For QE30/4/2015, Astro's net profit increased by 20% q-o-q or 31% y-o-y to RM168 million while revenue mixed; declined by 1% q-o-q but rose 6% y-o-y to RM1.33 billion.
Table 1: Astro's last 8 quarterly results
The improved bottom-line y-o-y was due to higher revenue & lower depreciation & interest expense. For more, go here.
Table 2: Astro's Segmental Reporting for 1QFY16 & 1QFY15
If we look at the first quarter's segmental results for the last 4 financial years, we can see that revenue has been on an uptrend. Along with that, we have rising depreciation charges which weighed down its profits until now. Depreciation charge has begun to ease back and I believe this is the inflection point for the company as its earning should start to rise.
Table 3: Astro's Segmental Reporting for 1QFY16, 1QFY15, 1QFY14 & 1QFY13
From the diagram below, we can see that bottom-line has risen for the past 2 quarters despite a flattening out of revenue. This is due to an upswing in profit margin.
Chart 1: Astro's last 15 quarterly results
Valuation
Astro (closed at RM3.01 yesterday) is now trading at a trailing PE of 28 times (based on last 4 quarters' EPS of 10.75 sen). Astro remains over-valued with PEG ratio at 1.4 times (based on last year's earnings growth of 20%). With dividend yield of 3.8%, Astro may be viewed as an income stock
Technical Outlook
Astro is now resting on its 2nd tentative uptrend line (S-S1) at RM2.90-2.95. In addition we can draw a line connecting the recent low, A-B. That line could provide support at RM2.90. With the MACD indicator hooked down as well as entering into the negative territory, there is a higher probability that the RM2.90 support may be violated. If this happens, the next support is at RM2.70.
Chart 2: Astro's daily chart as at June 17, 2015_10.30am (Source: ShareInvestor.com)
Conclusion
Based on improved financial performance, Astro could be a good stock for long-term investment. However, with its demanding valuation and negative technical outlook, Astro is not likely to charge up any time soon.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Astro.
4 comments:
Hi.
both airasia and ecowld are dropping below RM 1.50 today
what you think of it?
Hi Alex, what's your view on the sharp increase in ELSOFT.
Hi billyboy
ELSOFT rose from RM0.45 to RM1.90 in a short 2 years. The sharp rise in the share price was supported by increase in earnings from ~RM1 million in QE31/3/2014 to ~RM7 mil in QE30/6/2014 & QE30/9/2014. While earnings have eased back to ~RM4-5 mil in the past 2 quarters, it is still quite respectable - supportive of its current PER of 14.4X.
Technically speaking, the stock is in an uptrend with support at RM1.65 & resistance at RM2.10. The sudden sharp rise could be a trading SELL opportunity if the price reaches RM2.00-2.10.
Hi martinkakashi
I have already discussed about Airasia.
On Ecowld, you probably know that I am wary of this stock. On the one hand, its sponsors are impeccable and experienced. This is clearly shown by their incisive and aggressive move in quickly building-up the company.
On the other hand, we must consider two aspects of this team; firstly, their less-than substantial means and secondly, their sub-conscious need to rebuild "SPSetia" in the form of Ecoworld.
When I say "less-than substantial means", I am referring to their wealth relative to the size of their enterprise. To make up for that shortcoming, they need to have "currency" in the form of Ecoworld shares. Thus the higher the share price, the more substantial is their means to acquire land and to build up their enterprise. When the land acquisition phase is over, the share price will have to find its level. What is the natural/fair value of the share? We are about to find out as I feel that the group has bought all the land it need, from Penang to Iskandar Malaysia.
Next, we need to consider the ego of the sponsors. While Liew is a nice man with a humble beginning in life, all men have certain ego to maintain. This can be a subconscious thing. I am not saying this is necessarily a bad thing. However, if this is not controlled, it may lead to problems if you over-borrowed or over-invested when the industry is entering a consolidation mode.
How long will the property market consolidation last? On its own, I believe that we have already reached a saturation point. However the situation may worsen if central banks worldwide were to engage in a simultaneous tightening in the next 1-2 years. This could lead to a rise in interest rate; higher installment payment; and higher default in loan repayment.
Thus Ecoworld has rushed to put on a good show just as the property market is taking a breather. Can it report good profit? If not, how long can the market live with the disappointment? These are my concerns.
Where is the technical support for Ecoworld? I think the RM1.30 level is a good support. If that fails, the RM1.00 will be a great entry level to the stock. I doubt it will go to RM1.00 any time soon unless we have a major crisis.
Good luck!
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