• HLIB Institutional Research has a BUY rating on ASTRO with target price of RM3.56, or 20.3% upside, based on DCF valuation with a WACC of 6.9% and TG of 1.0%. ASTRO remains our top proxy pick for media sector as it offers resilient growth prospects (FY14-17 PATAMI CAGR of 19.3%) at undemanding PEG of 0.58x agains t peers ’ 1.3x and further supported by decent yields of 4.4- 4.9% for FY16-17 (FIG1). We like ASTRO due to: (1) Monopoly of pay-TV; (2) Higher subscriber base through stronger penetration rate and ARPU growth through new product offerings; (3) Strong take-up in IPTV; (4) Lower capex as well as depreciation and amortis ation; (5) As tro’s home s hopping bus iness . These are partly offset by: (1) Higher than expected content costs; (2) GST which reduces disposable income.
• Poised for a break above 200-d SMA soon. Since tumbling from 52-week high of RM3.50 (26 Nov 14) to low of RM2.73 (25 Aug 15), ASTRO’s correction phase may have been exhausted. As share prices are currently trending above 10-d/20-d/30-d/50-d SMAs, underpinned by a strong uptrend line and bottoming up os cillators , ASTRO’s share prices are poised to break above key res is tance near 200-d SMA or 50% FR at RM3.06. A decisive breakout above RM3.06 will lift prices higher to retest RM3.13 (61.8% FR) and RM3.23 (76.4% FR) levels, before reaching our LT objective at RM3.38 (YTD high). Immediate supports are situated at RM2.88 (10-d SMA) and RM2.77 (-d SMA). Cut loss at RM2.76.

Source: Hong Leong Investment Bank Research - 9 Oct 2015