Astro Prospects Remain Positive With ADEX Improvement

Astro Malaysia Holdings Berhad’s FY23 core PATAMI of RM272 million dropped 42.7%yoy due to a decline in merchandise sales, subscription revenue, and advertising revenue. The FY23 core PATAMI came in below consensus expectations, recorded at 54% and 74% of and consensus full-year estimates says research house MIDF. The negative deviation be mainly attributed to deficient subscription revenue, advertising revenue, and merchandise sales, all of which did not meet the anticipated level.

On a quarterly basis revenue in 4QFY23 declined to RM920.7m (-3.9%yoy) and core PATAMI slipped to RM55.0m (-42%yoy). The underlying cause was the decrement in subscription revenue, advertising revenue, and merchandise sales, which were counterbalanced by an increase in sales of programming rights. In terms of segmentation, the television segment experienced a decline in revenue, reaching RM895.9m primarily attributed to a decrease in subscription revenue and advertising revenue. On the other hand, the radio segment showed continuous growth with revenue of RM53.3m, mainly due to the steady number of weekly radio listeners at 17.7m. The improvement of this segment can be attributed to the recovery momentum in the transition to the endemic phase. Lastly, revenue from the home shopping arm, Go Shop, declined significantly to RM41.4m primarily due to weaker consumer sentiment, more cautious spending, and the resurgence of customers returning to physical stores.

Astro Radio’s brands have sustained its dominant position, garnering 17.7m weekly listeners through both FM and digital channels. Additionally, in FY2023, Radex and Digital Adex rose on yearly basis at growth rates of +17% and +7%, respectively, while the total Adex reached RM126m. Notably, Radex captured the majority share of 73%, followed by TV Adex at 34% and Digital Adex at 2%. The robust performances of the TV, radio, and digital platforms can be attributed
to the year-end festivities and FIFA World Cup Qatar 2022.

As earnings missed expectations, MIDF has revised its FY24F earnings estimates downward by -46.1% to
account for the lower-than-expected subscription revenue, advertising revenue as well as merchandise sale. Corresponding
to the downward revision in earnings, our target price is revised to RM0.89 from RM0.95. The revised target price is
premised on pegging onto revised FY24 EPS of 9.3sen against an unchanged PER of 9.6x. The house has also, introduced its FY25F estimates.

Overall, maintain a positive outlook on Astro as its prospects remain promising, with the potential to benefit from an improved Adex environment that is likely to be driven by the reopening of the economy. Hence, MIDF maintains its
BUY call on with an upside of +42.5%.

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