World Cup 2022 could be catalyst for Astro

by TMR / pic source

Astro announced a 2nd interim dividend of one sen per share for 2QFY23 

ASTRO Malaysia Holdings Bhd 1HFY23 core PATAMI of RM223m came in slightly below our expectation, making up 39% of our full-year estimate. 

Nonetheless, it was in line with consensus expectation at 47% of full-year estimate. The negative deviation was most likely caused by the decrease in advertising revenue, subscription revenue and merchandise sale. On a side note, Astro announced a second interim dividend of one sen per share for 2QFY23. 

Quarterly. Revenue in 2QFY23 declined to RM921.1m (-13.1% YoY) while core PATAMI improved marginally to RM104m (+1.3% YoY) primarily due to the decrease in subscription revenue, merchandise sales, sales of programming rights, offset by lower financing cost. Segment-wise, the TV segment’s revenue moderated to RM836.3m (-9.3%YoY) mainly arising from a decrease in subscription revenue. Secondly, the radio segment’s revenue continued to grow at RM37.6m (+15% YoY) due to the increasing number of Astro’s radio weekly listeners at 18m (+5.9% YoY). 

This segment’s performance was due to the recovery momentum during the transition to the endemic phase. Thirdly, the revenue from the home shopping arm, Go Shop slipped to RM47.1m (-55.3% YoY). This was subdued by consumer sentiment, more cautious spending and the return of customers to physical stores. 

Cumulative earnings. Its 1HFY23 top line was lower by -11.2% YoY to RM1.9b from RM2.1b in 1HFY22. The drop in revenue was mainly due to decrease in merchandise sales, subscription revenue and advertising revenue. In tandem with the fall in revenue, the core earnings decreased by -13.2% YoY as Ebitda dropped due to the same reason. 

World Cup 2022 may be a catalyst for Astro. Astro Radio brands are ranked No 1 across all languages, registering 18.2m weekly radio listeners (FM and digital). Its 1HFY23, radio advertisement market (radix) and digital advertisement expenditure (adex) rose +16% YoY and 5% YoY respectively while total adex stood at RM199m. Radex, TV adex and Digital adex share stood at 73%, 32% and 3% respectively. 

Maintain ‘Buy’ with a revised TP of RM1.03. Corresponding to the downward revision in earnings, our target price is revised to RM1.03 from RM1.06. Note that we roll forward our valuation base year to FY24. 

The revised target price is premised on pegging the revised FY24 EPS of 10.7sen against an unchanged target PER of 9.6x. We are positive on Astro due to improving adex environment while World Cup 2022 could be a catalyst. All in all, we maintain our ‘Buy’ call on Astro with an upside of +32.5%. 

Recommendation: Buy Revised Target Price: RM1.03 by MIDF Research (Sept 27) 

  • This article first appeared in The Malaysian Reserve weekly print edition.

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