KUALA LUMPUR (June 26): Hong Leong IB Research has upgraded Astro Malaysia Holdings Bhd to “Buy” at RM1.51 with a higher target price (TP) of RM1.67 (from RM1.59) and said Astro’s 1QFY20 core earnings of RM186.6 million (+0.5%) exceeded both house and consensus expectations.

In a note today, the research house said lower EBITDA year-on-year across all segments was offset by lower net finance cost, delivering flattish core earnings.

It said while quarterly dividend payout as lower at 53%, management reassured its commitment for the full year to hit 75%.

“Raise FY20-21 earnings by 14% to account for material cost savings and lower content cost.

“Upgrade to BUY with DCF based TP of RM1.67 as we reckon that cost savings can outweigh declining subscription revenue in the near term. Coupled with its 7.2% yield, the risk to reward equation seems tilted to the upside,” it said.