KUALA LUMPUR, July 15 — Maybank Investment Bank Research has reiterated its ‘buy’ call on Astro Malaysia Holdings Bhd (Astro), raising its discounted cash flow (DCF)-based target price (TP) on Astro’s shares by two per cent to RM1.36.
In a note today, the research house highlighted that Astro’s TV subscription revenue dwindled by 26 per cent to RM3.2 billion from a high of RM4.4 billion five years ago, as more Malaysians started buying TV boxes with pirated contents and terminated their Astro accounts.
Maybank IB believes that the Intellectual Property High Court Kuala Lumpur’s ruling on May 24 that the sale of TV boxes with pirated content is illegal could potentially be a potentially positive turning point for Astro.
With the ruling, Astro is approaching e-commerce and social media platforms to cease the sale of TV boxes with pirated content — especially theirs, with the hope that Malaysians who had terminated their Astro accounts would eventually re-subscribe to Astro should TV boxes be increasingly difficult to source.
“We estimate that every RM100 million of TV subscription revenue that Astro recoups will accrete RM51 million to our core net profit estimates and 10 sen to our DCF-based TP.
“In the (unlikely) event that Astro recoups all of the RM1.1 billion TV subscription revenue it lost over the last five years, we estimate that the accretion to our core net profit estimates will be a whopping approximately RM550 million and accretion to our DCF-based TP will be approximately RM1.10,” it said.
It noted that over the last three months, Astro has been making waves by announcing its tie-ups with international subscription video on demand (SVOD) operators, Disney+Hotstar and Netflix.
“It has also launched its own standalone SVOD product, Sooka, that targets Malay millennials,” added the investment bank. — Bernama
