KUALA LUMPUR: Astro Malaysia Holdings Bhd’s latest financial results have come in line with RHB Research’s expectations.

       “Astro Malaysia’s 3Q/9MFY22 numbers were broadly in line with our expectations but trailed consensus,” it said.

       “3QFY22 core earnings slipped 7% quarter-on-quarter (QoQ) on weaker Ebitda, partially offset by lower financing cost. 9MFY22 core earnings formed 71% of our forecast (consensus: 65%).

       “An expected 1.5 sen dividend per share (DPS) puts cumulative DPS at 4.5 sen (71% payout). Cukai Makmur’s impact (partly recognised during the quarter) on its key operating subsidiary (Measat Networks Systems) was masked by tax losses at certain entities and capital allowances,” RHB said.

       While advertising expenditure (Adex) sales fell for the third consecutive quarter (3QFY22: -5% QoQ), a strong recovery was seen in October, with the momentum extending into Nov/Dec 2021.

       RHB noted that the launch of addressable advertising solutions should help drive adex yields and revenue via relevant inventories distributed across its on-demand, over-the-top and linear channels.

       The research house expects a better 4QFY22 from the economic re-opening and rebound in advertising expenditure (adex).

       It said the addition of more streaming services in the medium term should further bolster Astro’s content proposition and draw in cord-nevers.

       “Astro is hopeful that the new subscription packages (unveiled on Nov 9) will drive higher ARPU. It has thus far invested RM300mil to improve customer experience via technology upgrades, with a similar amount to be expensed in 2022.

       “We see good avenues for deeper household engagement via the upselling of its fiber broadband-content bundle under the wholesale pact with Telekom Malaysia,” it said.

       RHB has maintained its “buy” call on Astro with a new DCF target price of RM1.30 from RM1.45.

       “We lowered FY23/24F core earnings by 1-4%, mainly to factor in slower GO Shop growth and higher depreciation expense.

       “Key risks are earnings miss, weaker MYR/USD and piracy. Our target price has incorporated a 4% ESG premium based on our in-house methodology,” it added.