Astro falls almost 7% on 2Q earnings miss

KUALA LUMPUR: Shares in Astro Malaysia Holdings Bhd fell in early trade after reporting a 76% lower net profit in the second quarter ended July 31 (2Q24).

In addition, the pay-TV services provider said no dividend was declared for the quarter due to its new dividend policy to distribute dividends annually from its consolidated profit after tax and minority interest (Patami).

“Dividends will be paid depending on overall business and earnings performance, capital commitments, financial conditions, distributable reserves and other relevant factors. We will continue to review the dividend policy,” Astro said.

The counter fell 3.5 sen, or 6.86% to 47.5 sen with 17.41 million shares traded.

Astro’s second quarter net profit ended July 31 fell by 76% year-on-year (y-o-y) to RM23.65mil on the back of its revenue falling by 5.6% y-o-y to RM869.82mil. Basic earnings per share stood at 0.45 sen, versus 1.89 sen previously.

In the first six months to July 31, Astro posted a net profit of RM39.5mil on revenue of RM1.76bil.

TA Securities said Astro’s 1HFY24 core net profit of RM105mil missed the house’s and consensus full-year estimates at 37.0% and 33.1%, respectively.

Core net profit excludes RM65mil unrealised forex loss from mark-to-market revaluation of transponder-related lease liabilities.

“On our end, results were missed mainly due to higher-than-expected costs,” it said.

TA Securities has cut its FY24F/FY25F/FY26F earnings estimates by 26.0%/11.8%/7.8% upon raising costs to reflect actual 2Q24 results.

“Also, following Astro’s revised dividend policy, we have imputed a conservative dividend payout ratio assumption for FY24F to FY26F at 45% (previously 79% to 84%). Correspondingly, our revised DPS implies a dimmer forward yield of 3.5% to 4.1% (previously 5.8% to 8.3%),” it said.

Corresponding to its earnings downgrade, TA also lowered the target price for Astro to 50.5 sen previously 56 sen based on a WACC of 10.4% and LT growth rate of 0.5%.

“Given the stock’s unfavourable risk-reward potential, we downgrade our recommendation on Astro from buy to sell,” TA said.