindled downwards to its current 35 to 37 sen levels.
The sell down of Sasbadi shares started back in October 2017 when the group announced its first quarter in red since its debut in 2014 – a net loss of RM4.23 million in its fourth quarter ended Aug 31, 2017 (4QFY17).
However since then, Sasbadi’s current performance has seen improvement and research house AllianceDBS Research Sdn Bhd (AllainceDBS Research) reckons that the stock now offers value proposition for investors and a growth potential.
While the group’s earnings rebound may not be as strong as expected, AllianceDBS Research reckoned that its current share price weakness has factored in most of the negative news surrounding the group and will now be on an upward trajectory for growth.
“Despite reducing our earnings for lower contributions from the publication and digital businesses, we still anticipate the group to register high earnings growth rates of 64, 46 and 14 per cent for FY18, 19 and 20 respectively,” said the research arm.
The earnings growth and estimates by AllianceDBS Research is higher than consensus expectations but the research arm believes that the optimistic estimates are justified as they believe the group will be able to register strong earnings from its continuous efforts to streamline cost and enhance its revenue growth trajectory.
“This is supported by higher contributions from its publication business, new product launches and increase in network market activities,” explained the research arm.
For new products, AllianceDBS Research expects Sasbadi’s launch of the i-LEARN offline platform and licence and services agreement with Indonesian’s biggest book publisher, PT Penerbit Erlangga, to contribute significantly to earnings.
Besides that, the group may also experience other growth catalysts from acquisitions and further network marketing growth as its management has guided that its aims to embark on at least one earnings-accretive acquisition annually to further strengthen its dominant position in the publishing industry which it holds circa 15 per cent market share of and drive income growth.