Astro Malaysia
Holdings’ (Astro) FY13 earnings were within our forecasts but below consensus
estimates. Group revenue rose 10.9% y-o-y but this was offset by higher
marketing and distribution expenses. Still, the growth in Pay-TV adex and the
group’s tie-up with Maxis may enhance its prospects and boost its future
outlook. We upgrade Astro to a BUY, with a slightly lower revised FV of RM3.36.
Within expectation.
Astro’s full-year FY13 earnings of RM418.0m (-33.6% yo-y) were within our
forecast but fell below street estimates by some 9%. Although its bottom-line
shrank y-o-y, the top-line grew by a strong by 10.9% y-o-y, mainly due to the
stronger numbers from its other business segments –Pay-TV (+11.2% y-o-y) and
radio (+23.9% y-o-y). Its Pay-TV average revenue per user (ARPU) showed an
encouraging 4.7% y-o-y growth to RM93.20 from RM89.00 in 2012. That said, due
to higher expenses incurred as a result of rising marketing and distribution
costs due to aggressive customer acquisition and the B.yond swap out, Astro’s
EBITDA and earnings growth pace mellowed to a slower +0.2% and -33.6% y-o-y
respectively.
Pay TV adex numbers
on the rise. As Astro’s pay-TV adex base is small, a significant growth
from this may not be meaningful. Nonetheless, we believe that moving forward,
advertisers may start raising their allocation for this segment due to: i) its
relatively lower advertising cost, ii) a growing share of the Pay-TV market
that they cannot afford to neglect, and iii) Pay-TV subscribers are generally
from the middle income segment, which is the largest group of consumers in the
country. As such, Astro may be able to benefit from this trend and its FY13
adex revenue has so far showed positive growth.
Source: RHB
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