Affin Hwang upgrades Astro to Buy, TP at RM1.62

  • Analyst Reports
  • Friday, 13 Sep 2019

KUALA LUMPUR: Affin Hwang Capital research has upgraded Astro Malaysia Holdings Bhd to a buy call with a higher target price of RM1.62 as its 6MFY20 core net profit came in better than expected.

It said in a note that Astro's six months earnings of RM394.7mil was up 48% year-on-year (y-o-y) on the back of lower operating costs due to content costs normalising post the 2018 FIFA World Cup and a reduction in marketing and administrative costs.

However, the broadcaster's revenue for the same period fell 9.4% y-o-y to RM2.5bil due to a decline in contricutions from its TV subscription, radio and home-shopping divisions.

"Positively, its EBITDA margin for 6MFY20 improved yoy by 8.8ppt to 37.5%," it said.

Astro announced an interim dividend per share (DPS) of two sen, which brings total DPS so far this year to four sen.

Affin Hwang said the lower DPS may be owing to management seeking to conserve cash flow in view of the challenging market.

"We project FY20E DPS at 8sen, assuming a 60% payout ratio," it said.

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