KUALA LUMPUR, March 27 — AmInvestment Bank Bhd is maintaining a “hold” call on Astro Malaysia Holdings Bhd amid a challenging operating environment which continues to pressure subscriptions due to competition from global online strong players, such as Netflix, who offer cheaper alternatives.
It said content piracy and illegal TV set-top boxes remained a major threat to the pay-TV industry despite recent developments in the local industry to combat piracy.
AmInvestment, however, said Astro had positive prospects driven by its 77 per cent TV household penetration rate in financial year 2019 (FY19) and continued focus on vernacular content proposition had been fairly priced in.
Astro Malaysia’s net profit for the financial year ended January 31, 2019 fell to RM462.92 million from RM770.64 million in the previous financial year.
Revenue eased to RM5.48 billion versus RM5.53 billion posted in the previous year due to a decrease in subscription and advertising revenue, offset by an increase in merchandise sales and licensing income.
Astro said the reduction in subscription revenue was mainly due to a lower package take-up, while advertising revenue was affected by the slowdown in the advertising market.
“We maintain a ‘hold’ recommendation with a higher fair value of RM1.69 per share (1.66 per share previously).
“We fine-tune our FY20-FY21 forecasts upwards by 2.0-4.0 per cent after adjusting our earnings before interests, taxes, depreciation and amortisation,” AmInvestment said.
As at 11.40am, Astro Malaysia’s shares were three sen lower at RM1.50, with 1.02 million shares traded. — Bernama