Astro’s home shopping provides top-line cushion, adex on downward trend
KUALA LUMPUR: Astro Malaysia Holdings Bhd’s (Astro) home shopping provides top-line cushion for the group, Affin Hwang Investment Bank Bhd (AffinHwang Capital) observed in a company update, while the downward trend in advertising expenditure (adex) is expected to continue in financial year 2020 (FY20).
According to AffinHwang Capital, Astro’s home shopping business Go Shop, seven per cent of financial year 2019 (FY19) total revenue, continues to see promising sales growth, generating a total of RM374 million in revenue for FY19, up 29.3 per cent year on year (y-o-y).
“This is on the back of 1.8 million registered customers for FY19 as compared to 1.3 million customers in FY18,” the research firm said.
“Go Shop’s attractive proposition over normal retailers by offering, among others, bundle packages and unique items at an attractive rate should bring about more customers in addition to retaining the existing registered customers.
“Coupled with targeted content across multiple platforms to cater to different dialect speaking customers -- currently available in Malay and Mandarin language -- we expect Go Shop to keep up its momentum and possibly achieve earnings before interest, tax, depreciation and amortisation (EBITDA) positive in FY20.”
On the other hand, Astro’s adex was losing steam in FY19 and AffinHwang Capital has projected this downward trend to persist going into FY20.
“Despite an adex-friendly year, Astro’s total adex in FY19 dipped five per cent y-o-y to RM687 million from a peak of RM722 million in FY18,” the research firm recapped.
“This is in tandem with total industry wide adex contraction, partly driven by a weak consumer sentiment as well as a shift towards digital ads platforms.
“We expect the downward trend to persist, especially given the lack of mega events this year in addition to the already weakened adex sentiment.”
It added that adex sentiment remained soft partly due to cautious spending by advertisers.