Astro’s 9MFY18 core net profit of RM603.8m (+16.1% yoy) came in within our expectation. The increase in earnings was partly attributable to better margins, a decrease in depreciation as well as finance cost. Astro also announced a DPS of 3 sen, bringing 9MFY18 DPS to 9 sen (9MFY17 DPS: 9 sen). We maintain our FY18-20E core EPS forecasts, as there were no major surprises to Astro’s 9MFY18 results. Maintain HOLD call on Astro with an unchanged DCF-based TP of RM2.83.

Lower Revenue From TV and Radio Divisions

Astro’s 9MFY18 revenue declined slightly by 1.7% yoy to RM4.14bn, due to lower contributions from the TV subscription (due to a lower package take-up rate), licensing (due to the loss of content recovery for sports channel), and radio (due to lower adex) divisions. But this was partially offset by higher revenue contributions from the TV adex and home shopping (increase in number of products sold) divisions. Astro’s revenue contribution from the TV and radio divisions declined by 2% and 0.9%, respectively, to RM3.7bn and RM239.5m, while the home shopping division’s revenue increased by 2.2% to RM205m. The EBITDA margin improved to 34.5% in 9MFY18 from 33.6% in 9MFY17, partly attributable to better operational efficiency, while PBT increased by 23.9% yoy to RM814.7m.

9MFY18 Results Within Expectations

After excluding one-off items, Astro’s 9MFY18 core net profit increased by 16.1% yoy to RM603.8m, partly due to better margins, and a decrease in depreciation as well as finance costs. The 9MFY18 results were within our expectations, accounting for 76% of our FY18 forecast. Also, Astro announced an interim DPS of 3 sen, bringing 9MFY18 DPS to 9 sen (9MFY17: 9 sen).

Maintain HOLD With TP Unchanged at RM2.83

We leave our FY18-20E core EPS forecasts unchanged as there were no major surprises to Astro’s 9MFY18 results. We maintain our HOLD rating with an unchanged DCF-derived 12-month target price of RM2.83.

Source: Affin Hwang Research - 7 Dec 2017