Astro’s earnings outlook has been projected to be muted, but analysts believe that the group’s home shopping segment will continue to assist in supporting the group’s financial performance. — Bernama photo
KUCHING: Astro Malaysia Holdings Bhd’s (Astro) earnings outlook has been projected to be muted, but analysts believe that the group’s home shopping segment will continue to assist in supporting the group’s financial performance.
The research arm of MIDF Amanah Investment Bank Bhd (MIDF Research) expected the group’s earnings outlook to be muted, considering the possibility of lower subscription due to still subdued consumer sentiment as well as competition from alternative cheaper platform.
However, MIDF Research foresees home shopping segment to continue to assist in supporting the group’s financial performance.
“Considering the third wave of Covid-19 pandemic and the implementation of the Conditional Movement Control Order (CMCO), we opine that the subscriptions revenue to continue to be muted on the assumption that some of its existing subscribers may opt out and convert to an alternative cheaper platform as a way to conserve their cash flows,” the research arm said.
MIDF Research recapped that Astro’s third quarter of financial year 2021 (3QFY21) top-line was lower by 8.9 per cent year on year (y-o-y) to RM1.11 billion as a result of lower subscription and advertising revenue to RM807.3 million and RM77 million respectively.
In contrast, the research arm highlighted that Go Shop has shown an improvement by recording larger growth in its top-line by 18.9 per cent y-o-y to RM110.7 million as compared to RM93.1 million in 3QFY20.
It gathered that this was primarily attributable to higher viewership and the shift of consumers to online shopping.
“In regards to home shopping’s resilient current performance, we opine that this segment to continue to assist in supporting the group’s financial performance moving forward.”
On the other hand, the research arm of Public Investment Bank Bhd (PublicInvest Research) noted that while Go Shop is benefiting from the increase in viewership and change in consumer behavior, it opined that the growth is not sufficient to cushion the risk of decline in subscription and advertising revenues in the near-term.
“Nevertheless, the revival of sporting events especially the UEFA 2020 and Tokyo Olympics 2020 could potentially maintain or attract new subscribers moving forward.
“In addition, on-going cost optimisation initiatives should partially mitigate the impact on lower revenue,” PublicInvest Research said.
As for Astro’s advertising expenditure (adex), the research arm of Hong Leong Investment Bank Bhd (HLIB Research) recapped that it showed encouraging numbers with improvement 59 per cent quarter on quarter and 34 per cent y-o-y on the back of resumption of local live shows that usually register a high adex deal.
“Despite the reintroduction of CMCO, we are comforted to know that the slide should be moderate and would unlikely to regress back to what was previously charted when MCO first introduced in March,” HLIB Research said.
The research arm opined with the nearing of year end, advertisers might choose to ramp up on their marketing in order to exhaust the budget allocated.
“Furthermore, with Chinese New Year (CNY) slated in February 2021, we are optimistic that adex would register a good number in January 2021 which bolsters well for the group in 4QFY21.”
After chalking in an improvement (from a flat previous two quarters), HLIB Research was more sanguine on Astro’s outlook as the grop proactively pursues profitability through various platforms and adhere to cost discipline.
“Additionally, the recovery in adex also bodes well with the group top line.”
Coupled with an attractive dividend yield of 8.9 per cent, the research arm opined that the near term risk to reward equation is still tilted to the upside.