Strong show from Astro despite tough operating environment
KUCHING: Astro Malaysia Holdings Bhd’s ( Astro ) performance for the financial year 2017 (FY17) has generally met positive views from analysts as the group has continued to outperform despite challenges affecting the media industry.
MIDF Amanah Investment Bank Bhd’s research arm (MIDF Research) said despite various headwinds affecting the media industry, the group continued to outperform by successfully expanding its customer base through dual-model, which are premium and freemium market approach.
“Based on the business model, bulk of the income stream is derived from subscription revenue as opposed to advertising revenue.
“In addition, the group also expanded its revenue stream by tapping into the consumer market through its home shopping business venture. Moreover, its continuous cost management strategy has also kept the operating cost at bay.
“As a result, it has strong cash generation capability which enables the adoption of a progressive dividend policy.”
At present, it noted that the stock offers an attractive dividend yield of at least 4.5 per cent which further elevates Astro’s attractiveness.
In a statement, Astro noted that its revenue rose two per cent year- on- year ( y- o- y) to RM5.6 billion while its profit after tax, amortisation, and minority interest (PATAMI) increased one per cent to RM624 million, underpinned by its e-commerce and advertising expenditure (adex).
It also pointed out that its customer base had exceeded five million, driven by subscription-free TV service, NJOI.
In a separate report, the research arm of TA Securities Holdings Bhd (TA Securities) believed that Astro could see a 9.3 per cent y-o-y earnings growth in FY18.
“Coming off a double sporting year, this is expected to be driven by a moderation in content cost to 34 to 35 per cent of TV revenues.
“The Pay TV segment is anticipated to remain challenging, with projections of a flattish base of 3.4 million to 3.5 million subscribers.
“Instead, Pay TV revenues are expected to be driven by higher Pay TV average revenue per unit (ARPU) of RM103 to RM104 – driven by premium households,” it opined.
Elsewhere, the research team continue to expect healthy adex and home shopping revenue growth.
“Go Shop targets to raise its revenues to RM500 million, by increasing its product breadth, live hours, premium delivery options and payment options,” it added.
On another positive note, AmInvestment Bank Bhd’s research arm ( AmInvestment Bank) pointed out that Astro’s overthe-top (OTT) streaming app Tribe, which was recently launched in the Philippines and Indonesia, has achieved a million downloads just within a year.
“Together with its Astro GO which has 1.1 million registered users, the segment will allow the group to tap into mass mobile users and increase its ability to monetise advertisements,” it said.
Overall, AmInvestment Bank maintained a ‘hold’ call on the stock while TA Securities pegged a ‘buy’ call on the stock. MIDF Research maintained a ‘buy’ call on the stock.