Astro to gain from higher viewership during MCO period
KUALA LUMPUR: Analysts project Astro Malaysia Holdings Bhd (Astro) to be a potential beneficiary of the movement control order (MCO).
However, others believe the Covid-19 pandemic may affect the group’s customer acquisition efforts and financial year 2021 (FY21) earnings.
“We are of the view that Astro will benefit from the current MCO through higher consumption of its contents and larger sales from its multitude of platforms such as NJOI, Astro Go and Go Shop, as most people are confined in their homes,” the research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) said.
“Through our channel checks with management, the current purchases of NJOI contents are trending at 1.5-fold to two-fold of normal run rates since MCO which could possibly contribute positively to average revenue per user (ARPU).
“A healthy traction is also seen at its Go Shop’s online purchases by customers. Meanwhile, we gather that there are currently about 50,000 non-Astro customers already have signed up for the free viewing of contents on Astro Go thus far since March 22, 2020, indicating a reasonably strong interests for
Astro’s contents in a short span of time.”
MIDF Research also expected the number to be increasing in view of the extension of MCO until April 14, 2020.
As a result, the research arm opined that this is a positive development as these non-Astro customers might possibly have a higher likelihood to be nurtured into paying-customers subsequently post-MCO.
“While the operation of set-top box installation is temporarily prohibited under MCO, we postulate there will be a pent-up demand in the second quarter of current year 2020 (2QCY20) after the MCO is lifted.”
According to the research arm of Kenanga Investment Bank Bhd (Kenanga Research) the group has worked hard in churning new offerings, most recently with the launch of the new Ultra Box to enhance the viewing experiences of its subscribers and bundling packages with telcos for more value-for-money propositions.
Kenanga Research also noted that partnerships (iQIYI) allow their subscribers access to a wider range of content.
“That being said, the recent Covid-19 pandemic could put a dent in its customer acquisition efforts,” the research arm said.
“The outbreak has also led to the delay in sporting events earmarked for the year such as Tokyo Olympics and Euro 2020.
“While this may affect seasonal viewership, the silver lining is that the respective program costs have yet to be transacted, to be deferred to FY22 when it will be featured.
“However, the higher US dollar rates could spell some imported content cost pressures in the medium term.”
Meanwhile, Affin Hwang Investment Bank Bhd (AffinHwang Capital) expected Astro’s FY21 earnings to be impacted by the slower economy due to Covid-19.
“We expect Astro’s FY21 earnings to be impacted by the slower economy, but see a slight improvement in FY22 underpinned by sporting events (Tokyo Olympics and Euro League Cup) being postponed to 2021,” the research firm said.
“Given that many businesses and industries have been adversely impacted by the Covid-19 outbreak, we believe that Astro will not be spared.”