Quick take: Astro shares up 3% after earnings top estimates

KUALA LUMPUR: Shares of Astro Malaysia Holdings Bhd rose 3% in early trade after it reported quarterly earnings that beat expectations and raised forecast for the year.

The pay-TV operator added 2.94%, or four sen to RM1.40. Astro-C15 rose 12.5%, or 0.5 sen to 4.5 sen.

Astro’s net profit rose 11.5% to RM170.85mil for its third quarter ended Oct 31,2019 against RM153.22mil in the same period a year ago, mainly due to lower net finance costs and tax expenses.

Revenue, however, fell 12.2% to RM1.22bil from RM1.38bil.

It has proposed a third interim dividend of 2 sen per share for the quarter under review.

For the first nine months, Astro reported a net profit of RM516.38mil, a 49.9% increase from RM344.52mil, but revenue declined 10.3% to RM3.69bil from RM4.11bil.

Affin Hwang Capital Research said Astro’s result was above the house and street’s expectations with the variance to its forecast largely due to lower-than-expected costs.

“For 9MFY20, core earnings came in at RM588.5mil (+31.7% yoy), accounting for 84% and 87% of our and the street’s forecast respectively, ” it said.

In light of the better-than-expected 9MFY20 results, Affin has raised its FY20-22E core earnings by 3-8%.

The upward revision is mainly to take into account lower operational costs, particularly on marketing and administrative expenses.

“Following our earnings upgrade, our DCF-derived target price is revised higher to RM1.65 from RM1.62.

“We reiterate our ‘buy’ rating on Astro in view of the attractive 21% upside from current levels, coupled with attractive dividend yields of 5.5-6% over FY20-22E, ” Affin said.

Source: TheStar