epa05111098 (FILE) A file picture dated 20 August 2015 of an exterior view on the Netflix Corporate headquarters in Los Gatos, California, USA. Netflix is to release their 4th quarter 2015 results on 19 January 2016. EPA/JOHN G. MABANGLO
KUALA LUMPUR: Netflix and iflix would unlikely pose a big threat to Astro
as a larger portion of Malaysians generally still prefer to watch local content compared to international offerings, said PublicInvest Research.
Competition from internet TV, cable TV, internet such as YouTube and pirated CDs are not new to Astro.
On average, Malaysians spend 75% of their four to five hours of daily TV viewing watching Astro’s original local signatures.
“Astro’s strong vernacular contents and exclusive rights to live sporting events differentiates Astro from its competitors and we do not see the likelihood of Astro being affected in the near to medium term,” it said in a note on Wednesday.
Astro has evolved from linear TV to ‘on demand’ offerings with services like Astro On The Go, On Demand (OD), OD Plus, and Personal Video Recorder (PVR) to cater for changes in consumers’ preference of content consumption.
“We continue to like Astro premised on the ability to monetise its value-added services and contents to lift ARPU coupled with higher projected dividends moving forward,” it said.
Despite current cautious consumer sentiment, PublicInvest believes Astro’s earnings will be relatively resilient on the back of its subscription-based business model with a strong total customer base of 4.7 million.
Astro’s satellite broadcast exclusive rights will expire on Feb 28, 2017. But the research house does not foresee any significant operational changes due to the barriers of high entry costs for newcomers as well as its strong content offerings.
Astro has fully hedged and swapped its USD-denominated loans. For content costs, management guided an approximate amount of RM1.9bil in financial year ending Jan 30, 2017 to reflect forex exposure impact, double sporting events i.e. UEFA Euro 2016 and 2016 Olympic Games and other additional content costs.
PublicInvest maintains its Outperform call on Astro with a lower TP of RM3.10.
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