KUALA LUMPUR (Dec 13): The weakness on Astro Malaysia Holdings Bhd's share price continue today after it fell by 7.1% to its closing price of RM2.60 yesterday since the announcement of its third quarter's results which saw its net profit slip lower by 2.9% to RM146.7 million on lower earnings before interest, tax, depreciation and amortisation (EBITDA).

As of 10.13am, its share price was down by another 4 sen or 1.5% to RM2.56.

According to TA Securities analyst Paul Yap, the results were largely within expectations on normalisation of content costs.

"I think that the results are basically within expectations as content costs normalise. The weakness in share price is probably more on the concern on the moderation in the subscription for Pay TV. The slower-than-expected growth from its home shopping business is also another concern," Yap told theedgemarkets.com.

However, Yap, who has a "buy" call for Astro Malaysia with a 12-month target price of RM3.10, thinks that the price weakness is a buying opportunity for investors especially given the attractive dividend yield of the company.

"I'm expecting Pay TV to be flattish moving forward, which would provide a stable cash flow to support the dividend. The yield is currently quite attractive at about 5.2% to 5.4% over the next two years. From my last check, the yield is the fifth best among the KLCI top 30," he added.

As for growth, he shared that NJOI subscribers would play an important role. He also thinks this segment has the potential to grow its average revenue per user, which remains low at RM2 currently and could grow to RM8 to RM10 within the next five years.

Another area would be the home shopping business, which is expected to drive Astro's revenue growth for 2018.

Meanwhile, Rakuten Trade Sdn Bhd's vice president of research, Vincent Lau, also thinks the price weakness seen in the short period of time since the announcement of its third quarter's results has presented a buying opportunity.

"While there is a lot of competition for Astro's business with cheaper alternatives from iflix, Netflix and other TV box that are available in the market now, the decline seen over the last couple of days has made it a case for investment. Purely looking at the company from a dividend point of view, it gives an attractive yield of about 4.9%. The company has a stable cash flow, which would be important for a dividend play," Lau said.

He added that consensus also has an average target price of about RM2.91, which indicates a potential return of about 11.7% even without taking the dividend into consideration.

At current level, Astro is trading at a trailing P/E of about 18.4 times, giving it a market capitalisation of RM13.6 billion.