Astro: Better Results, Still Expensive

Results Update

For QE30/4/2014, Astro's net profit increased by 15.2% q-o-q or 12.4% y-o-y to RM128 million while revenue was mixed: down marginally by 0.5% q-o-q but up 11.4% y-o-y to RM1.254 billion.

The increased revenue y-o-y was attributed to higher subscription, advertising & licensing income and sales of decoders. Higher subscription was the results of higher ARPU (from RM94.20 last year to RM97.10) as well as increased subscribers (from 3.32 million to 3.47 million).

In addition to higher y-o-y revenue, Astro's bottom-line also benefited from lower marketing & market research costs, staff-related costs & lower tax bill.

Table: Astro's last 8 quarterly results


Chart 1: Astro's last 11 quarterly results

Valuation

Astro (closed at RM3.54 yesterday) is now trading at a trailing PE of 40 times (based on last 4 quarters' EPS of 8.9 sen). At this PE, Astro is over-valued.

Technical Outlook

Astro broke above its recent high of RM3.23 in early April (here). It rallied to a high of RM3.70 before correction set in. From the chart below, we can see that Astro share price has hit the line connecting its recent highs. If it pulled back to RM3.30-3.40 (between the 20-d SMA line and 50-d SMA line), the stock could be a good trading BUY.


Chart 2: Astro's daily chart as at Jun 18, 2014 (Source: Tradesignum)

Conclusion

Despite the improved financial performance, Astro is rated a SELL INTO STRENGTH at RM3.60-3.70 due to demanding valuation and mildly challenging technical set-up.

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.