Astro Malaysia Holdings Bhd (Astro) struggled in 1QFY25, reporting disappointing results amidst ongoing challenges in its pay-TV segment, compounded by declining average revenue per user (ARPU) and reduced advertising expenditure. Kenanga Investment Bank (Kenanga) has lowered its earnings forecasts for FY25–26F by 37% and 29%, respectively, reflecting higher operational costs and weaker-than-expected financial performance.
Revenue for 1QFY25 contracted by 10% year-on-year, primarily due to a significant loss in subscribers and a decrease in advertising expenditure across its platforms. The company’s core net profit of RM25.0 million fell short of both Kenanga’s and consensus estimates, underscoring the impact of elevated fixed costs on profitability.
Despite efforts to mitigate costs through a voluntary separation scheme and CRM platform optimizations, Astro faces sustained pressure from competitive forces within the streaming and free-to-air TV markets. The company anticipates further challenges in cost rationalization amid an environment of escalating content acquisition costs exacerbated by currency depreciation against the USD.
Kenanga has adjusted its target price downward to RM0.25 from RM0.27, maintaining an UNDERPERFORM rating on Astro due to continued uncertainties in its operational strategy and market positioning. The revised valuation accounts for a less optimistic outlook on earnings growth and overall market competitiveness, signalling caution for potential investors considering Astro’s stock.
Investors are advised to assess Astro Malaysia Holdings Bhd carefully amidst its ongoing struggles in subscriber retention and revenue generation. With a target price set at RM0.25, reflecting a downside from current market levels, Kenanga’s assessment suggests limited upside potential in the near term. Continued execution risks and competitive pressures underscore the need for a cautious approach towards investing in Astro amid its evolving market dynamics.
