Astro valuations attractive as it seeks to raise subscribers


DEMAND for home entertainment during the Movement Control Order (MCO) could help drive Astro Malaysia Holdings Bhd’s earnings with higher consumption of its contents and larger sales on its multitude of platforms such as NJOI, Astro Go and Go Shop.

Astro now allows existing subscribers to access a host of channels for free until April 14, as well as opens up some of its channels to non-subscribers.

There are currently about 50,000 customers who are not subscribers to Astro, but have signed up for free viewing on Astro Go since March 22, which shows a strong interest for Astro’s contents in a short time.

MIDF Amanah Investment Bank Bhd Research (MIDF Research) expects the number to increase following the extension of the MCO until April 14, which could turn non-Astro customers into paying customers after MCO.

“Through our channel checks with management, the current purchases of NJOI contents are trending at 1.5 times to two times of normal run rates since MCO, which could possibly contribute positively to average revenue per user. A healthy traction is also seen at its Go Shop’s online purchases,” MIDF Research stated in a note recently.

Astro, in a release yesterday, stated its complimentary viewing for Astro and NJOI customers, as well as complimentary Astro GO access for all Malaysians, has led to television (TV) viewership increasing by 43%, while daily time spent rose 30% since the start of MCO. TV viewership for English movies and entertainment jumped over 200%.

All news channels registered a 71% rise in TV viewership, it said. In the first five days of MCO, 5.5 million Malaysians watched Astro Awani, while its website and app registered a 15% and 13% increase in unique visitors respectively. Astro GO was well-received by all Malaysians with over 78,000 new registrations. Kids shows also dominated viewership on Astro GO during this period.

MIDF Research is positive on Astro’s outlook as the media and entertainment services provider continues to show meaningful progress on its cost optimisation plan, while pursuing profitability through its various platforms.

MIDF Research also maintained its ‘Buy’ call on Astro with a lower revised target price of RM1.04 from RM1.84 previously.

“In terms of valuation, the stock appears to be attractive as it is currently trading at a 1.5 times standard deviation (SD) discount to its two- year historical average price-to- earnings (PE) ratio of 11.7 times.

“We expect this would increase monetisation opportunities for Astro’s pay-TV segment. Coupled with the appealing dividend yield of 10.8%, we are maintaining our ‘Buy’ recommendation on Astro,” said MIDF Research.

Public Investment Bank Bhd maintained its ‘Outperform’ call on Astro with a revised target price of RM1.80 from RM2 previously.

Given that Astro’s share price has fallen by 39% in the past 30 trading days, the research house opined the stock’s valuation looks appealing, trading at seven times forward PE ratio which is below its -3SD of five- year average.

“We adjusted down our financial year 2021-2022 forecast (FY21-22F) earnings by 6%-16% as we incorporate lower TV subscription revenue and higher content cost for FY22F given both the major sporting events (UEFA Euro and Olympics) have been postponed to 2021,” it added.

The investment bank likes Astro for its ongoing cost optimisation efforts and ability to leverage exist- ing customer base to build new revenue adjacencies on its various platforms.

“The group remains committed to expanding its existing content library (local vernacular and international contents) to further strengthen its position as Malaysia’s entertainment destination of choice,” it said.