ASTRO: Earnings Rebounded

Results Update

For QE31/7/2019, Astro's net profit rose 9 folds y-o-y to RM169 million on the back of a 13%-drop in revenue to RM1.24 billion. Compared to the immediate preceding quarter (QE30/4/2019), net profit dropped 4% while revenue rose marginally by 0.2%.

Revenue was lower by RM180 million or 13% against corresponding quarter mainly due to a decrease in subscription revenue and licensing income. EBITDA margin improved by 15.0% against corresponding quarter, due to lower content costs and marketing and distribution expenses. Net Profit increased by RM153 million or 10 folds compared with the corresponding quarter mainly due to increase in EBITDA and lower net finance costs, offset by higher tax expenses.


Table: Astro's last 8 quarterly results


Graph: Astro's last 32 quarterly results

Financial Position

Astro's financial position improved slightly with current ratio of 0.98 time and gearing ratio of 6.6 times.

Valuation

Astro (closed at RM1.39 in the morning session) is now trading at a trailing PE of 11 times (based on last 4 quarters' EPS of 11.83 sen). In addition, Astro paid out dividend quarterly which amounted to 6 sen for the last 4 quarters; giving the stock an attractive DY of 4.3%. Based on these PER and DY, Astro is deemed fairly attractive.

Technical Outlook

Astro is trapped in a triangle, with the upside capped at RM1.45 and downside supported at RM1.30. Until Astro can break out of this triangle, it will likely be around the RM1.40 level.


Chart 1: Astro's daily chart as at Sep 13, 2019_12.30 (Source: Malaysiastock.biz)


Chart 2: Astro's weekly chart as at Sep 13, 2019_12.30 (Source: Malaysiastock.biz)

Conclusion

Based on improved financial performance, I believe Astro is still a good stock for long-term investment based on fair valuation.

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.