Maybank IB Research expects Astro’s quarterly earnings to be better on the absence of high content costs.
PETALING JAYA: An additional tax assessment of RM734.9mil could impair Astro Malaysia Holdings Bhd
’s ability to pay dividends, despite positive earnings expectations for the second half of its financial year 2025 (2H25), according to Maybank Investment Bank Research (Maybank IB Research).
The research house expects Astro’s quarterly earnings to be better on the absence of high content costs, which was incurred for the recent UEFA European Football Championship and Summer Olympics.
The research house, however, remained concerned about the additional tax assessment even after Astro submitted an appeal to the Inland Revenue Board in August and was granted an interim stay until November.
“Until the matter is resolved, we remain cautious due to the sheer size of the additional tax assessment,” the research house stated in a report on Astro following its recent second-quarter (2Q25) results announcement.
Maybank IB Research, however, upgraded the stock to a “hold” from “sell” with a target price of 28 sen a share from 29 sen.
This came after Astro’s results for 2Q25 ended July 31 beat expectations with a core net profit of RM26.7mil and a surprise 2% rise in TV-subscription revenue quarter-on-quarter after five consecutive quarters of decline.
Astro’s six-month (1H25) core net profit hit RM51.7mil, down 51% year-on-year and the company reviewed its dividend policy from a quarterly payout to an annual one.
CGS International Research (CGSI Research), however, said Astro’s core earnings for 2Q25 fell short of its expectations while cost-saving measures were taking longer than expected to filter through.
One positive factor was the average monthly revenue per user (Arpu) rising to RM99.80 in 2Q25, driven by active bundling and up-selling strategies, the research house said.
It added the media concern will be rolling out three new packages over the next few months with improved content offerings to cater to changing consumer preferences and to simplify package-choice considerations.
CGSI Research cut its financial year 2025 (FY25), FY26 and FY27 core net profit forecasts for the media company by 48%, 40%, and 21%, respectively, to factor in weaker advertising expenditure (adex) and higher operating expenditure and taxes, although this would be partially offset by the stronger ringgit.
“All of Astro’s revenues are denominated in the ringgit, while we estimate that about 35% of its total costs are in US dollars, comprising mainly a portion of its content costs, transponder leases and software-related expenses.
“As such, the company stands to benefit from the recent ringgit strength, albeit with a lag as it hedges the bulk of its US dollar-related costs on a 12-month rolling basis,” the research house said.
The research house retained its “add” call on Astro with a target price of 41 sen a share, noting that while headwinds persist given the downtrend in Astro’s Pay-TV subscriber base, its efforts to innovate and offer services with better value propositions and cost optimisation, is starting to bear fruit.
Hong Leong Investment Bank Research meanwhile retained its “sell” call on Astro with a lower TP of 22 sen a share, as it believes the company’s move to rejig its package offerings to attract subscribers would come at the expense of Arpu despite leading to an increase in customer acquisition.
“We view the outlook may still be hampered by softening adex and weakening subscription.
“Looking ahead, the structural substitution by consumers to other streaming services is expected to persist,” the research house stated.
