AllianceDBS trims FY20-21 earnings estimates for Astro

  • Analyst Reports
  • Wednesday, 27 Mar 2019

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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