KUALA LUMPUR: Astro Malaysia Holdings Bhd
continues to see a challenging year ahead amid structural changes in the global content and media industry as well as the threat of piracy, says AllianceDBS research.
In a research note, AllianceDBS trimmed its FY20-21 earnings forecasts by 4-5%. It maintained its buy call on Astro with a target price of RM2, lowered from RM2.10 previously.
"At current price, Astro is still trading at an undemanding valuation of 12.0x FY20F PE and offers 7% net dividend yield," said the research house.
In its recent quarterly earnings result, Astro recorded core net profit of RM159mil, 15% lower quarter-on-quarter, excluding unrealised forex gain and one-off separation scheme costs of RM58mil.
The Pay-TV broadcaster declared a fourth interim dividend per share of 1.5 sen in 4QFY19, which translates to 101% dividend payout.
Revenue was slightly weaker by 1.1% q-o-q in Q4, largely due to the decline in TV subscription revenue but partially mitigated by the pick-up in adex for both TV and radio.
Operating margins fell to 14.8% in the quarter versus 22.2% in the preceding quarter due to higher staff-related costs from the separation scheme payments and the impairment of receivables.
Astro's current TV based stands at 5.7 million subscribers, or about 77% penetration of Malaysian households.
AllianceDBS said it estimates a net churn of about 80,000-100,000 Pay-TV subcribers in Q4 while ARPU was relatively unchanged at RM100 for a few consecutive quarters.
For Njoi services, subscriber net adds remained strong at 90,000-110,000 in Q4.
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