KUALA LUMPUR (Dec 9): Shares of Astro Malaysia Holdings Bhd, the country's largest pay television provider, fell in thin trade early today after it reported a net profit of RM106.01 million or 2.04 sen a share for the three months to Oct 31, 2015 (3QFY16), down 6.5% from RM113.41 million or 2.18 sen a share in the same period a year ago, due to higher finance costs.

At 9.30am, Astro fell 0.70% or 2 sen to RM2.84 with 41,700 shares traded.
 
Revenue for 3QFY16, however, rose 7.4% to RM1.37 billion, from RM1.28 billion in 3QFY15, on higher subscription, advertising, and merchandise sales from its home-shopping business.
 
Astro's average revenue per user (ARPU) for 3QFY16 grew to RM99.30 from RM98.50 in 3QFY15, supported by the take-up of value-added services.
 
The group also declared a third interim dividend of 2.75 sen per share for the financial year ending Jan 31, 2016 (FY16), payable on Jan 7, 2016. It was 22% higher than last year.
 
Meanwhile, the group's share of advertising expenditure and radio expenditure grew to 34% and 60.5% respectively, supported by higher TV viewership and radio listenership.

Hong Leong IB Research has maintained its “Buy” rating on Asto Malaysia Holdings Bhd with a lower target price of RM3.33 (from RM3.56) and said Astro’s 9MFY16 core earnings (adjusted for RM320.7 million unrealised forex losses and RM230.5 million derivative gain) increased 23% yoy to RM501.8 million (9.65 sen/share), accounting for 77% and 79% of both ours and streets’ full year estimates.

In a note today, the research house said Astro declared dividend of 2.75 sen/share, similar to 1Q and 2Q of FY16. Ex-date on 21 Dec 2015 while payment date is on 07 Jan 2016.

It said Astro’s 9MFY16 revenue increased 4.9% y-o-y to RM4.9 billion from RM3.9 billion attributed to higher ARPU where it increased from RM98.5/month to RM99.3/month

“Net ads declined 35% y-o-y to 267,000 from 410,000 subscribers. In accordance with weak consumer and business sentiment, both Pay-TV and NJOI registered lower subscribers.

“In view of the continuous weak environment, earnings lowered by 10% as we cut our targeted ARPU from RM101.5/month to RM100/month for FY17 and also assume higher content costs due to weaker ringgit versus US dollar.

“Target price lowered to RM3.33 from RM3.56 based on DCF valuation with a WACC of 6.9% and TG of 1.0%. Maintain Buy,” it said.