PETALING JAYA: Astro Malaysia Holdings Bhd’s shares hit an all-time low today, following its discouraging results in the second quarter ended July 31, 2023 (Q2 FY2023).
Its net profit tumbled 75.98% to RM23.65 million from RM98.47 million previously, which the group attributed to higher operating costs and unfavourable foreign exchange (forex) loss.
In addition, its quarterly revenue dropped 5.56% to RM869.82 million, as compared to RM921.12 million previously, due to a decrease in subscription revenue and merchandise sales.
This morning, the media and entertainment holding company’s counter opened two sen lower at 49 sen and hit its all-time low of 46.5 sen, before paring losses to trade at 47.5 sen, still down 3.5 sen or 6.86%.
At market close, Astro’s share price further dropped 4.5 sen or 8.82% to 46 sen, giving the group a market capitalisation of RM2.4 billion.
The company saw 21.46 million shares exchanging hands, compared to its 200-day average volume of 7.52 million shares.
Following the disappointing results, the pay-TV provider experienced a cut in its target prices (TPs) and earnings forecasts from research houses.
Hong Leong Investment Bank (HLIB) Research said Astro’s results came below expectations and missed the research house and consensus’ expectations of full-year forecasts.
“Astro has done much to turn the group around, acquiring many excellent streaming platforms, along with launching Astro Fibre, as well as addressable advertising.
“However, the uncertain economic outlook could continue to hamper demand for the group’s products,” it said.
HLIB Research maintained its “hold” rating on Astro. However, it has lowered the group’s earnings forecast for FY2024 until FY2026, and its TP to 50 sen from 59 sen previously.
Meanwhile, Kenanga Research also cut its FY2024-FY2025 earnings forecast for Astro to reflect higher content costs and interest expense.
The research house maintained its “market perform” call but revised Astro’s TP to 56 sen from 66 sen previously.
“We continue to like Astro, given the normalisation of content costs in FY2024 due to the absence of major sporting events, subscriber retention and average revenue per user (ARPU) boost from new fibre broadband bundles, and highly cash-generative operations, given subdued capital expenditure (capex),” Kenanga said.
Nonetheless, Kenanga noted that consumer sentiment remains tepid amid inflationary pressures and a sluggish economic outlook.
Similarly, Public Investment Bank (PublicInvest) Research also cut Astro’s FY2024 until FY2026 earnings forecasts by an average of 15%, as it raised its net finance cost assumption.
The research house has revised down its terminal growth rate assumption, leading to a downward revision in its TP to 59 sen, while maintaining a “neutral” call on Astro.
“In view of the challenging operating environment, we expect Astro to conserve cash and declare a lower dividend payout of 50% (FY2023: 60%), translating to a yield of 5% for FY2024,” PublicInvest Research said.