SMG aiming to increase revenue via diversification

(L-R) SMG Chairman Tan Sri Chor Chee Heung, SMG Group CEO Alex Yeow and SMG Group CFO Sam Au Chen Sum at the online AGM. — SAMUEL ONG/The Star

PETALING JAYA: Star Media Group Bhd (SMG) is embarking on a number of new initiatives to transform the business and optimise shareholders’ return by penetrating into new ventures.

SMG group CEO Alex Yeow said going forward, the group aims to have 30% of its revenue come from new businesses that may be related to property or digital products.

Yeow explained that currently 70% of the group’s revenue was newspaper-related, and the remaining 30% was from segments such as radio and events.

“Going forward, we want to change this to 40% (newspaper-related): 30% (segments such as radio and events): 30% (diversification into new businesses).

“Ideally, the new businesses will be related to media, digital or other strengths that we may have, ” he said after the group’s 49th annual general meeting (AGM), which was conducted online.

Yeow also pointed out that SMG owns properties that can be repurposed.

“We can convert them into logistic hubs, which is an up-and-coming business segment. Or we can convert offices for medical care and wellness businesses, or co-working spaces, ” he said.

Yeow said the diversification into new businesses can be funded by the group’s cash and cash equivalents. SMG had cash of RM353.24mil as at end-2020.

“We have to scrutinise (business) proposals carefully. It’s not easy, because we have to be very responsible in how we spend shareholders’ money, ” he said.

SMG chairman Tan Sri Chor Chee Heung reiterated that in the face of rapid changes in media consumption trends, the group will focus on sustaining its investment in the digital space and attracting digital revenues.

This could be done by introducing new products and rejuvenating existing ones to keep up with changing market needs.

In his statement in SMG’s annual report 2020 released last month, Chor had pointed out that saw a 31% year-on-year growth in its international readership and almost a four-fold increase in March 2020 at the height of the first wave of the Covid-19 pandemic in Malaysia.

During this period, hit a total of 20.6 million unique visitors from various countries, up from 7.90 million in the same period in 2019.

Meanwhile, the group’s decision to wind down the operations of video-on-demand service Dimsum Entertainment by Sept 30 was received positively by research analysts who increased their target prices for SMG’s stock after the announcement was made in early April.

The move followed a strategic review carried out by SMG’s key management team that has identified a number of new opportunities the group will explore to further strengthen its position in the industry.

Hong Leong Investment Bank Research said in a report that the move is a good start in SMG’s restructuring and cost optimisation efforts, as well as allowing it to better reallocate its resources to its main business operations.

AmInvestment Bank Research said it believes SMG’s prospects will improve, and is hopeful that the group would be able to strengthen its core business and expand into other non-core ventures to diversify its revenue streams.

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