Astro Malaysia Holdings - USD250m Windfall On Its Way

THE BUZZ   

Yesterday,  the  media  reported  that  the  High  Court  of  Singapore  accepted  the  appeal  of Astro’s group of companies which includes: (i) Astro All Asia Networks Limited  (AAAN),  (ii) MEASAT Broadcast Network Systems SB (MBNS), and (iii) All Asia Multimedia Networks FZ-LLC (AAMN) against PT First Media Tbk (PTFM)’s application to set aside the court orders which granted awards of USD250m to the trio.
  
OUR TAKE  

Overview of events. To recap, the Astro Group and Lippo Group entered into a joint venture (JV) to establish a pay-TV business in Indonesia in 2005. In turn, the former invested heavily into the project. The JV between the two was terminated in 2008. As a result, the Astro Group sought  compensation  from  Lippo  for  approximately  USD250m.  Of  the  three  main  claimants, MBNS is now parked under the newly listed company, Astro Malaysia Holdings (AMH) while the other two are not part of the listed company.

No changes to our forecast. We have yet to confirm the exact amount that is claimed under MBNS.  Nonetheless,  the  management  indicated  that  the  legal  tussle  could  be  a  long-drawn affair. Thus, we have yet to factor this potential one-off compensation into our financial model.

Maintain BUY, FV unchanged at RM3.37. That said, this announcement bodes well for AMH and  we  see  the  recent  retracement  of  its  share  price  as  an  opportunity  to  accumulate  the stock. A key re-rating for the company would be the outcome of the bidding for the rights to  air Barclays Premier League. We are reiterating our BUY recommendation on the stock with an unchanged FV of RM3.37 (WACC: 8.45%, TG: 1.5%).

Source: OSK