This article first appeared in The Edge Financial Daily on April 26, 2017

Astro Malaysia Holdings Bhd
(April 25, RM2.69)
Maintain outperform with an unchanged target price of RM3.22: According to various newspaper reports, police have arrested six men believed to be members of a syndicate that allegedly offered illegal cable television channels of Astro Malaysia Holdings Bhd at lower monthly subscription cost via online streaming and card sharing. In the raids, the police also seized various pieces of equipment believed to have been used for live streaming. Bukit Aman Commercial Crimes Investigation Department chief Datuk Acryl Sani Abdullah Sani said investigations revealed that the syndicate, believed to have been making profits of over RM900,000 per month, had been operating since 2015 with over 30,000 customers nationwide. 

The syndicate had been selling the pirated box for RM150 and charging an annual subscription fee of RM350 (about RM30 per month) for offering pirated Astro channels and other channels, which caused Astro to suffer huge losses. The suspects had been remanded for three days to facilitate investigations under Section 41 of the Copyright Act 1987. They could be fined up to RM300,000 or jailed. Acryl Sani also stressed that subscribing to illegal cable television is also an offence under the Copyright Act 1987. He hopes the people will be more vigilant after this. We believe that tougher action to combat piracy should be positive for Astro.

Due to changes in the media landscape, consumers prefer to consume media through their digital devices. Other potential long-term risks likely to threaten Astro include local on-demand Internet streaming media. To address the threat, Astro has relaunched Astro GO to allow customers to watch Astro content on their mobile devices, collaborated with Amazon Web Services to provide personalised experiences for customers, and planned to expand its regional over-the-top services (Tribe) to increase its competitive advantage. Hence, we believe that any potential negative impact may not affect Astro significantly in the near future. — PublicInvest Research, April 25