Astro: Earnings Dipped

Results Update

For QE31/7/2016, Astro's net profit dropped by 38% q-o-q or 9% y-o-y to RM125 million even though its revenue increased by 5% q-o-q or 4% y-o-y to RM1.428 billion.

Revenue rose y-o-y mainly due to an increase in subscription, advertising, home-shopping and other revenue of RM1.7 million, RM17.6 million, RM36.7 million and RM3.3 million respectively. The higher revenue performance for home-shopping was due to increase in number of products sold and launch of Chinese Channel in October 2015.

EBITDA margin decreased by 6.0% y-o-y due to higher content costs, particularly EURO 2016 and impact of weakening RM, offset against discounts received from renegotiated content contracts.

Net profit decreased by 9.0% y-o-y due to decrease in EBITDA of RM63.5 million, offset by a decrease in depreciation of property, plant and equipment by RM34.6 million and lower net finance cost by RM18.7 million. 


Table: Astro's last 8 quarterly results


Chart 1: Astro's last 20 quarterly results

Valuation

Astro (closed at RM2.95 yesterday) is now trading at a trailing PE of 24 times (based on last 4 quarters' EPS of 12.25 sen). At this PER, Astro is fully valued. However, Astro paid out dividend quarterly which amounted to 12.5 sen for the last 4 quarters; giving the stock a decent DY of  4.2%.

Technical Outlook

Astro has broken above its long-term downtrend line at RM2.90. The breakout was not accompanied by increased volume nor upward momentum (ADX is flat!). Without public participation, its upside is capped by the horizontal line at RM3.00. For now, Astro is likely to continue to hang around the intermediate uptrend line support at RM2.85-2.90.

 
Chart 2: Astro's weekly chart as at Sep 14, 2016 (Source: ShareInvestor.com)


Chart 3: Astro's monthly chart as at Sep 14, 2016 (Source: ShareInvestor.com)

Conclusion

Based on weak financial performance, demanding valuation & unexciting technical outlook Astro's rating remains a HOLD.

Note:

I hereby confirm that I do not have any direct interest in the security or securities mentioned in this post. However, I could have an indirect interest in the security or securities mentioned as some of my clients may have an interest in the acquisition or disposal of the aforementioned security or securities. As investor, you should fully research any security before making an investment decision.