Astro earnings miss expectations, analysts cut forecasts

KUALA LUMPUR: Astro Malaysia Holdings Bhd’s second quarter ended July 31 (2Q23) earnings missed expectations, which has led to analysts cutting estimates for the financial year 2023-2023 (FY23-24).

Astro’s 1HFY23 core profit after tax and minority interest (PATAMI) of RM223m came in slightly below MIDF Research’s expectation, making up 39% of its full year estimate.

“Nonetheless, it was in line with consensus expectation at 47% of full year estimate. The negative deviation was most likely caused by the decrease in advertising revenue, subscription revenue and merchandise sale. On a side note, Astro announced a second interim dividend of 1.0 sen per share for 2QFY23,” MIDF said.

“As earnings missed our expectation, we revised our FY23 and FY24 earnings estimates downward between -6.7% to -7.7% to account for the near-term market volatility as the ongoing recovery in consumer sentiment remains uneven and heightened risk of economic slowdown due to inflationary pressure.

“This could hurt the home-shopping segment further as the consumer tends to be more cautious with their spending due to the inflationary pressure,” MIDF said.

The research house has maintained a “buy” call on Astro with a lower target price of RM1.03 from RM1.06 previously.

Astro posted a 13% year-on-year (y-o-y) rise in earnings to RM98.5mil or earnings per share of 1.89 sen in 2Q23 on improved cost discipline and despite revenue for the period falling 13% y-o-y to RM921mil.

Hong Leong Investment Bank Research said Astro’s 2Q23 core PATAMI of RM106.7mil brought 1H23 sum to RM231.1mil at 40.4%/48.4% of the house/consensus full-year forecasts.

“We deem the results below our expectations. The results shortfall was

mainly due to weaker than expected adex and subscription revenue. Given the results shortfall, we lower our FY23/24/25 forecasts by -13.6%/-12.7%/-4. 8% respectively,” it said.

The research house has maintained a “buy” call on Astro with a lower DCF-based target price of RM1.28.

“Despite the results shortfall we continue to like Astro as a long-term play as we opine that an eventual recovery in its subscription and advertising revenue would signal an inflection point which could provide a re-rating opportunity for the stock. Moreover, Astro also currently yields an attractive FY23 projected dividend yield of 6%,” Hong Leong said.

The counter fell 3.01%, or 2.5 sen to 80.5 sen with 3.01 million shares traded at 9.36 am. Year-to-date, it has fallen some 14.2%.

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