SJC recorded 3QFY25 core net profit of RM2.2m (+4.7% qoq) and recovered from a core net loss of -RM1.7m in the previous corresponding quarter, bringing 9MFY25 core net profit to RM5.8m came below our expectations, accounting for 42.4% of our in-house forecasts.
3QFY25 CNP of RM2.2m – remained in the black for the third straight quarter reflects the fruits of labour from the restructuring exercise in recent years as well as improving demand for OOH business solutions.
Looking ahead, the proposed acquisition of Unilink Outdoor Sdn Bhd and Vision OOH Sdn Bhd is expected to beef up the Group’s out of home advertising presence.
Maintained BUY recommendation on SJC with a target price of RM0.43, based on 8.0x P/E multiple pegged to FY26F EPS of 5.4 sen, and appraised with a three-star ESG rating.
Results missed expectations. Excluding fair value loss on investment (-RM0.4m), 3QFY25 core net profit (CNP) came in at RM2.2m, bringing 9MFY25 CNP to RM5.8m (turnaround from a core net loss of -RM3.2m in the previous corresponding period). The results, however, came below expectations, representing 42.4% of our estimates. The earnings miss was primarily attributable to weaker-than-expected revenue growth as well as higher operating expenses.
qoq. 3QFY25 CNP climbed 4.7% qoq to RM2.2m, lifted by increased demand for billboards, higher margin projects and efficient overhead management. Consequently, the CNP margin expanded to 12.9%, from 11.0% in 2QFY25, reflecting better operational efficiencies.
yoy. 3QFY25 CNP stood at RM2.2m, representing a turnaround from a core net loss of -RM1.7m, on the back of stronger demand in billboard segments, and the absence of operational cost incurred for the B*Verse Exhibition in the previous corresponding quarter.
Better Fundamental Standings. We gathered that SJC continues to operate in the black for the third straight quarter with 9MFY25 CNP stood at RM5.8m, a turnaround as oppose to a core net loss of -RM3.2m recorded in 9MFY24. The improvement reflects the results of recent restructuring efforts, as the Group has been increasingly focused onto out-of-home (OOH) advertising, with a gradual shift toward digital out-of-home formats. We also gather that balance sheet remains healthy with cash position of RM8.7m as at end-3QFY25, while the Group operates in a net operating cash flow.
Outlook. SJC will be supported by more than 500 billboards as well as 31 digital billboards to sustain revenue visibility. Several expansions are in pipeline such as installation of (i) digital unipole at MRR2, (ii) digital screen at Bangsar, (iii) fourth gantry by mid-2025, (iv) digital screen at Terengganu, (v) additional advertising space at several PLUS highway sites, (vi) additional digital and static gantries and (vii) continues to tie up with e-hailing players for mobile DOOH.
Earnings Revision. Cut our earnings forecast by -21.1%/-14.8%/-13.0% for FY25F/FY26F/FY27F mainly to account for higher operational cost incurred for the on-going OOH expansion plans and slower-than-expected take-up in digital and static billboard occupancy rate.
Valuation. Re-iterate BUY recommendation with lower a target price of RM0.43 (from RM0.50) based on assigned P/E multiple 8.0x to revised FY26F EPS of 5.4 sen and three-star ESG rating. We continue to favour SJC for their (i) solid turnaround plan that was justified recovery in fundamentals in recent quarters, (ii) efforts to cement their position in the OOH advertising space via strategic expansionary plans in addition of new assets/sites, (iii) leveraging onto exponential growth of DOOH in recent years and (iv) higher corporate adex spending.
Risk. Slower-than-expected roll-out in expansion plan and weaker-than-expected occupancy rate.
Disclaimer
The report is for internal and private circulation only and shall not be reproduced either in part or otherwise without the prior written consent of Apex Securities Berhad. The opinions and information contained herein are based on available data believed to be reliable. It is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered by this report.
Opinions, estimates and projections in this report constitute the current judgment of the author. They do not necessarily reflect the opinion of Apex Securities Berhad and are subject to change without notice. Apex Securities Berhad has no obligation to update, modify or amend this report or to otherwise notify a reader thereof in the event that any matter stated herein, or any opinion, projection, forecast or estimate set forth herein, changes or subsequently becomes inaccurate.
Apex Securities Berhad does not warrant the accuracy of anything stated herein in any manner whatsoever and no reliance upon such statement by anyone shall give rise to any claim whatsoever against Apex Securities Berhad. Apex Securities Berhad may from time to time have an interest in the company mentioned by this report. This report may not be reproduced, copied or circulated without the prior written approval of Apex Securities Berhad.
| Currency | Buy Rates (RM) | Sell Rates (RM) |
|---|---|---|
| USD | 4.212042 | 4.248408 |
| EUR | 4.921000 | 4.929487 |
| CNY | 0.591903 | 0.592919 |
| HKD | 0.540309 | 0.544492 |
| SGD | 3.268153 | 3.293573 |