Astro CEO confident despite flat re-listing
KUALA LUMPUR: The third largest initial public offering (IPO) in South-East Asia for 2012, Astro Malaysia Holdings Bhd ended its first day of trading on the local bourse unchanged from its reference price RM3.00.
Astro was the most actively traded with 269.7 million shares changing hands. Its trade accounted for 19% of the total volume of 1.378 billion shares traded yesterday.
The anticipated stock debut surprised with a tepid comeback on Bursa Malaysia as it registered an opening price of 1% or 3 sen premium to its reference price of RM3.00. The day’s high was recorded at RM3.11.
The stock, re-listed after it was taken private in 2010, opened with a volume of 20.19 million shares traded. Its listing this round did not include its overseas operations.
Analysts covering the sector, however, summed up the counter’s performance: “As expected because the valuation was too rich.”
Analyst Kong Heng Siong from OSK Research said that Astro’s growth numbers over the next two years “would be reasonably good but not great” due to the cost to be incurred as the company migrated its customers over to the high-definition platform.
“(Because of that) investors are more cautious but, looking beyond 2015, growth would be better when they begin to get more average revenue per user (arpu),” he said, commenting on the closing price.
Another analyst said that investors may be concern about Astro’s rights to the English Premier League (EPL) license.
“Investors could be worried about the EPL license because Telekom Malaysia Bhd has the dough to buy it. If Astro loses the license, it would be a hit to its arpu,” she said.
Despite the softer debut on the local stock exchange, chief executive and executive director Datuk Rohana Rozhan said the company was a growth story and was confident Astro would continue to perform on the back of growth in affluence and more urban households in the country.
“We are operating against the backdrop of an increasingly affluent and young demographics. There’re more than 75% of Malaysians under 40 years old and an increased use of technology. These are encouraging statistics that is the backdrop where our growth story is going to come from,” she told a press conference after the market opened.
“Our strategy moving forward is two-pronged – to acquire new subscribers and, at the same time, address the individuals in households – through our service on mobile devices, Astro On-The-Go,” she said.
“Of the whole market, about 70% is addressable to pay-TV and the other 30% (from rural areas) can be addressed through Astro Njoi.”
Astro now has about 50% market share with presence in 3.1 million homes.
Rohana said although the current market for pay-TV seemed saturated, the total 6.6 million television-ready households in Malaysia should increase up to 7.7 million in the next five years, giving Astro more market to pursue.
Astro’s market capitalisation based on the IPO price of RM3.00 is RM1.56bil.
It raised about RM4.6bil of total funds, of which RM1.4bil was raised by the company through the issuance of 474 million new shares.
In its prospectus, Astro noted that it had allocated RM750mil over the next three years as capex for new corporate building and technical facility for the expansion of the group’s business, broadcast and transmission equipment as well as set-top boxes.
Another RM500mil will go to repayment of bank borrowings within a year’s time. Astro will have RM112.9mil as working capital over the next two years.
Chairman Tun Zaki Tun Azmi said the board was “quite happy with the share price though it did not go up very high during the opening.”
“But of course, if the share price had gone up too fast, investors may want to dump their shares. We rather have long-term investors than those who want make a quick buck,” he said.
Astro’s institutional shares have been more than 30 times oversubscribed, not including the cornerstone and bumiputra investors identified by the International Trade and Industry Ministry.
Demand for the 103.9 million shares made available to the public was six times oversubscribed, reflective of the strong appetite of new listings in Malaysia that defied the broad weakening in the global IPO market this year.