Better days ahead for Astro – Analysts
KUCHING: Astro Malaysia Holdings Bhd’s (Astro) prospects are improving and analysts believe that with Malaysia entering its ‘endemic’ stage, this should lead to recovery in domestic income and employment which should see improvement in advertising expenditure (adex) as well as allowing consumers to better respond to the expanding OTT services provided by Astro.
“With the government lifting movement restrictions beginning in the second quarter of 2022 (such as allowing businesses to resume normal operating hours, reopening of borders), this should lead to recovery in domestic income and employment which should see improvement in adex as well as allowing consumers to better respond to the expanding OTT services provided by ASTRO.
“However, we are cautious of the upcoming costs in FY23 which has major sports events such as FIFA World Cup, Asian Games and many more,” the research team at Kenanga Investment Bank Bhd (Kenanga Research) said in a report.
Nevertheless, it pointed out that Astro is continuing its efforts in expanding its services by collaborating with Synamedia to provide Addressable Advertising solutions to businesses in order to help them reach specific audience with targeted advertisements.
Currently, the service is available on Astro Go and Video On Demand content, Ultra and Ulti boxes, and will eventually be launched for their linear TV audiences.
“We see this as a positive move taken by the group to further strengthen the group’s TV adex.
“Furthermore, the group has recently rolled out their very own internet service called Astro Fibre to meet demand for stronger connectivity of multiple devices at the same time. This gives Astro control over pricing and margin more effectively,” the research team said.
On its FY22 results, Kenanga Research noted that Astro registered a normalised PATAMI of RM474 million which generally came within expectaions.
On a year-on-year (y-o-y) basis, Astro’s FY22 revenue dropped by four per cent to RM4.2 billion due to a six per cent decline in subscription revenue and 18 per cent drop in home-shopping revenue which was offset by higher sales of programming rights and advertising revenue. The home-shopping revenue dropped mainly due to more cautious consumer spending, as a result of inflation, and lifting of movement control leading to more shopping activities in malls.
“Despite subscription revenue declining by seven per cent and estimated paying-subscribers base dropping by six per cent, ARPU rose by 0.3 per cent which we believe is due to a slightly higher percentage of consumers selecting premium packages compared to FY21.
“Moreover, EBITDA margin declined by three percentage points due to higher content cost (FY22: 30 per cent of sales vs. FY21: 27 per cent of sales), broadband costs and marketing and distribution expenses.
“In tandem with the fall in revenue, the group’s core PATAMI declined by 11 per cent to RM474 million,” it said.
On a quarterly basis, the research team highlighted that the lifting of movement control in 4Q21 led to higher radio and Pay-TV advertisements, with 55 per cent jump in total adex.
“On the other hand, homeshopping revenue dropped by 29 per cent due to the aforementioned reason. All in, core PATAMI rose by 35 per cent to RM130 million,” it said.