Astro closes above IPO price

Business & Markets 2013
Written by Kamarul Anwar of theedgemalaysia.com
Wednesday, 08 May 2013 10:27
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KUALA LUMPUR: Astro Malaysia Holdings Bhd shares closed a sen
higher at RM3.04 yesterday, after charting an eight sen or 2.7% gain at
RM3.03 on Monday, riding a post election rally.
This was the stock’s second highest closing since the pay TV operator
was listed last October at an IPO price of RM3.
While many research houses had set their target prices on Astro above
RM3, the counter has rarely breached that level. Its highest close
hitherto was RM3.05 on Jan 9 this year.
According to an Alliance Research note on Monday, Astro was trading
169% higher than the media industry’s average price-earnings ratio
(PER) of 21.7 times and offers a net dividend yield of only 1.4%,
approximately half of what fixed deposits offer.
However, the pay TV operator’s shares were consistently at the top active ranking with 32.38 million shares done on Monday
and 16.69 million yesterday.
An analyst told The Edge Financial Daily it was foreign funds that catapulted Astro to among the top actives, as the group is
seen to be on safer ground with Barisan
Nasional (BN) continuing to govern the country.
“[Astro] has the monopoly power [in the pay TV medium] and with BN’s victory, there is a possibility it could renew its licence,”
said another analyst.
Astro holds an exclusive direct-to-home licence until 2017. Until then, no other company can provide satellite TV services in
Malaysia. TELEKOM MALAYSIA BHD []’s Hypp.TV service runs via the Internet protocol TV (IPTV) format.
The local bourse has performed well after BN declared it had clinched a majority of parliamentary seats.
Interpacific Securities head of research Pong Teng Siew told The Edge Financial Daily that the stock market’s surge was a
relief rally. Big-cap stocks, which had been quiet for some time, saw a knee-jerk reaction to BN’s victory.
“The resumption of BN’s governance removes the uncertainty brought by the election,” he said.
However, with such a big gain in a short span of time, Pong said the market could succumb to profit taking in the near term.
Astro’s already pricey valuations among its peers could deter further interest in the stock.
When asked which media counter would appeal to investors, the analyst responded, “STAR PUBLICATIONS (M) BHD [] has
really good dividends.”
Alliance’s note lists Star to offer a 7.6% net dividend yield for this calendar year, followed by MEDIA PRIMA BHD [] at 5.5%.
MEDIA CHINESE INTERNATIONAL LT []d (MCIL), meanwhile, has a net dividend yield of 3.7% for the same period.
In terms of PER for this calendar year, Star is trading at the lowest among the media sector at 10.1 times. MCIL comes in
second at 10.8 times, closely followed by Media
Prima’s 10.9 times. Astro’s PER came in much higher than the rest, at 36.8 times.
However, Kenanga Investment Bank Bhd is positive on Astro’s earnings growth after the pay TV giant launched its new IPTV
service with Maxis Bhd.
In a note last Thursday, the research house upgraded Astro to an “outperform” and increased its target price to RM3.38 from
RM3.10.
“We are sanguine on this collaboration as it has bundles of win-win benefits for subscribers and synergistic benefits for Astro
and Maxis,” said Kenanga in the note.