Astro hits rock bottom at 40 sen

 No News Is Bad News

Astro hits rock bottom at 40 sen

KUALA LUMPUR, Oct 5, 2023: Is it any surprise that Pay-TV operator Astro is biting the dust as far as dwindling subscribers and profits are concerned.

Decades of profiteering with wanton increases in subscription charges coupled with detriorating packages that only recycle programmes are finally taken its toll on the Ananda Krishnan-owned Astro Malaysia Holdings Bhd.

Astro is now worth only 40 sen in the Kuala Lumpur Stock Exchange (KLSE).

There is only that much that consumers will accept shoddy services - ask consumers why and they will tell you the same! It’s just not worthwhile continuing with paying high subscriptions for poor programmes.

Sorry Ananda! No sympathies from us. 

No News Is Bad News reproduces below a news report on Astro’s current “rock bottom” woe:

Ananda Krishnan’s Astro hits rock bottom, battered by setbacks

Pay-TV operator’s shares hit all-time low of 40 sen amid disappointing Q2 results, uncertain dividend prospects.

Sankita Jayanandan - 05 Oct 2023, 8:14am 

Astro announced on Monday it would cease operations of its home shopping business, Go Shop, a joint venture with Korean partner GS Retail Co Ltd.

PETALING JAYA: The proverb “it never rains but it pours” is probably an apt description of recent setbacks that have pummelled Astro Malaysia Holdings Bhd, the pay-TV operator controlled by reclusive tycoon Ananda Krishnan.

Its shares plummeted to an all-time low of 40 sen yesterday, driven by disappointing results for its second quarter ended July 31, 2023 (Q2 FY2024), a murky dividend outlook, and closure of its home shopping venture Go Shop.

Over the past 18 months, the media and entertainment holding company’s market capitalisation has seen a huge drop in tandem with its dwindling subscriber base.

Its share price has tumbled 61.17% from its peak of RM1.03 at the end of March last year, wiping some RM3.29 billion from its market capitalisation.

The group suffered a 75.98% plunge in its Q2 net profit to RM23.65 million from RM98.47 million the previous year, on the back of rising operating expenses and unfavourable foreign exchange losses.

Quarterly revenue dropped by 5.56% to RM869.82 million compared to RM921.12 million in the previous period, driven by reduced subscription revenue and merchandise sales.

Investors have voted with their feet, and analysts are also not impressed by Astro’s recent decision to alter its dividend policy.

In its latest quarterly earnings filing last week, Astro introduced an unexpected shift in its dividend policy. Instead of maintaining a fixed dividend payout ratio of 75% of profit after tax, amortisation and minority interest (Patami), it will now calculate its dividend payout ratio annually, based on consolidated Patami.

In response to the dividend policy change and earnings shortfall, analysts predicted its dividend per share (DPS) for FY2024 is anticipated to fall within the range of 1.8 sen to three sen.

“As Astro has been viewed as more of a dividend than growth stock, we believe that the DPS uncertainty will be viewed poorly,” said Maybank Investment in a recent note.

Astro’s DPS stood at 6.8 sen in FY2022 with a 13.2% yield but saw a drop to three sen and a 5.9% yield in FY2023.

Six out of 12 analysts advised investors to “sell” the shares, with the remaining suggesting to “hold” them.

A number of analysts have a pessimistic outlook on Astro, with KAF Equities Sdn Bhd setting the lowest target price (TP) at 35 sen, followed by AmInvestment Bank at 38 sen, while the median TP is 47 sen. MIDF is the most bullish with a “neutral” call and TP of 62 sen.

Kenanga Research, which has a TP of 56 sen, has warned that if the ringgit remains weak, Astro could face ongoing challenges with elevated content expenses, particularly for imported programmes.

No go for Go Shop

The negative news flow for Astro continued on Monday when it announced it would cease operations of its home shopping venture, Go Shop, effective Oct 11.

The move to shut down the business of Astro GS Shop Sdn Bhd (AGSS) after eight years was because of a “challenging overall economic landscape and the changes in consumer shopping behaviour”.

AGSS is a 60:40 joint venture between Astro’s wholly-owned subsidiary, Astro Retail Ventures Sdn Bhd, and Korean partner GS Retail Co Ltd.

Go Shop was launched in 2015 as Astro’s maiden foray into the e-commerce domain, enabling Malaysians to “shop anytime and anywhere”. The shopping platform was also operating in Singapore and Brunei.

Astro’s major shareholders include billionaire Ananda, who holds a 41.3% stake, and Khazanah Nasional Bhd with 20.7%. EPF ceased to be a significant shareholder as of January this year.

Astro managed to pare its losses at the close yesterday, down 2.5 sen or 5.68% at 42 sen, valuing the group at RM2.17 billion.