The counter touched 35 sen in early trade, down 1.5 sen or 4.1% from yesterday’s close of 36.5 sen.
This means its shares have plunged 53.6% from the year’s high of 75.5 sen hit on March 9, slashing about RM2 billion off its market capitalisation.
The stock pared some of its losses, edging up to 36 sen by the mid-day break, valuing the group at RM1.88 billion.
Astro posted a net loss of RM47.05 million for the third quarter ended Oct 31, 2023 (Q3 FY2024) from a net profit of RM5.8 million a year ago. This was attributed mainly to a voluntary separation scheme (VSS) exercise to reduce its headcount by 20% that cost the group RM52 million.
Revenue fell 10.54% to RM828.55 million from RM926.18 million a year earlier on lower contribution from the television segment, and as it exited the home-shopping business.
For the nine months ended Oct 31, 2023 (M9 FY2024), Astro recorded a net loss of RM7.51 million versus a net profit of RM204.29 million a year ago. Revenue for the period fell 5.62% to RM2.52 billion from RM2.67 billion last year.
No dividend was declared for the current quarter. Astro had revised its dividend policy in September to make yearly payouts from its consolidated profit after tax and non-controlling interests.
It had previously made dividend payments on a quarterly basis. This new dividend policy has apparently not been well received by investors and shareholders.
Research house downgrades
Astro’s latest set of poor results prompted the inevitable downgrades from research firms. Kenanga Investment Bank Bhd downgraded its call to “underperform” from “market perform” while Hong Leong Investment Bank Bhd (HLIB) downgraded its “hold” recommendation to “sell”.
AmInvest Research and TA Research also had sell calls while Public Investment Bank Bhd maintained its “neutral” call.
Kenanga lowered its target price (TP) to 33 sen a share from 56 sen while HLIB was equally bearish, slashing its TP to 31 sen from 50 sen previously.
Kenanga cut its earnings projections by 26% for FY2024 and 12% for FY2025 to reflect subscriber churn and higher overhead costs.
“Its M9 FY2024 core net profit of RM135 million came in at 49% of our full-year forecast, and 57% of the consensus estimate. The discrepancy was mainly due to weak TV subscription revenue and higher-than expected overheads,” it said.
It expects sustained earnings weakness against the gloomy backdrop of an erosion of pay TV’s market share on the back of strong competition from unauthorised TV boxes and over-the-top (OTT) streaming platforms.
“We expect this to translate to lower dividends in line with the group’s revised policy that aims to reinvest in the growth of adjacent businesses, while preserving liquidity,” Kenanga added.
Bleak prospects
Meanwhile, HLIB lowered its earnings forecasts by 45% for FY2024, 26% for FY2025, and 25% for FY2026.
“Astro has done much to turn the group around, acquiring many excellent streaming platforms, along with launching Astro Fibre, as well as addressable advertising.
“However, the continued soft economic outlook, coupled with intense competition from more affordable OTT offerings (Netflix, Disney+, and HBO Max) could continue to hamper demand for the group’s products,” it added.
TA Research cut its TP to 36 sen from 38.5 sen previously, and lowered its FY2024F, FY2025F, and FY2026F earnings estimates by 10.6%, 5.8%, and 0.7% respectively.
“We expect the impact in FY2025F/FY2026F to be cushioned by cost savings we factored in from the VSS exercise.
“In addition, we expect prevailing macroeconomic headwinds to dampen the near-term recovery of its key pay-TV subscription and advertising expenditure (adex) revenue streams,” it added, maintaining its sell call.
AmInvest Research cut its TP to 31 sen from 38 sen previously. “We believe that there is no catalyst for revenue growth while at the same time, operating costs are rising.
“The weaker-than-expected earnings stemmed from a lower subscription and adex revenue. Churn rate was also higher as Astro lost 2% of its TV customer base to 5.3 million. We have trimmed Astro’s FY2024F-FY2026F net profit by 24%-31% to account for all of these,” it added.