Are you familiar with cars with a screen attached to the top of their vehicles?

This is a development between SJC and Grab Malaysia – albeit unofficial and no public announcement was made. We could say that SJC is a relatively low-profile company.

Now back to the financial performance – here are a couple of key things that I had noticed in their quarterly report.

1.Significant improvement in revenue

When it comes to the revenue of the company, we can see that SJC had achieved RM8.56 million in revenue – a 519.49% increase on a Year-on-Year basis and 100.28% when compared on a Quarter-to-Quarter basis.

Sadly, no Quarter-on-Quarter breakdown in the performance was provided in the quarterly report, but the management had stated that based on the ongoing effort of SJC’s business transformation plan and nation moving towards endemic, they had seized strong recovery momentum in the outdoor advertising sector and recorded increase in revenue compared to the corresponding quarter of preceding financial year.

In short, the improvement was mainly caused by change of business direction of the company as there were several initiatives executed by the management previously. Take one for sample, the company had entered to a Sale and Purchase Agreement to acquire 55% of Andaman Media Sdn Bhd, Saakti Billboards Sdn Bhd and Tanjong Jernih Berhad back in financial year 2021.

Also, the development with Grab Malaysia must have also helped to improve their financials.

This is also the single best quarter for the company since listed.

2.Also, much better in net earnings

When it comes to the earnings of the company, SJC’s net profit had also increased by 131.36% on a Year-on-Year basis and 203.66% when compared on a Quarter-to-Quarter basis, this is largely in line with their growth in revenue, but partly impacted by the increase in administrative costs due to increase of headcount to cater for increased demand for advertising services.

3.May need to take note on cashflow

For the quarter under review, SJC had RM1.22 million cash on hand and bank, and RM2.17 million deposits with licensed banks. The company had RM4.35 million invested into property, plant, and equipment as part of their expansion plan to invest in more billboard assets. There were no positive operating cash flow generated for this quarter, hence no free cash flow was generated.

Over the short term, I do not foresee fund raising needed.

4.Prospects of the company

“Since the Group embarked on its transformation journey started in mid-2021, it has managed to build an enlarged portfolio of OOH assets with greater comprehensiveness. With that, the Company is well positioned to capitalise on the favourable industry trend ahead. In addition, it also expects to enter into a new phase of its business transformation journey involving more concession-based projects in 2022. Based on the aforementioned factors, the Group is anticipating a positive year ahead and is confident that the strategies in place will sustain the present growth trend over the course of financial year 2022.”

A study by Kenanga Research was published back in February stating that advertising spendings will continue its upward trajectory as precedents have shown that the reopening of the economy normally bumps up advertising spendings – especially for outdoor media.

https://www.nst.com.my/business/2022/04/790234/media-adex-trend-higher-second-quarter%C2%A0-2022

This is largely in line with the prospects given by the management.