Astro Malaysia Holdings Bhd
Hold. Target price: RM0.29
4QFY24 core net profit of RM35 million brought FY24 core net profit to RM176 million or only 68% of our FY estimate. The shortfall was largely due to FY24 TV subscription revenue coming in at RM2.69 billion or RM60 million below our expectations. Due to its relatively fixed expenses, a minor revenue miss can lead to a major core net profit miss. Although 4’24 was profitable, no DPS was declared again. The first and only interim DPS of 0.25sen for FY24 translates into 31% DPR (MIBG forecast: 50%).
In hindsight, the dearth of dividends ought not to have come as a total surprise to us. Although ASTRO has introduced new packages priced at lower entry points and is still ramping up antipiracy efforts, ASTRO stated that its outlook remains uncertain due to the still poor consumer sentiment driven by high inflation and persistent content piracy. Adjusting for the FIFA World Cup subscription revenue in Q4’23, Q4’24 TV subscription revenue eased 3% QoQ or the fastest pace in two years.
Reflecting the poorer-than-expected TV subscription revenue, we lower FY25E/FY26E TV subscription revenue forecasts by 3%/2%. Coupled with minor housekeeping, we slash FY25E/FY26E earnings by 46%/29%. We also introduce FY27E earnings which we expect to ease 7% YoY on TV subscription revenue easing another 3% YoY. In our view, FY25E will be difficult not just because of falling TV subscription revenue but also high UEFA Euro Cup and Summer Olympics content cost. That said, ASTRO is a lot more resilient than the adex-based media groups due to its stable subscriber base.
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