Astro records relatively resilient earnings, decent dividend yield
KUCHING: Astro Malaysia Holdings Bhd’s (Astro) relatively resilient earnings and decent dividend yield have garnered an ‘outperform’ call from analysts.
According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research), Astro recently outlined three key areas of focus to sustain the group’s longterm growth, namely digitalising dominant legacy businesses, rapidly scaling the digital ventures, as well as deepening strength in verticals and building a robust innovation pipeline.
Kenanga Research noted that Astro is aiming to digitalise 75 per cent of the group’s business as well as double the number of connected set top boxes (STBs) to one million in financial year 2018 (FY18).
“Through digitalising its core platforms, the group is set to grant more control to customers, with self-serve ability for them to plan and manage their viewing, subscription and service request online,” the research arm said.
“Through the use of analytics, Astro aims to further strengthening its digital brands portfolio and become the best for reaching millennial and digital natives as well as to prepare to scale regionally.”
On another note, Kenanga Research highlighted that the group’s digital ventures, namely e-commerce via Go Shop, over the top (OTT) video via Tribe and eSports via eGG are expected to play a pivotal role in driving expansion into new regional markets.
It further highlighted that Go Shop offers a premium shopping experience across multiple platforms: TV, web and mobile.
“With this unique platform, Astro has expanded Go Shop to Singapore in late 2016,” Kenanga Research said.
“Tribe, meanwhile, will continue expanding to more Asean markets this year beyond Indonesia and the Philippines.”
Kenanga Research pointed out that while the OTT video industry in the region is still at a nascent stage, it is poised for exponential growth thanks to broadband and LTE mobile infrastructure.
“Meanwhile, following the launch of eGG network (a dedicated 24/7 eSports channel available on Astro and Astro GO) in mid-2016, the home-grown channel has been made available in five countries within its first year, including Australia,” the research arm said.
It added that all in, with these initiatives, Astro is hoping to expand the group’s reach to seven million households; 50 million individuals (including Tribe regional reach of 16 million) and two million connected homes in financial year 2022 (FY22), from 5.1 million, 23 million and 0.5 million in FY17 respectively.
Kenanga Research noted that Astro is proactively seeking collaborations with compatible partners in areas such as IP co-creation and production, distribution and merchandising, to create compelling content and monetise via subscription, advertising expenditure (adex) and commerce.
“Besides, the group also plans to build a robust innovation pipeline to sail through the digital evolution, guided by capability enhancements in areas of technology, people and culture,” it said.
On targets, Kenanga Research noted that Astro has outlined the group’s targets for FY18 and FY22 with an aim to achieve average revenue per user (ARPU), subscription revenue and adex revenue of RM102 to RM103, RM4.5 billion and RM770 million in FY18, respectively.
The research arm further noted that Astro aims for the amount to be expanded to RM114 to RM115, RM4.8 billion and RM1 billion in FY22, respectively.
Kenanga Research said that the group is also aiming to achieve revenue of RM6 billion, earnings before interest, tax and depreciation (EBITDA) of RM1.9 billion and profit after tax and minority interest (PATAMI) of RM686 million in FY18 followed by RM8.8 billion, RM3 billion and RM1.5 billion in FY22, respectively.