KUALA LUMPUR (Sept 27): CIMB IB Research has downgraded Astro Malaysia Holdings Bhd to “Hold” at RM1.66 with a lower target price of RM1.75 (from RM2.70) and said Astro’s 1HFY1/19 core net profit missed expectations, at 34%/33% of house/consensus FY19 forecasts due to higher-than-expected FIFA World Cup cost in 2QFY19.

In a note today, the research house said Astro’s core net profit fell 48% year-on-year (y-o-y) in 1HFY19 due to higher finance cost related to new transponders and higher content cost (up 26% y-o-y).

“We cut our FY19-21F EPS by 16-20% to reflect higher content cost projections, lower adex growth and higher finance cost.

“Downgrade to Hold, with a lower RM1.75 TP, in view of a challenging outlook from a weakening ringgit, rising competition and a sluggish adex market.

“The stock offers an attractive FY19F yield of 6.3%. We see a potential M&A with a telco provider as a key upside risk for the stock,”it said.