Astro 2Q net profit flat at RM137m, declares higher dividend of 2.75 sen

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KUALA LUMPUR (Sept 15): Astro Malaysia Holdings Bhd recorded a flat net profit of RM137.24 million or 2.64 sen per share in the second quarter ended July 31, 2015 (2QFY16) compared to RM137.66 million or 2.65 sen per share in the previous corresponding quarter.

The media group saw a wider earnings before interest, taxes, depreciation and amortisation (EBITDA) margin of 1.5%, plus a decrease in depreciation of set-top boxes of RM21 million and lower taxes by RM10.4 million for the quarter under review.

However, this was offset by higher finance costs and unrealised foreign exchange (forex) impact from its unhedged finance lease liability as well as vendor financing.

Its quarterly revenue rose 1.5% to RM1.37 billion against RM1.35 billion in the previous corresponding financial quarter.

For the first half of financial year ended July 31 (1HFY16), Astro’s accumulated net profit grew 13.2% to RM305.54 million, or 5.88 sen per share, compared to RM265.99 million or 5.12 sen per share in the previous corresponding period.

Revenue for the six months ended July 31 expanded 3.7% to RM2.7 billion from RM2.603 billion previously.

Astro Holdings declares a second interim dividend of 2.75 sen per share of 10 sen for the financial year ending Jan 31, 2016 (FY16).

In the notes accompanying its results, Astro said the increase in finance costs was due to discounting of transponder’s deposit to a value of RM22 million while unrealised forex impact arising from unhedged finance lease liability and vendor financing amounted to RM17.3 million.

The mild revenue growth was attributed to an increase in subscription due to an expansion in pay television (TV) residential subscribers, advertising and other revenue as a result of higher merchandise sales from its home shopping business.

Astro recorded an increase of 33,900 Pay-TV residential subscribers to 3.52 million compared to 3.49 million subscribers previously.

The company also said a significant percentage of its costs are US dollar denominated and are mainly hedged for the current year and the first quarter of the next financial year.

The company said it would continue to implement measures to mitigate the impact of the prevailing rates but did not elaborate.

In a statement, Astro chairman Tun Zaki Azmi said despite a challenging operating environment coupled with soft consumer sentiment, the group continued to deliver on its growth strategies to generate shareholder value creation.

This was denoted by its second interim dividend of 2.75 sen per share, which is 22% higher compared to the same period last year, he noted.

Astro chief executive officer Datuk Rohana Rozhan said the company added 426,000 net TV customers in 1HFY16 underpinned by the strong take-up of Malaysia’s first subscription-free satellite TV service NJOI, which increased 58% year-on-year (y-o-y) to 1,071.

“This has increased our Malaysian TV households’ penetration rate to 65% in 1HFY16 compared to 60% in 1HFY15,” she added.

She said the company is aiming to drive the take-up rate of connected boxes and of Astro On The Go from the 181,000 subscribers to 500,000 by year end.

Rohana said Astro On The Go downloads has increased by 31% y-o-y to 1.6 million with weekly viewing time exceeding 140 minutes.

“As for our international content, we are ensuring that linear viewing is supplemented by strong on-demand proposition of same day as global premieres, live, social and box sets to cater to our customers’ viewing trends,” she said.

“Advertising income registered a 5% growth to RM305 million, supported by higher TV viewership, radio listenership and growing interest in digital,” she added.

Rohana also said Astro’s share of TV advertising expenditure (adex) and radio expenditure increased to 35% and 61% respectively.

Rohana also said greater utilisation of analytics and close collaboration with Astro’s key advertisers and media buyers has also contributed to growth in its share of adex.

Meanwhile, she said Astro’s e-commerce venture Go Shop achieved encouraging results with a revenue of RM75 million in 1HFY16 while customers can look forward to a Chinese language Go Shop channel in 4QFY16.

Astro shares closed 5 sen or 1.7% higher at RM2.99, with a market capitalisation of RM15.55 billion.

(Note: 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.)