KUALA LUMPUR: Astro Malaysia Holdings Bhd, the country’s largest pay television provider, expects to see growth in its overall operations for its financial year ending Jan 31, 2016 (FY16), despite softer market conditions caused by factors such as the implementation of the goods and services tax (GST) tomorrow and the weak ringgit against the US dollar.
The group saw its net profit jump 25.7% to RM139.97 million or 2.69 sen per share in the fourth quarter ended Jan 31, 2015 (4QFY15) from RM111.39 million or 2.14 sen per share a year ago, driven by higher subscription and lower installation, marketing and distribution costs.
In a filing with Bursa Malaysia yesterday, Astro (fundamental: 1.1; valuation: 2.1) said its revenue for 4QFY15 rose 7% to RM1.35 billion from RM1.26 billion in 4QFY14, mainly due to an increase in subscription and other revenue of RM56.2 million and RM40.4 million respectively, offset by a decrease in advertising revenue of RM8.5 million.
It also declared a fourth interim dividend of 2.25 sen per share and a final dividend of two sen per share, bringing the full-year dividend to 11 sen per share, a 22% increase over FY14’s payout of nine sen.
For the full FY15, net profit rose 15.9% to RM519.37 million or 9.99 sen per share compared with RM447.95 million or 8.62 sen per share in FY14, while revenue grew 9.2% to RM5.23 billion from RM4.79 billion, which it attributed to the expansion of its customer base.
Astro chief executive officer Datuk Rohana Rozhan said the group is expecting almost the same revenue trajectory of 9% for FY16, driven by the momentum in take-up of the group’s products and services across its pay-TV, NJOI, Astro on the Go and over the top platforms.
“Our customer base grew by 547,000 subscribers to 4.4 million subscribers, representing 63% penetration of Malaysian TV households in FY15. We also saw a doubling up of our free satellite TV proposition NJOI customers taking up Astro’s prepaid services.
“With the performance on NJOI, [complemented with our other services] we believe our revenue trajectory of 9%, and our earnings before interest, taxes, depreciation and amortisation, which grew by 12% to RM1.8 billion, will hold through and have the same trajectory in FY16,” she told a press conference yesterday to announce Astro’s FY15 financial performance.
In terms of revenue from its advertising expenditure (adex), Rohana said Astro’s share of television adex has grown to about 33% in FY15 and the group plans to grow its adex to a potential share of 35% in FY16.
On the impact of the GST on Astro, Rohana said it is still too early to tell.
“We will be working closely with the Royal Malaysian Customs Department with regard to the GST, but like any other business the issue of GST will be managed over time, as there are a lot of dynamics to the business and various components to our costs that we need to take into account, and for us our challenge is always to give the best value to our customers,” said Rohana.
She also said Astro has prepared itself well in terms of the weakening ringgit by being prudent with its cost management.
“Our content costs are around RM1.7 billion to RM1.8 billion, of which 60% is US dollar denominated. The good news is we are a company that is very prudent with our cost management, so for this year the very least we are fully hedged at below the prevailing rates at the moment, and we shall continue to be prudent,” she said.
On its future plans, Rohana said the group will look to leveraging its infrastructure to complement its services, with new offerings that will not only address its growth by household numbers but through mobility.
The Edge Research’s fundamental score reflects a company’s profitability and balance sheet strength, calculated based on historical numbers. The valuation score determines if a stock is attractively valued or not, also based on historical numbers. A score of 3 suggests strong fundamentals and attractive valuations.
This article first appeared in The Edge Financial Daily, on March 31, 2015.