TA Research highlighted the macroeconomic headwinds and subdued customer sentiment weighing on Astro’s growth and transformation efforts.
PETALING JAYA: Astro Malaysia Holdings Bhd
’s medium-term prospects remain lacklustre, as the group continues to navigate macroeconomic headwinds and shifting consumer behaviours.
Citing ongoing difficulties in subscription and advertising revenue, analysts who spoke to StarBiz painted a mixed picture of the pay-TV operator and slashed their target prices for Astro’s shares, reflecting concerns about its ability to sustain growth in an increasingly competitive market.
In a report, TA Research highlighted the macroeconomic headwinds and subdued customer sentiment weighing on Astro’s growth and transformation efforts.
The research house cut its earnings forecasts for Astro by 28% for its financial year ending Jan 31, 2025 (FY25) and 3% for FY26 and FY27, reflecting the weaker-than-anticipated third-quarter (3Q) results for FY25.
“Additionally, we have revised our average revenue per user (Arpu) assumptions for FY25 to FY27 downward by 0.5% to 1.5% to align with Astro’s strategy, which focuses on expanding its customer base through more affordable packages, consequently diluting Arpu,” TA Research said.
Correspondingly, the research house cut its target price for Astro slightly to 28 sen, while maintaining its “buy” call on the counter.
TA Research noted Astro One – three streamlined TV packages targeted at different audience segments, including entry-level viewers, sports enthusiasts, and all-access users – could potentially serve as a key catalyst for future earnings growth, driven by its targeted approach to attracting new customer segments.
“We anticipate higher revenue and earnings from these new packages, with advertising expenditure (Adex) expected to remain stable, potentially trending upward next year as the impact of boycotts diminishes, encouraging higher advertising spending,” it stated.
TA Research also highlighted potential benefits from the recent appreciation of the ringgit, as approximately half of Astro’s content costs were denominated in foreign currencies, primarily the US dollar.
However, it cautioned that the impact would likely be minimal in the second half of FY25 due to hedging and locked-in pricing, with noticeable benefits only expected beyond FY25.
Meanwhile, Hong Leong Investment Bank Research (HLIB Research) downgraded its target price for Astro to 20 sen from 22 sen and maintaineda “sell” rating. It cited weak earnings visibility due to cord-cutting behaviour and softening Adex trends, stating: “Despite Astro’s expertise in producing local content, its outlook remains clouded by softening Adex trends and weakening subscription revenue.”
HLIB Research pointed to declining subscription and advertising revenue as key concerns, which overshadowed the group’s efforts to boost customer acquisition through its rebranded Astro One packages.
The simplified packages, priced as low as RM49.90, were seen as a move to compete with streaming services.
“These new offerings aim to streamline customer choices and enhance value for Malaysian households, potentially boosting customer acquisition,” it stated.
However, the lower Arpu, which fell to RM99.20, underscored the trade-off between growing customer volumes and maintaining profitability, the research house added.
Maybank Investment Bank Research (Maybank IB Research) painted a similarly bleak outlook, highlighting the underperformance of Astro’s 3Q and nine-month (9M) results for FY25 due to lower-than-expected margins.
The research house also cut its FY25, FY26, and FY27 earnings forecasts by 26%, 52%, and 55%, respectively. It slashed its discounted cash flow-based target price for Astro to 10 sen from 28 sen and downgraded its call for the counter to “sell” from “hold”.
“We understand Astro’s desire to cut the price of its new TV packages to regain subscribers. While it did state that pay-TV gross additions are improving, it remains to be seen how many will return to Astro given the prevalence of illegal streaming via Android TV boxes,” the research house said.
Maybank IB Research also flagged Astro’s unresolved RM734.9mil tax case as a lingering risk to its financial position.
Astro swung back into profitability with a net profit of RM46.9mil in 3Q25, compared with a net loss of RM47.1mil in the same quarter last year.
The improvement was attributed to lower net financing costs, driven by favourable unrealised forex rates from unhedged lease liabilities, and lower amortisation of intangible assets.
Revenue, however, declined to RM749.7mil from RM828.6mil, reflecting weaker subscription and advertising contributions.
For 9M25, Astro reported a net profit of RM118.7mil, reversing a net loss of RM7.5mil in the previous year, on the back of RM2.31bil in revenue, which was lower than the RM2.52bil recorded last year.
