Astro: Earnings dropped

Results Update

For QE31/10/201530/9/2015, Astro's net profit dropped by 22.8% q-o-q or 7.4% y-o-y to RM106 million while revenue was up marginally by 0.4% q-o-q or 7.4% y-o-y to RM1.374 billion.

Revenue rose y-o-y due to an increase in other revenue of RM23.1 million, offset by decrease in subscription and advertising of RM10.5 million and RM7.2 million respectively. The increase in other revenue is due to an increase in merchandise sales of RM14.6 million from home-shopping business and sales of programming rights of RM8.4 million.

Net profit decreased by RM31.7 million mainly due to decrease in EBITDA of RM16.1 million, higher net finance costs by RM36.4 million due to unrealised forex impact primarily arising from unhedged finance lease liability of RM54.5 million and unhedged vendor financing of RM8.8 million, offset by decrease in discounting of transponder’s deposit to its present value of RM22.0 million. The decrease was offset by lower depreciation of set-top boxes of RM10.2 million and lower tax expenses of RM16.1 million.


Table: Astro's last 8 quarterly results


Chart 1: Astro's last 17 quarterly results

Valuation

Astro (closed at RM2.86 yesterday) is now trading at a trailing PE of 27 times (based on last 4 quarters' EPS of 10.6 sen). At this PER, Astro is over-valued. However, Astro paid out dividend quarterly which amounted to 12.5 sen for the last 4 quarters. Thus, its DY is at a decent 4.4%.

Technical Outlook

Astro has been drifting downward after it peaked at RM3.70 in June 2014. Its immediate support is at RM2.80-2.90 while its immediate resistance is at RM3.00-3.10.


Chart 2: Astro's weekly chart as at Dec 8, 2015 (Source: ShareInvestor.com)

Conclusion

Based on weak financial performance, expensive valuation & weak technical outlook, Astro's rating remains at best a HOLD but preferably an AVOID.

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.