SJC’s 2QFY26 CNP came in at RM4.2m (-37.8% YoY, -15.8% QoQ), bringing 6MFY26 CNP to RM9.2m. Given that the Group’s earnings is seasonally stronger in 1H, the results were in line with our expectations, accounting for 72.4% of our full year forecast.
SJC declared a first interim dividend of 1.0 sen per ordinary share (ex-date: 10 Mar 2026).
SJC has proposed a private placement of up to 209.6m new shares, representing 98.2% of its existing share base for the acquisition of Unilink, Vision and other expenses.
Earnings forecasts have been revised upwards by 3.7%/11.4%/8.6% for FY26F/FY27F/FY28F, respectively, following higher growth assumptions and improved operational efficiencies.
We maintain our BUY recommendation on SJC with an increased TP of RM0.67 (from RM0.61), based on unchanged P/E multiple of 8.3x applied to FY27F revised EPS of 8.1 sen, along with a three-star ESG rating.
Within Expectation. After excluding exceptional items comprising the utilisation of capital allowances, unabsorbed business losses and recognition of tax adjustments during the quarter which amounted to RM1.2m, SJC registered robust CNP of RM4.2m (-37.8% YoY, -15.8% QoQ). This brings the Group’s 1HFY26 CNP to RM9.2m (+19.0% YoY), representing 72.4% of our estimates. We consider the results in line with expectations, as the Group’s earnings are typically front-loaded in the first half of the financial year.
YoY. SJC achieved a 19.0% YoY increase in revenue, fuelled by robust billboard demand, enhanced operating leverage and disciplined execution of its growth strategy. However, CNP declined by 37.8% YoY. This contraction was primarily driven by a 53.3% drop in other income and a substantial 1,209.0% surge in tax expenses.
QoQ. While revenue increased by 3.3% due to higher billboard advertising demand, CNP declined by 15.8%. This decrease was primarily driven by the tax and accounting adjustments mentioned previously.
Dividends. The Group declared a first interim dividend of 1.0 sen per ordinary share (ex-date: 10 Mar 2026).
Proposed Private Placement. The Group has proposed a private placement of 64.0m new shares, representing 30.0% of the existing issued share capital of 213.5m shares. The final issue price will be determined at a later date, though it will be set at a discount of no more than 20% to the 5-day VWAP prior to price fixing. Based on an illustrative price of RM0.3770, this placement is expected to raise c.RM24.2m. From these proceeds, RM11.9m will fund the cash portion of the acquisition of Unilink Outdoor Sdn Bhd (Unilink), while the remaining funds will be used for office renovation at The Mate, working capital and related transaction expenses.
Additionally, SJC proposes to issue up to 145.6m new shares as consideration for its strategic acquisitions, representing 68.2% of its existing share capital. At an issue price of RM0.3160, this issuance is valued at RM46.0m. c.RM27.7m of this amount will be used to acquire the remaining equity interest in Unilink while the remaining RM18.4m will facilitate the purchase of the entire equity interest in Vision OOH Sdn Bhd (Vision). These corporate exercises are expected to reach completion in March 2026.
Rationale of Private Placement. The proposed exercise enables the Group to expand its geographical footprint and strengthen its market presence within the out-of-home (OOH) advertising sector. This expansion aligns with the strategic goal of broadening media network coverage in high-traffic and strategic locations to enhance market share and diversify revenue streams. Additionally, the acquisitions allow the Group to eliminate significant collaboration fees. Under the existing arrangement, SJC promotes the Unilink and Vision portfolios while returning approximately 75% of revenue as collaboration fees. Transitioning away from this revenue-sharing model is expected to result in significantly higher profit margins and a stronger overall financial position.
Upon completion, the enlarged Group is projected to command approximately 10% of the total addressable OOH advertising market. This increased scale will provide the Group with substantially greater bargaining power when negotiating with suppliers, contractors and media buyers. By leveraging this enhanced market position, the Group aims to secure more favourable commercial terms and realize greater cost efficiencies, ultimately solidifying its competitive standing within the advertising landscape.
Outlook. We are positive on the Group’s results and proposed placements. We expect the Group’s operations to remain robust moving forward, benefitting from higher asset utilisation as advertiser demand improves. While the issuance will strengthen the Group’s positioning in the OOH advertising space, it will also result in an estimated 49.5% dilution to FY27F EPS under the fully diluted scenario. This implies a fully diluted fair value of RM0.31 per share. This placement reflects management’s confidence in expanding the Group’s operations and capitalise on opportunities arising from tailwinds such as the Visit Malaysia 2026 campaign.
Earnings Revision. Following the proposed private placement, we have revised our growth and margin forecasts upwards. This adjustment reflects an enhanced capacity to capture a large share of advertising expenditure while achieving greater operational efficiencies. As a result, FY26F/FY27F/FY28F earnings forecasts have been revised upwards by 3.7%/11.4%/8.6%, respectively. The impact of the private placement is maintained pending determination of the issue price and completion of the exercise.
Valuation & Recommendation. We maintain our BUY recommendation on SJC with an increased TP of RM0.67 (from RM0.61), based on unchanged P/E multiple of 8.3x applied to FY27F revised EPS of 8.1 sen, along with a three-star ESG rating.
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 | 3.879490 | 3.910828 |
| EUR | 4.586505 | 4.596176 |
| CNY | 0.565924 | 0.567111 |
| HKD | 0.495908 | 0.499928 |
| SGD | 3.062969 | 3.087829 |