KUALA LUMPUR, 15 JULY: According to Maybank Investment Bank (Maybank IB) Research, the judgement by the Kuala Lumpur Intellectual Property High Court on May 24 that the sale of TV boxes containing pirated content is prohibited represents a potentially positive turning point for Astro. Maybank IB said in a note that for every RM100 million in TV subscription income recovered, the company will add RM51 million to its profitability expectations and 10 sen to its Astro target price (TP).
The research house maintained its “buy” call on the stock, raising its target price to RM1.36 from RM1.33.
Astro’s core net profit (CNP) forecasts for FY22, FY23, and FY24 have been raised by 10%, 4%, and 4%, respectively, due to lower-than-expected depreciation and amortisation.
Astro is expected to make RM419 million, RM503 million, and RM507 million in CNP in FY22, FY23, and FY24, according to Maybank IB.
“We estimate that the accretion to our core net profit estimates will be a whopping circa RM550 million and accretion to our DCF-based TP will be circa RM1.10 in the unlikely event that Astro recoups all, albeit unlikely, of the RM1.1 billion TV subscription revenue it lost over the last five years,” the research house stated.
Astro’s TV subscription income peaked at RM4.4 billion in FY16, but has since dropped by 26% to RM3.2 billion, according to Maybank IB “”Fortunately, effective cost cutting resulted in a lesser 20 percent drop in core net profit.” More Malaysians were buying TV boxes with pirated content while canceling their official Astro memberships, as a result of the aforementioned. E-commerce platforms such as Lazada and Shopee, as well as Facebook Marketplace, sell TV boxes containing pirated material openly “It was reported.
To summarize, the Intellectual Property High Court in Kuala Lumpur declared on May 24 that selling TV boxes containing pirated content is illegal.
Astro has approached e-commerce and social media sites to ask them to stop selling TV boxes with pirated content, particularly their own, according to Maybank IB.
“It is hoped that Malaysians who cancelled their Astro accounts in favor of TV boxes will re-subscribe to Astro once TV boxes become more difficult to come by,” it continued.
Astro’s stock was up one sen, or 0.88 percent, to RM1.14 at the time of writing./n
