KUALA LUMPUR: RHB Research Institute has downgraded Star Publications to Market Perform from Outperform as the stock's potential return is roughly in line with its expected return from the market.
In its research note on Tuesday, June 21 it lowered its indicative fair value to RM3.71 (from RM4.23 previously), which takes into account the earning revisions above and after rolling-forward its valuation base year to FY12 from FY11 previously.
“Our fair value is based on a revised target FY12 PER of 15 times from 16 times previously to take into account the slower earnings growth that we now project and which is also in line with its five-year average PER.
"As the stock's potential return is roughly in line with our expected return from the market, we downgrade the stock to Market Perform from Outperform previously," it said. RHB Research also lowered its FY11-13 earnings forecasts by 7.7% to 12.8% following the changes in: 1) higher depreciation; 2) interest expense for FY11-13; and 3) higher newsprint prices for FY12-13.
In its research note on Tuesday, June 21 it lowered its indicative fair value to RM3.71 (from RM4.23 previously), which takes into account the earning revisions above and after rolling-forward its valuation base year to FY12 from FY11 previously.
“Our fair value is based on a revised target FY12 PER of 15 times from 16 times previously to take into account the slower earnings growth that we now project and which is also in line with its five-year average PER.
"As the stock's potential return is roughly in line with our expected return from the market, we downgrade the stock to Market Perform from Outperform previously," it said. RHB Research also lowered its FY11-13 earnings forecasts by 7.7% to 12.8% following the changes in: 1) higher depreciation; 2) interest expense for FY11-13; and 3) higher newsprint prices for FY12-13.
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