MIDF is of the view that Astro’s 9MFY23 earnings came in below its expectations, the core PATAMI of RM296 million dropped -14.0%yoy which was due to a decline in merchandise sales and subscription revenue. The below consensus’ expectation, was recorded at 56% and 68% of MIDF’sfull year estimates.
The negative deviation was primarily due to weaker-than-expected subscription revenue and merchandise sale. On a side note, Astro did announce a third interim dividend of 0.75 sen per share in 3QFY23.
As for the quarter, revenue declined to RM926.2m (-12.6%yoy) and core PATAMI slipped to RM73m (-28.7%yoy). This is due to the decrease in merchandise sales, and sales of programming rights, which was partially offset by an increase in advertising sales. Segment-wise, the television segment’s revenue moderated to RM833.1m (-7.0%yoy) mainly arising
from a decrease in subscription revenue. On the contrary, the radio segment’s revenue continued to grow at RM52.3m (+60.9%yoy) due to a sustainable number of Astro’s radio weekly listeners at 17.2m (-2.8%yoy). This segment’s improvement was due to the recovery momentum in the transition to the endemic phase. Lastly, the revenue from the home
shopping arm, Go Shop declined to RM40.8m (-56.5%yoy). The decline was primarily due to weaker consumer sentiment, more cautious spending and the return of customers to physical stores.
Astro Radio brands stay leading on rank No.1 across all languages, registering 17.2m weekly radio listeners (FM and digital). Its 9MFY23, Radex and Digital Adex rose +29%yoy and 13%yoy respectively while total Adex stood at RM309m. Radex, TV Adex and Digital Adex share stood at 73%, 32% and 3% respectively. Additionally, the Group is airing the FIFA World Cup Qatar 2022, with all 64 matches live in 4K HDR and HD. The FIFA World Cup Qatar 2022 matches dominated the top 10 most viewed events on Astro. We expect that to boost earnings in 4QFY23.
MIDF maintains a BUY call with a revised TP of RM0.95. As earnings missed expectations, the house revised the FY23 and FY24 earnings estimates downward between -5.0% to -7.4% to account for the lower-than-expected subscription revenue and merchandise sale. Corresponding to the downward revision in earnings, our target price is revised to RM0.95 from RM1.03. The revised target price is premised on pegging onto revised FY24 EPS of 9.9sen against an unchanged PER of 9.6x.
However, MIDF remains positive on Astro as its prospect stays intact to ride on a better Adex environment that likely improves in coherence to the reopening of the economy.
