Astro Malaysia Holdings Berhad (Trading Buy)

• ASTRO is a leading content and entertainment provider in Malaysia that serves over 5.7m homes, providing a wide spectrum of local, regional and international contents.

• To maintain its vision of being Malaysia’s number one entertainment hub, the group has constantly evolved and released a number of products (e.g. Ultra Box with 4K UHD and Ulti Box with HD). It has also formed strategic partnerships with 2 subscription-based streaming services (Netflix and Disney+), thus enabling the group to enrich its customers’ viewing experiences.

• The ongoing initiatives are expected to contribute positively to the group’s bottom-line going forward. For the latest 1HFY22 results ended July 2021, ASTRO reported a net profit of RM230.4m (+10% YoY).

• Based on consensus numbers, the group is projected to make net profit of RM532.3m in FY Jan 22 and RM566.6m in FY Jan 23, which imply forward PERs of 9.2x and 8.7x, respectively. The stock also offers dividend yields of 7.8%-8.5% based on consensus DPS estimates of 7 sen for FY22 and 8 sen for FY23.

• Chart-wise, after hitting a high of RM1.07 (in the beginning of May 2020), the stock plunged 34% to a low of RM0.71 (in the beginning of Nov 2020). Subsequently, the stock slowly recovered to RM0.985 (in the beginning of December 2020) before spiking up further to a 52-week high of RM1.26 (at the end of June 2021).

• Since then, the stock has registered a decline of 25% to close at RM0.945 yesterday, registering a return of 12% YTD.

• Following which, a technical rebound is anticipated as: (i) the stock has been treading towards the lower end of the Bollinger Band (indicating the stock has been oversold), and (ii) the BBTrend indicator is in the positive zone (which reflects a bullish trend).

• This could set the stage for the share price to rise and challenge our resistance targets of RM1.06 (R1) and RM1.12 (R2), which represent upside potentials of 12% and 19%, respectively.

• Our stop loss price has been set at RM0.85, which represents a downside risk of 10%.

IGB Real Estate Investment Trust (Trading Buy)

• IGBREIT owns a portfolio of 2 high quality retail properties located in Kuala Lumpur, namely: (i) Mid Valley Megamall, and (ii) The Gardens Mall.

• Riding on a brighter outlook for the REIT sector following the gradual reopening of the domestic economy, IGBREIT stands to benefit from an increase in footfall at its properties and a recovery in consumer spending.

• Amid the challenging industry landscape thus far, IGBREIT reported net earnings of RM38.5m (-50% YoY) in 3QFY21, hit mainly by lower net property income, which took its 9MFY21 net profit to RM126.5m (-23% YoY).

• Valuation-wise, IGBREIT is currently trading at forward dividend yields of 3.7% and 4.8% based on consensus DPU projections of 6.1 sen for FY21 and 7.9 sen for FY22, respectively.

• From a low of RM1.52 in end-March 2020, the stock appreciated to a high of RM1.90 in end-September 2020 before sliding once again to RM1.59 in the second half of January 2021.

• Since then, the stock has been treading sideways within a price channel, closing at RM1.64 yesterday.

• Following which, a technical rebound may occur as the stock will likely reverse from the bottom end of the Bollinger Band.

• In addition, with the BBTrend indicator signaling a positive trend, the stock could rise to test our resistance targets of RM1.83 (R1; 12% upside potential) and RM1.92 (R2; 17% upside potential).

• Our stop loss price is pegged at RM1.48 (or a 10% downside risk).

Source: Kenanga Research - 25 Nov 2021