HLIB Research said Astro continues to face pressure from declining television subscription and advertising revenue.
PETALING JAYA: Analysts are turning cautious on Astro Malaysia Holdings Bhd
, given the group’s dismal financial year 2025 (FY25) results, which fell short of most consensus estimates.
Hong Leong Investment Bank (HLIB) Research in a report said Astro continues to face pressure from declining television subscription and advertising revenue, being unable to offset the decline despite entering a seasonally stronger second half advertising expenditure (adex) period.
It noted the company recently introduced its rebranded Astro One, offering simplified package options – Entertainment, Sports and Epic Packs – with prices starting at RM49.90 to compete with over-the-top (OTT) services.
“These new offerings aim to streamline customer choices and enhance value for Malaysian households, potentially boosting customer acquisition.
“However, this shift has resulted in lower average revenue per user (Arpu), which fell to RM98.50, reflecting the group’s focus on growing customer volume at the expense of revenue per user,” the research house added.
To put into perspective, subscription revenue has been the main revenue driver for the group, making up about 62% to 77% of top line for the past five financial years.
Despite Astro’s expertise in local content production, HLIB Research highlighted that the company’s outlook remains clouded by weakening subscription revenue and softening adex trends, suggesting that its transition to OTT will continue to pose hurdles.
The research house has cut the group’s FY26 and FY27 forecasts by 45% and 37%, respectively, while maintaining a “sell” call on the stock.
After earnings adjustment and cutting its terminal growth rate to 3%, HLIB Research has pegged the target price (TP) for the stock to 13 sen per share from 20 sen previously.
“We believe that its earnings visibility remains clouded in light of persistent subscription decline with cord-cutting behaviour and softening adex,” it added.
Meanwhile, Kenanga Research noted key takeaways from Astro’s recent analyst briefing, including the company’s optimism about reduced competition from unauthorised TV boxes following amendments to the Communications and Multimedia Act 1998, set to take effect in February 2025.
This amendment criminalises piracy via illicit streaming devices.
The group also said its Astro Shaw dominated the Malaysian box office in 2024, capturing 71% market share with FY25 gross box office collection (GBO) of RM121mil. up 10% year-on-year (y-o-y).
Notably, its jointly-produced film Sheriff: Narko Integriti, was the top-grossing film in Malaysia in 2024, earning GBO of RM60.5mil, far surpassing Hollywood blockbuster Deadpool & Wolverine, which ranked second with RM32.4mil.
Looking ahead, Kenanga Research said Astro expects continued strong GBO momentum in FY26, driven primarily by Keluang Man Cinematic Universe film, which will premiere in May 2025.
The research house said it has kept an “underperform” call on Astro with a lower TP of 15 sen.
“We remain cautious on Astro due to potential hefty erosion in shareholders’ funds if it is unsuccessful in its appeal against the Inland Revenue Board’s additional assessments totalling RM735mil.”
Other factors include intense competition from OTT streaming platforms (for international content), free-to-air TV for vernacular content and unauthorised TV boxes, its inflated cost base that includes legacy expenses and competition from digital music streaming platforms that leverage on AI to offer curated content and targeted commercials.
According to Maybank Investment Bank Research (Maybank IB), the group’s FY25 results underperformed its expectations.
“Furthermore, we expect Astro’s outlook to remain suppressed,” it said in a report yesterday.
Going forward, the research house said Astro’s earnings outlook to remain challenging due to electricity tariff hikes from July 1, 2025 and proposed RON95 subsidy rationalisation in mid-2025.
“In response to the above, Astro launched new TV packs called Astro One in December 2024 which are priced cheaper than the preceding packages but hopes to turn the tide on subscribership.
“The lower priced Astro One packages caused Arpus to decline to RM98.5 in 4Q25.
“We expect Arpus to continue declining to RM97.4,” it added.
In its defence, Astro had stated that FY25 gross Pay-TV subscriber additions have grown 52% y-o-y and FY25 net Pay-TV churn have narrowed 84% y-o-y, thanks to Astro One coupled with TVB and Liga Malaysia content being made available to basic package subscribers.
The group also hopes to narrow net Pay-TV churn to nil this year and turn it into net Pay-TV additions thereafter.
“Our estimates are based on net Pay-TV churn of 3% per annum,” Maybank IB noted.
It has a “sell” call on the stock with a TP of 11 sen per share. Astro closed at 12% yesterday, up to 19 sen.
