Stock Focus Astro falls after downgrade by RHB

Business & Markets 2014
Written by Jonathan Gan at theedgemalaysia.com
Thursday, 09 January 2014 15:43
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KUALA LUMPUR (Jan 9): Shares of Astro Malaysia (Astro) saw a 4 sen drop to
RM3.03 per share at mid-afternoon after a downgrade by RHB Research.
At 3:05pm today, Astro saw a 4 sen or 1.3% drop to RM3.03 per share, with
103,800 trades done.
RHB Research, in a note today, stated that it had downgraded the stock due to
its low earnings growth and low dividend yield.
“Astro’s high P/E – stacked against its low earnings growth and 2% dividend
yield – is a setback,” said the research house.
However, the research house expects the stock to benefit from the upcoming
football fever and see increased advertising expenditure (adex) and average
revenue per user (APRU)
“We maintain our earnings forecast but downgrade the stock to neutral due to the limited upside to our unchanged DCF based fair value of
RM3.36...We advocate that investors accumulate Media Prima given its more attractive valuation and dividend yield of more than 5-6%” it
said.
Jerry Lee, analyst with RHB Research, told theedgemalaysia that “there is limited upside to the stock and we’ll be keeping our neutral
rating for now”
Similarly, Kenanga Research has downgraded the media sector to “underweight”, citing the dampening effects of on-going subsidies
rationalisation plans.
But the research house maintains a “hold” call on ASTRO with a target price of RM3.10
“The current 4QCY13 seems to be an exception given that total gross adex only grew by 2.5% month-on-month in November. We believe
the slower growth was due to the lacklustre consumer sentiment affected by a series of subsidies rationalisation plans,” the research
house said.
A media analyst from Kenanga research told theedgemalaysia that “entertainment expenses will be one of the primary items that people
cut when subsidy rationalisation plans come in and we’ve adjusted our ratings accordingly to fit”