• Earnings in line but operating numbers (i.e. subscribers, ARPU) were slightly weaker.
• Astro blames the 6% GST but believes it will not last long.
• Maintain estimates, HOLD call and MYR3.26 TP for now.

What’s New

1QFY1/16 net profit of MYR168.2m (+31% YoY, +20% QoQ) was within expectation at 24% of our full-year estimate. 1QFY1/16 revenue of MYR1.33b (+6% YoY, -1% QoQ) was also in line at 24% of our full-year estimate. 1QFY1/16 single tier DPS of 2.75sen (1QFY1/15: 2.25sen) did not disappoint either.

1QFY1/16 net profit was up 31% YoY due to Pay-TV subscriber growth of 1% YoY to 3.5m and ARPU growth of 2% YoY to MYR99 coupled with lower depreciation. 1QFY1/16 net profit was up 20% QoQ largely due to lower depreciation and finance costs. We are more concerned that 1QFY1/16 turnover/EBITDA were flat QoQ.

What’s Our View

In 1QFY1/16, Astro lost 5k Pay-TV subscribers QoQ (second time since relisting), 24k HD subscribers (ARPU: ~MYR100) and 8k Super Pack subscribers (ARPU: ~MYR140) (Charts 1-3). This culminated in 1QFY1/16 ARPU being flat QoQ at MYR99, the first time since relisting that Astro did not record ARPU growth (Chart 4).

As much as the decent 1QFY1/16 results reflect the operations (e.g. subscribers, upgrades, ARPU) of previous quarters, we fear the weak 1QFY1/16 operations may reflect weaker results ahead. Astro attributed the above to the 6% GST denting consumer sentiment but opines that it will last for only one to two quarters. Astro still guides that it will add ~50k Pay-TV subscribers (our forecast: 45k) and record MYR100-MYR101 ARPU (our forecast: MYR102) for the whole of FY1/16 which is not far from our forecasts. Therefore, we leave our estimates, HOLD call and MYR3.26 DCF-based TP unchanged for now.

Source: Maybank Research - 17 Jun 2015