Astro All Asia Networks plc shares closed 5 sen higher at RM5.45 yesterday, off their day-high of RM5.50.
With 418,100 shares changing hands, Astro was one of the more active counters of the day amid dull trading on Bursa Malaysia in the absence of fresh leads.
An OSK analyst said Astro should deliver better results in its fourth quarter due to its higher number of subscribers as a result of lower programming cost and implementation of a new system.
“We believe Astro will have a very strong fourth quarter. Based on our estimates, Astro’s average subscription revenue per day jumped 21.5% from RM3.63 to RM4.41 when it switched on its new system.
“The increased revenue per day will have its full impact in the fourth quarter,” he said.
Moreover, the analyst said, addition of subscribers could still be stronger as not all households had switched to legitimate access to Astro’s multi-channel TV.
Astro may benefit from the inflow of funds, given its huge market capitalisation, and is likely to gain from a ringgit re-peg.
“As 60% of its costs are foreign currency-denominated, a re-peg of the ringgit will have a positive impact on Astro’s bottomline,” said the analyst.
The management has indicated that a 10% upward adjustment in the ringgit peg would increase its earnings by RM50mil.
“If we assume the new level of a revised ringgit peg remains for six years, our fair value for Astro will rise from RM5.30 to RM5.40.”
Astro posted net profit of RM29.8mil for its third quarter of financial year 2005 and RM82.9mil for the nine months ended October.
In annualised terms, the company' s results were 15.5% and 35.8% below OSK's forecast and market consensus, respectively.
The drag on third quarter results was attributable to higher programming costs due to Akademi Fantasia and the Olympics as well as the start of the English Premier League.
The company also incurred some RM15mil additional distribution costs to courier its new smart cards to subscribers.
“We believe Astro’s fourth quarter will show strong recovery due to the absence of these items plus the strong growth in new subscribers,” said the analyst.
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