For QE30/4/2015, Astro's net profit increased by 20% q-o-q or 31% y-o-y to RM168 million while revenue mixed; declined by 1% q-o-q but rose 6% y-o-y to RM1.33 billion.
Table 1: Astro's last 8 quarterly results
The improved bottom-line y-o-y was due to higher revenue & lower depreciation & interest expense. For more, go here.
Table 2: Astro's Segmental Reporting for 1QFY16 & 1QFY15
If we look at the first quarter's segmental results for the last 4 financial years, we can see that revenue has been on an uptrend. Along with that, we have rising depreciation charges which weighed down its profits until now. Depreciation charge has begun to ease back and I believe this is the inflection point for the company as its earning should start to rise.
Table 3: Astro's Segmental Reporting for 1QFY16, 1QFY15, 1QFY14 & 1QFY13
From the diagram below, we can see that bottom-line has risen for the past 2 quarters despite a flattening out of revenue. This is due to an upswing in profit margin.
Chart 1: Astro's last 15 quarterly results
Valuation
Astro (closed at RM3.01 yesterday) is now trading at a trailing PE of 28 times (based on last 4 quarters' EPS of 10.75 sen). Astro remains over-valued with PEG ratio at 1.4 times (based on last year's earnings growth of 20%). With dividend yield of 3.8%, Astro may be viewed as an income stock
Technical Outlook
Astro is now resting on its 2nd tentative uptrend line (S-S1) at RM2.90-2.95. In addition we can draw a line connecting the recent low, A-B. That line could provide support at RM2.90. With the MACD indicator hooked down as well as entering into the negative territory, there is a higher probability that the RM2.90 support may be violated. If this happens, the next support is at RM2.70.
Chart 2: Astro's daily chart as at June 17, 2015_10.30am (Source: ShareInvestor.com)
Conclusion
Based on improved financial performance, Astro could be a good stock for long-term investment. However, with its demanding valuation and negative technical outlook, Astro is not likely to charge up any time soon.
Note:
In addition to the disclaimer in the preamble to my blog, I hereby confirm that I do not have any relevant interest in, or any interest in the acquisition or disposal of, Astro.
ASTRO (6399) - Astro: Earnings improved
http://nexttrade.blogspot.com/2015/06/astro-earnings-improved.html
