ASTRO (6399) - Astro: Earning Improved
Results Update
For QE31/10/2016, Astro's net profit rose 20% q-o-q or 42% y-o-y to RM151 million while revenue was relatively unchanged - down 0.3% q-o-q or up 3.6% y-o-y- at RM1.424 billion.
Its revenue dropped y-o-y due to a decrease in subscription and home-shopping of RM5.7 million and RM11.9 million respectively, which offset by an increase in advertising and other revenue RM1.8 million and RM11.6 million respectively.
EBITDA margin increased by 3.1% y-o-y mainly due to lower content costs, particularly EURO 2016 in the preceding quarter and lower impairment of receivables. Net profit increased y-o-y mainly due to an increase in EBITDA of RM42.7 million, lower net finance costs by RM12.1 million due to lower unrealized forex loss arising from unhedged finance lease liability of RM5.6 million and unhedged vendor financing of RM2.3 million. The increase was offset by impairment of investment in associate of RM15.1 million and higher tax expense of RM15.4 million. RM34.6 million and lower net finance cost by RM18.7 million.
Table: Astro's last 8 quarterly results
Graph: Astro's last 21 quarterly results
Valuation
Astro (closed at RM2.65 yesterday) is now trading at a trailing PE of 20.2 times (based on last 4 quarters' EPS of 13.11 sen). At this PER, Astro is fairly valued. However, Astro paid out dividend quarterly which amounted to 12.75 sen for the last 4 quarters; giving the stock a decent DY of 4.8%.
Technical Outlook
Astro dropped back below its long-term downtrend line, now at RM2.80. The downtrend has gathered momentum, with ADX rising steeply. With Stochastic oversold, a relief rally can set in but it would probably be capped at the downtrend line at RM2.80.
Chart: Astro's weekly chart as at Dec 7, 2016 (Source: ShareInvestor.com)
Conclusion
Based on improved financial performance and fair valuation, Astro's rating remains a HOLD. If Astro can break above its downtrend line at RM2.80, the rating can be revised to a Long-Term BUY.
Note:
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ASTRO (6399) - Astro: Earning Improved
http://nexttrade.blogspot.my/2016/12/astro-earning-improved.html
