Astro expected to pay dividend yield of 9% for CY2022-23

KUALA LUMPUR (Oct 18): Astro Malaysia Holdings Bhd is expected to yield a dividend of 9% for calendar year 2022 (CY2022)-CY2023, even though its share price has fallen by a fifth since Sept 26, said CGS-CIMB.

The research house has upgraded Astro to "add" from "hold", with an unchanged target price of 88 sen, following a selldown over investor concerns about weak earnings and dividends.

According to CGS-CIMB analyst Kamarul Anwar, “even in the extreme case of Astro’s earnings per share for the financial year ending Jan 31, 2024 (FY2024)-FY2025 falling 30% short of our projections, the 80% payout we assume would still translate into CY2023-24 dividend yields of 6.4% (based on the latest close of 65.5 sen on Monday, Oct 17), which we still deem attractive amid high interest rates”.

“The 34.4% upside potential should be enticing for investors looking for capital appreciation, and they would get CY2022-23 yields of 9% to boot.”

Astro’s strategic shift towards full-suite broadband connection and content could restore its revenue in the long run.

“While piracy has eaten into Astro’s earnings, the group’s financial position remains robust, with its free cash flow over twice its net profit,” Kamarul added.

However, Astro’s dividend payout has been reduced to 75%, and its payout for FY2018-22 was 31.8%-53.6%, added CGS-CIMB, with subscription revenue projected to be flat in FY2024 and slipping 2.5% year-on-year in FY2025.

Nevertheless, Astro’s business model of collecting monthly subscription fees has led to strong cash flows, and its dividend payout is expected to be 49.5%-60.8% for FY2023-25, CGS-CIMB said.