CIMB Research maintains Add for Astro, TP RM3.80

KUALA LUMPUR: CIMB Equities Research is maintaining its Add rating on Astro, with a lower discounted cashflow based target price of RM3.80. 

It said on Friday that in spite of sluggish consumer sentiment, Astro’s growth prospects are intact given its dominant market position, with a 62% penetration rate, a defensive operating structure and the sticky nature of its subscribers.

The research house said Astro’s 9MFY15 annualised core net profit came in below expectations at 96% of its full-year estimate and 92% of consensus due to lower pay-TV subscription growth and higher than expected effective tax rate. 

Despite this, 9MFY15 core net profit grew by 12.7% on-year, driven by higher average revenue per user (ARPU) and subscriber additions, along with licensing income. 

“However, we cut our FY15-17 EPS forecasts by 3%-7% to account for gradual pay-TV subs growth due to a challenging economic outlook in 2015. 

“We maintain Add call with a lower discounted cashflow based target price of RM3.80 (WACC 8%). Astro remains our top pick in the sector. Rising ARPU growth from value-added services, higher licensing income and stronger contribution from home shopping are potential catalysts,” it said.