The investment bank maintains a ‘BUY’ call and a target price (TP) of MYR1.36 (DCF-based), that is roughly 40% upside potential.
The Copyright (Amendment) Act 2022 implies that it is potentially very potent in combatting content piracy which has plagued ASTRO over the last 6 years. Hence, Maybank IB Research team has maintained their earnings estimates and MYR1.36 TP for now as this act is literally fresh off the printing press and has yet to be tested in court. The investment bank has also introduced an expanded ESG tear sheet for ASTRO and assigned it an above average overall score of 66, based on its aggregated quantitative/qualitative/target-based metrics.
Turning the screws on content pirates
Copyright (Amendment) Act 2022 now explicitly recognizes streaming technology as an avenue to infringe copyright. A reading of Section 43AA implies that e-commerce (e.g. Shopee, Lazada, Carousell) and social
media platforms (i.e. Facebook) that openly sell illegal streaming devices, colloquially known as TV boxes, are likely guilty of infringing copyright. A Feb 2019 YouGov poll found that 87% of Malaysian TV box owners purchased them from e-commerce and social media platforms.
ASTRO can take action against TV box vendors
Positively, Section 51B implies that ASTRO, as a copyright owner, can ‘test’ purchase TV boxes to determine if anyone is infringing its copyright and take legal action against suspected offenders. Negatively, Section 41A (2) implies that offenders may avoid prosecution if made a written offer to ‘settle’ by the relevant authorities. The related safeguard is that the written consent of the Public Prosecutor, also known as the Attorney General, must be sought before issuing the aforesaid written offer.
Earnings estimates and TP unchanged for now
Given that the act is new and yet to be tested in court, thus the investment bank maintains their earnings estimates and TP which are premised (also unchanged) on ASTRO’s TV subscription revenue inching up 1-2% p.a. after falling 30% over the last 6 years (Fig. 1). It is also noted that churn may remain high not only due to content piracy but currently fragile consumer sentiment due to purchasing power being eroded by rising inflation. Yet, this act could be a very positive inflection point for ASTRO.
