KUALA LUMPUR (Dec 16): The share price of Astro Malaysia Holdings Bhd slipped into the red on Friday (Dec 16), after some investment analysts tracking the stock trimmed their target prices (TPs) as well as earnings forecasts following disappointing earnings for the third quarter ended Oct 31, 2022 (3QFY2023).
The counter was trading down five sen or 7.04% at 66 sen a share, giving the group a market capitalisation of RM3.42 billion. The stock — which earlier hit a low of 64 sen in the morning — has depreciated 30.53% since the beginning of this year.
Burdened by a sharp rise in net financing cost due to foreign exchange losses, Astro's net profit fell to RM5.8 million for 3QFY2023, from RM105.9 million for the corresponding quarter last year. Revenue also declined to RM926.18 million, compared with RM1.02 billion, due to lower subscription revenue and merchandise sales.
No thanks to lower 3Q earnings, nine-month net profit fell to RM204.28 million from RM334.29 million, as revenue declined to RM2.8 billion from RM3.14 billion.
With profits falling short of expectations, MIDF Research revised its FY2023-24 earnings estimates downwards by 5%-7.4% for Astro to reflect lower subscription revenue and merchandise sales. The research house lowered its TP to 95 sen from RM1.03.
“The revised TP is premised on revised FY2024 earnings per share of 9.9 sen against an unchanged price-earnings ratio of 9.6 times,” said MIDF in a note.
Meanwhile, Kenanga Research lowered its FY2023-24 earnings forecasts by 20%-14%, mainly due to increased content cost and higher operating cost resulting from a weaker ringgit against the US dollar.
“We also reduce our FY2023-24 dividend estimates to 5.2-6.3 sen, in line with the group’s guidance for a 75% payout ratio,” said Kenanga, which lowered its TP for Astro to 75 sen from 90 sen.
In addition, Hong Leong Investment Bank (HLIB) Research, which lowered its TP to 95 sen from RM1.15, cut its FY2023 forecast for Astro by 5.5%, followed by 4.8% for FY2024, and 7.7% for FY2025, on the back of the results shortfall.
However, all of the three stockbroking firms maintained their "buy" or "outperform" ratings for the stock, and remained positive on its prospects, as advertising expenditure is expected to improve as the economy rebounds, coupled with the company's growth potential as an internet service provider, and its unique services as an over-the-top streaming service provider.