Astro: Steady, As She Goes

Results Update

For QE31/7/2015, Astro's net profit dropped by 18% q-o-q or marginal 0.3% y-o-y to RM137 million while revenue rose by 3% q-o-q or 1% y-o-y to RM1.37 billion. Revenue rose y-o-y due to 0.4%-increae in revenue for Television segment (brought on by increased subscription revenue which offset the decline in advertising & other revenue) plus 14.1%-increase in revenue for Radio segment. EBITDA rose for both Television & Radio segments by 6.2% & 18.7%, respectively. Higher EBITDA for Television segment was attributable to an increase in revenue, lower content costs, lower  installation  costs, lower marketing & market  research expenses and lower selling & distribution expenses which offset the higher broadband costs, lower other operating income and impairment of other investment.

Revenue increased q-o-q due to increased revenue for Television & Radio segments.Despite higher revenue, net profit dropped q-o-q due to increase in net finance costs of RM60.8 million (brought on by discounting of transponder's deposit to its present value of RM22.0 million), unrealized forex losses from unhedged lease liability & vendor financing of RM19.5 million and higher amortization of software of RM3.2 million. The drop on net profit was softened somewhat by increase in EBITDA of RM17.3 million, lower depreciation of set-top boxes of RM3.2 million and lower tax expenses of RM14.5 million.


Table 1: Astro's last 8 quarterly results


Chart 1: Astro's last 16 quarterly results

Valuation

Astro (closed at RM2.99 last Tuesday) is now trading at a trailing PE of 28 times (based on last 4 quarters' EPS of 10.74 sen). Which ever way you look at it, Astro remains over-valued. Its PEG ratio stood at 2.3 times (based on last year's earnings growth of 12%). Nevertheless, Astro may be viewed as an income stock, with uts dividend yield of 4%.

Technical Outlook

Astro is moving sideways, with support at RM2.80-2.90. Its upside is capped by the line connecting its recent peaks, RR- posing resistance at RM3.20.


Chart 2: Astro's daily chart as at Sept 14, 2015 (Source: ShareInvestor.com)

Conclusion

Based on steady financial performance, Astro could be a good stock for long-term investment. However, with its demanding valuation and mildly 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.