KUALA LUMPUR (July 15): The Kuala Lumpur Intellectual Property High Court’s May 24 ruling that the sale of TV boxes with pirated content is illegal, is a potentially positive turning point for Astro, opined Maybank Investment Bank (Maybank IB) Research.

In a note, Maybank IB said every RM100 million of TV subscription revenue recouped by the group will accrete RM51 million to its earnings estimates and 10 sen to its target price (TP) on Astro. 

The research house raised its TP for the stock to RM1.36 from RM1.33 as it maintained its "buy" call.

Its FY22, FY23 and FY24 core net profit (CNP) estimates for Astro are raised by 10%, 4% and 4% respectively on lower-than-experienced depreciation and amortisation.

Maybank IB is forecasting Astro make RM419 million, RM503 million and RM507 million for its FY22, FY23 and FY24 respectively in terms of CNP

"In the event that Astro recoups all, albeit unlikely, of the RM1.1 billion TV subscription revenue it lost over the last five years, we estimate that the accretion to our core net profit estimates will be a whopping circa RM550 million and accretion to our DCF-based TP will be circa RM1.10,” the research house stated.

Maybank IB pointed out that Astro’s TV subscription revenue peaked at RM4.4 billion in FY16, dwindled by 26% to RM3.2 billion five years later.

“Fortunately, core net profit dwindled by a narrower 20% due to aggressive cost rationalisation. The aforementioned was largely due to more Malaysians buying TV boxes with pirated content while terminating their legitimate Astro accounts. TV boxes with pirated content are sold openly on e-commerce platforms like Lazada and Shopee and Facebook Marketplace,” it noted. 

To recap, the Kuala Lumpur Intellectual Property High Court ruled on May 24 that the sale of TV boxes with pirated content is illegal.

Astro is approaching e-commerce and social media platforms to cease the sale of TV boxes with pirated content especially theirs, Maybank IB said.

“It is hoped that Malaysians who terminated their Astro accounts in favour of TV boxes will eventually re-subscribe to Astro should TV boxes be increasingly difficult to source,” it added. 

At the time of writing, Astro’s stock was up one sen or 0.88% to RM1.14.