Here's an article published on the Edge website last night: RAM Ratings cautious about Star Publications’ new investments
- RAM Ratings cautious about Star Publications’ new investments
Written by Joseph Chin of theedgemalaysia.com
Thursday, 21 April 2011 19:33
KUALA LUMPUR: RAM Rating Services Bhd is cautious about STAR PUBLICATIONS (M) BHD []’s new new investments may pose new risks to the group.
The ratings agency said on Thursday, April 21 that in the near term, the group “may invest some RM60 million in new media assets”, that is television channels, radio stations, online media and event organising.
“The group is expected to incur losses from some of these investments during their respective gestation periods given that they are fairly new businesses.
“In addition, Star lacks experience in the TV segment, which is viewed to be more competitive than its mainstay newspaper business,” it said.
RAM Ratings assigned respective preliminary long- and short-term ratings of AA1 and P1 to Star’s proposed up to RM750 million medium-term notes (MTN) programme (2011/2026) and proposed up to RM750 million commercial papers programme (2011/2018); both facilities have a combined limit of RM750 million in nominal value.
Concurrently, RAM Ratings reaffirmed the AA1/P1 ratings of STAR’s RM350 million commercial papers/MTN programme (2005/2012). Both long-term ratings have a stable outlook.
It said the ratings reflect Star’s dominant market position and robust financial profile. The Group’s flagship daily, The Star, remains the clear leader in the local English-language newspaper market, supported by its strong circulation and readership bases.
RAM Ratings said Star’s balance sheet and cashflow-protection metrics remained strong as at end-December 2010; its gearing ratio had more than halved to 0.09 times (end-December 2009: 0.23 times), underscored by a lighter debt load.
At the same time, Star retained its net-cash position. Led by its lower borrowings and stellar operating performance amid a more robust advertising market in 2010, the group’s funds from operations debt cover (FFODC) catapulted from 0.70 times to over 2 times.
However, the ratings agency said the ratings remained constrained by the group’s susceptibility to economic cycles, its vulnerability to newsprint price volatility and the increasing prominence of other media platforms.
While print advertising expenditure (adex) has expanded, TV and radio adex has been rising more rapidly.
Circulation and readership of English-language newspapers have also been declining (although at a slower pace than in more developed nations).
Nonetheless, it said print will remain relevant in the eyes of Malaysian advertisers, at least in the medium term.
“Even factoring in additional borrowings for its investments, capital expenditure for the possible development of the Star media hub in Shah Alam and working capital, we expect the group to continue exhibiting conservative gearing levels and sturdy debt-coverage ratios.
“Star’s gearing ratio is expected to be kept at around 0.3–0.4 times while its FFODC is envisaged to slip, albeit remain favourable at a minimum of 0.5 times over the next two years,” said RAM Ratings’ head of consumer & industrial ratings Kevin Lim.
Today, Star business decided to carry the same article.: RAM assigns AA1 and P1 to Star’s debt facilities
- Friday April 22, 2011
RAM assigns AA1 and P1 to Star’s debt facilities
PETALING JAYA: RAM Ratings has assigned preliminary long- and short-term ratings of AA1 and P1 to Star Publications (M) Bhd’s proposed medium-term note and commercial papers programme of up to RM750mil respectively.
Both facilities have a combined limit of RM750mil in nominal value.
The rating agency has also reaffirmed the AA1/P1 ratings of the newspaper publishing group’s RM350mil commercial papers/medium-term note programme with a stable outlook.
The ratings reflected The Star’s dominant market position and robust financial profile, RAM Ratings consumer and industrial ratings head Kevin Lim said in a press release yesterday.
“The group’s flagship daily, The Star, remains the clear leader in the local English-language newspaper market, supported by its strong circulation and readership bases,” he said.
Lim added that the group’s balance sheet and cashflow-protection metrics remained strong as at end-December 2010; its gearing ratio had more than halved to 0.09 times (end-December 2009: 0.23 times), underscored by a lighter debt load.
At the same time, the group retained its net-cash position.
“Led by its lower borrowings and stellar operating performance amid a more robust advertising market in 2010, the group’s funds from operations debt cover catapulted from 0.70 times to over two times,” Lim said.
He expects the group to continue to exhibit conservative gearing levels and sturdy debt-coverage ratios, even factoring in the additional borrowings for the investments, capital expenditure for the possible development of the Star media hub in Shah Alam and working capital with gearing ratio expected to be kept around 0.3 to 0.4 times.
Can we spot the difference?
Can we?
Glee!
Here's the article from RAM website: RAM Ratings assigns preliminary AA1 and P1 ratings to STAR’s proposed debt facilities, reaffirms existing ratings
- RAM Ratings assigns preliminary AA1 and P1 ratings to STAR’s proposed debt facilities, reaffirms existing ratings
Published on 21 Apr 2011
RAM Ratings has assigned respective preliminary long- and short-term ratings of AA1 and P1 to Star Publications (Malaysia) Berhad’s (STAR or the Group) proposed up to RM750 million Medium-Term Notes Programme (2011/2026) and proposed up to RM750 million Commercial Papers Programme (2011/2018); both facilities have a combined limit of RM750 million in nominal value. Concurrently, RAM Ratings has reaffirmed the AA1/P1 ratings of STAR’s RM350 million Commercial Papers/Medium-Term Notes Programme (2005/2012). Both long-term ratings have a stable outlook.
The ratings reflect STAR’s dominant market position and robust financial profile. The Group’s flagship daily, The Star, remains the clear leader in the local English-language newspaper market, supported by its strong circulation and readership bases. STAR’s balance sheet and cashflow-protection metrics remained strong as at end-December 2010; its gearing ratio had more than halved to 0.09 times (end-December 2009: 0.23 times), underscored by a lighter debt load. At the same time, STAR retained its net-cash position. Led by its lower borrowings and stellar operating performance amid a more robust advertising market in 2010, the Group’s funds from operations debt cover (FFODC) catapulted from 0.70 times to over 2 times.
On the other hand, STAR’s new investments may pose new risks to the Group. In the near term, it may invest some RM60 million in new media assets, i.e. television (TV) channels, radio stations, online media and event organising. The Group is expected to incur losses from some of these investments during their respective gestation periods given that they are fairly new businesses. In addition, STAR lacks experience in the TV segment, which is viewed to be more competitive than its mainstay newspaper business. The ratings also remain constrained by the Group’s susceptibility to economic cycles, its vulnerability to newsprint price volatility and the increasing prominence of other media platforms. While print advertising expenditure (adex) has expanded, TV and radio adex has been rising more rapidly. Circulation and readership of English-language newspapers have also been declining (although at a slower pace than in more developed nations). Nonetheless, we opine that print will remain relevant in the eyes of Malaysian advertisers, at least in the medium term.
“Even factoring in additional borrowings for its investments, capital expenditure for the possible development of the STAR media hub in Shah Alam and working capital, we expect the Group to continue exhibiting conservative gearing levels and sturdy debt-coverage ratios. STAR’s gearing ratio is expected to be kept at around 0.3–0.4 times while its FFODC is envisaged to slip, albeit remain favourable at a minimum of 0.5 times over the next 2 years,” notes Kevin Lim, RAM Ratings’ Head of Consumer & Industrial Ratings.
Media contact
Low Su Lin
(603) 7628 1071
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