PETALING JAYA: Astro Malaysia Holdings’ efficient advertising model and live-programming advantage is expected to improve its long-term prospects, said analysts.
In a research note, Hong Leong Investment Bank (HLIB) maintained a ‘Buy’ call on the counter with a target price of RM1.34. The brokerage cited Astro’s recent launch of addressable advertising alongside its fibre broadband service as a standalone product in May 2022 to contribute to a more diversified revenue stream.
Astro launched its own fibre broadband service in March this year, offering its TV content as a bundle, with fibre broadband being a standalone product.
“We view this positively as it represents a new revenue stream for the group. Moreover, we opine that this would entice existing Astro content customers to take up its fibre broadband service,” the brokerage said.
As a result, this would then boost Astro’s future earnings prospects, as the content and broadband services would fuel each other’s growth.
HLIB also pointed out that the scale and reach available to advertisers from its combined advertising channels are expected to increase significantly.
Although current ad spend is increasingly going towards digital, HLIB believes more advertisers would return to traditional channels for advertising (linear TV) as they can also target specific audiences on linear TV now.
Meanwhile, CGS-CIMB called an ‘Add’ on Astro, with a target price of RM1.35.
The brokerage has dismissed Netflix co-CEO Reed Hastings’ prediction of the death of linear TV over the next five to 10 years as “a view from a person with a vested interest in streaming”.
A key sales proponent in the TV world remains live programming, which linear TV strives on, but is unconducive economically for streaming portals.
The brokerage said linear broadcast remains relevant for live programming, especially for sports events and matches, something Netflix has not seriously considered, given the exorbitant rights fees and the high bandwidth requirements.
“In our view, Astro’s distribution model of linear TV and streaming is the way forward, i.e. the best of both worlds,” said the brokerage.
The brokerage sees Astro bouncing back from its slump in the long run due to its transformation strategy of combining linear broadcasting and streaming, and its venture into broadband services.
“Ultimately, Astro is an entertainment service that houses all types of programming and genres – including live sports. It wants to appeal to every segment of Malaysian demographics,” the brokerage said in its research note.