PETALING JAYA: A day after Astro Malaysia Holdings Bhd addressed publicly a customer data leak and posted weaker financial results, the company’s long-serving chief executive officer Datuk Rohana Rozhan has given notice of her resignation effective Jan 31, 2019.
The group’s chief content and consumer officer Henry Tan will take over from Rohana from end-January next year and Rohana will remain on the board as a non-executive director.
“It is my honour to have been part of this amazing team, moving as one, to achieve far more than I ever dreamt possible in a fast-evolving and dynamic industry.
“As Team Astro, our passion has always been to better serve our customers, which has been our privilege and our continued responsibility,” said Rohana in a statement.
Rohana’s resignation, coupled with poorer financial results, saw the stock take a hit yesterday, with the company’s share price falling 9.8% or 18 sen to RM1.65.
Despite the weak share price, sentiment among analysts on Astro is largely bullish amid the rising competition within the media industry, plunging stock price and the decline in the pay-TV operator’s latest financial results.
According to Bloomberg, 10 research houses have “buy” calls on Astro, while eight others have “hold” calls. One research firm has issued a “sell” rating on the stock.
While media consumption habits are gradually evolving following the emergence of online content providers such as Netflix and iflix, Astro is expected to remain as the industry leader, moving forward.
According to MIDF Research, Astro has continued to record a commendable performance via the expansion of its customer base, despite the various headwinds affecting the media industry.
Currently, the bulk of the company’s income stream is contributed by the subscription revenue, as compared to its advertising revenue.
Astro’s dual-model strategy to attract more subscribers, via the premium and freemium market approach, is key in supporting its income stream.
“The major sporting events will serve as an additional catalyst to further drive the group. In addition, the group has expanded its revenue stream by tapping into the consumer market through its home-shopping business venture and digital initiatives.
“Moreover, its continuous cost-management strategy has kept the operating cost at bay. As a result, it has strong cash-generation capability, which enables the adoption of a progressive dividend policy,” said the research house in a note, maintaining its “buy” call on the stock.
While Astro’s financial results in the first quarter ended April 30 was within expectations, the company saw a decline in both its top line and earnings in the quarter.
The pay-TV operator’s net profit declined by 10.77% year-on-year (y-o-y) to RM174.73mil in the first three months of financial year 2019.
The decline was mainly due to higher net finance costs, given the unfavourable unrealised foreign exchange movement.
Astro’s revenue in the quarter was also down by 1% y-o-y to RM1.31bil.
Segmental-wise, revenue contribution from the television and radio segments dropped in the first quarter, but was partially offset by the improvement in revenue from the home-shopping segment.
Over the last 12 months up to its record low on May 30, the stock had plunged by about 44%. It has since risen on the back of rumours of a privatisation by billionaire tycoon T. Ananda Krishnan.
Ananda is the single-largest shareholder in Astro, with an equity interest of 40.9% via his private vehicle Usaha Tegas Sdn Bhd.
RHB Research Institute, which has reiterated its “buy” call on Astro, pointed out that the company is backed by its strong cash position.
“While there remain concerns on the threat posed by competing over-the-top applications, piracy and escalating cost of content, the business in itself is extremely cash generative with strong free cashflow, offering capital management headroom.
“Key positives are a steady average revenue per user (Arpu) from the cross-selling of non-discretionary services, and continuing advertisement expenditure outperformance, given its stranglehold on TV households,” it said.
Currently, Astro’s Arpu remains stable at RM99.60. RHB Researh Institute expects the Arpu to see an uplift in the following quarter.
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