Astro Malaysia Holdings saw a significant decline in its shares following the release of disappointing second-quarter earnings. The satellite-television provider’s stock plummeted by 6.9% to 0.48 ringgit on Tuesday morning, resulting in a 12-month loss of over 43%.
The decline in stock price is attributed to Astro Malaysia’s sharp drop in net profit for the three months ending July 31. The company’s net profit fell to MYR23.7 million ($5.1 million), a significant decrease from MYR98.5 million during the same period last year. Higher costs and unfavorable foreign-exchange losses were identified as the primary factors contributing to this profit decline.
As a result of lower subscription revenue and merchandise sales, Astro Malaysia also experienced a 5.6% decrease in revenue, amounting to MYR869.8 million.
Astro Malaysia announced a change in its dividend policy, leading to the company not declaring a quarterly dividend. Moving forward, the company will distribute yearly dividends starting from fiscal 2024. The decision to pay dividends will be based on overall business and earnings performance, capital commitments, financial conditions, distributable reserves, and other relevant factors.
The recent second-quarter results prompted TA Securities to downgrade Astro Malaysia’s stock from buy to sell due to unfavorable risk-reward potential. Wilson Loo, an analyst at TA Securities, noted that while management plans to stabilize the company’s pay-TV subscription revenue through transformation plans, challenging macroeconomic conditions may impede the near-term recovery of this revenue stream.
Additionally, Hong Leong Investment Bank revised down its earnings estimates for Astro Malaysia for fiscal years 2024-2026 by 19%, 12%, and 10% respectively. Syifaa’ Mahsuri Ismail, an analyst at Hong Leong Investment Bank, emphasized that although Astro Malaysia continues to provide high-value services, it may take some time before significant improvements are seen due to the uncertain economic outlook and its impact on the demand for these services.
Astro Malaysia remains committed to navigating these challenges and striving for improvement in the future.
