Results Update
For QE31/1/2016, Astro's net profit increased by 92% q-o-q or 46% y-o-y to RM204 million while revenue was up marginally by 2% q-o-q or 4% y-o-y to RM1.374 billion.
Revenue rose y-o-y mainly due to an increase in subscription, advertising and other revenue of RM7.8 million, RM24.8 million and RM21.0 million respectively. EBITDA margin increased by 0.6% against corresponding quarter mainly due to lower staff related costs, and lower impairment of receivables. This was offset by higher content costs and cost of merchandise sales.
Net profit increased by RM65.1 million or 47.2% compared with the corresponding quarter. The increase in net profit is mainly due to increase in EBITDA of RM27 million, lower net finance cost by RM30.0 million due to lower unrealised forex loss arising from unhedged finance lease liability of RM19.4 million and unhedged vendor financing of RM34.7 million, offset by an increase in transponder’s lease interest of RM6.8 million and increase in share of post-tax result from investment accounted for of RM12.9 million, offset by higher tax expenses by RM11.2 million.
Table: Astro's last 8 quarterly results
Chart 1: Astro's last 18 quarterly results
Valuation
Astro (closed at RM3.00 yesterday) is now trading at a trailing PE of 25 times (based on last 4 quarters' EPS of 11.83 sen). At this PER, Astro is full valued. If Astro can maintain its last quarter's performance for a full year, the group's EPS would rise to 16 sen while its PER would drop to 20 times. At a PER of 20 times, the stock would be attractive.
In addition, Astro paid out dividend quarterly which amounted to 12 sen for the last 4 quarters. Thus, its DY is at a decent 4%.
Technical Outlook
Astro has been drifting downward after it peaked at RM3.70 in June 2014. The price moves in a downward channel, RR-R1R1) wth support at RM2.40-2.50 & resistance at RM3.00.
Chart 2: Astro's weekly chart as at Mar 22, 2016 (Source: ShareInvestor.com)
Conclusion
Despite the improved financial performance, Astro's rating remains a HOLD due to its expensive valuation and bearish technical outlook.
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 Soared
http://nexttrade.blogspot.my/2016/03/astro-earnings-soared.html
