‘BUY’ CALL WITH RM1.10 TARGET PRICE

HLIB Research sees boost from improving consumer sentiment, reopening of businesses

ASTRO Malaysia Holdings Bhd’s advertisement expenditure (adex) is likely to increase in the coming quarters due to improving consumer sentiment amid the easing of movement restrictions and rollout of

Covid-19 vaccines.

Hong Leong Investment Bank Bhd (HLIB Research) said the home shopping segment’s growth momentum was slowing quarter-on-quarter as discretionary spending was sensitive to household income, which was affected by the pandemic.

“But with improving consumer sentiment and businesses reopening, we may see the growth momentum in this segment picking up in the coming quarters,” said HLIB Research yesterday.

The research firm was encouraged by Astro management’s announcement that more streaming services partnership were in the pipeline.

“This will be positive for average revenue per user as well as help retain the customer base as content consumption habits are shifting towards on-demand streaming.”

HLIB Research had retained its “buy” call on Astro with an unchanged target price of RM1.10 per share.

The easing of movement restrictions and improving consumer sentiment boded well for Astro’s adex and home shopping segment going forward, said the research firm.

Astro’s net profit in the fourth quarter ended Jan 31 jumped 20.8 per cent to RM167.83 million from RM138.92 million a year ago on lower net financing costs and tax expenses.

However, revenue fell 9.5 per cent to RM1.11 billion from RM1.23 billion previously following a decline in subscription and advertising revenues.

For the full year ended Jan 31, Astro’s net profit decreased 17.6 per cent to RM539.85 million from RM655.3 million a year ago while revenue fell 11.2 per cent to RM4.36 billion from RM4.91 billion previously.