Astro Malaysia Holdings Berhad

Relisted on Bursa Malaysia on October 2012, Astro Malaysia Holdings Bhd (6399.KL) is currently the largest direct-to-home (DTH) satellite Pay-TV provider. Astro is also one of the largest radio broadcasting service provider in Malaysia. The company also produces and distribute many of its own television programs, magazines.

STOCK INFORMATION

TICKER SYMBOL: 6399.KL
MARKET CAP: RM14.0 Billion (Updated 16 April 2017)
INDUSTRY: Service

THE BUSINESS

Astro Malaysia Holdings Berhad segments its business into four main categories; Pay-TV, radio, publications and digital media. The company is the market leader in the Pay-TV segment in Malaysia, penetrating about 60% of all Malaysian TV households.

The company has been expanding into supplementary digital services for its radio and Pay-TV segment. Astro provides services like Astro on the Go for digital access to its Pay-TV programs.

The company focused on creating subscription and advertising business model for its businesses.

KEY OPPORTUNITIES

  1. The Need for more Content

With easier access to entertainment such as music and video program, there is a need for more content in the production business. Astro, being one of the largest production house in the country, stands to be well positioned to feed that content demand to the public.

  1. Growing economy of Malaysia

Malaysia is still one of the fastest growing countries in the region. Combining that with a young population and a relatively low GDP per capita, the demand for entertainment will increase once the population becomes wealthier. Advertising budgets from its corporate clients should increase as well with a growing economy.

  1. Digital Growth

The company is creating more online platforms to suit the changing demographics. The company digital platforms such as Astro on Demand and Astro on the Go are seeing higher engagement. More importantly, with digital platforms, the company can gain access to audiences outside of Malaysia.

 

KEY RISKS

  1. Digital Threat

The digital transformation of content consumption is both an opportunity and a risk. The risk being as more and more people are accessing content through the internet, the need for viewing it from a local provider diminish. Just as Astro is able to attract new digital audiences outside of Malaysia, foreign companies can also gain access to Malaysian viewers from their online platform. The choices available for the consumers increase dramatically and the competition for the attention of audience will be much greater for Astro in the future.

  1. The Decline of Pay-TV and Radio

As viewers have more options for entertainment in the future due to the availability of the internet, the demand for Pay-TV and radio might drop significantly in the future. After all, why would one pay for content when you can get it for free or cheaper over the internet? Likewise, if you can stream your favourite music over the internet without commercial interruptions, would you still see the need to listen to the radio? As newer vehicles are launched with wifi connectivity, the broadcasting business might need to transform itself as well.

TOP SHAREHOLDER (As at 31 Dec 2016)

  1. Ananda Krishnan Tatparanandam: 45.54%
  2. Khazanah Nasional Berhad:             23.01%
  3. Employee Provident Fund:         7.7%

Financial Statement

Income Statement – Click here

Balance Sheet – Click here

We look at the company based on the concept of value investing. To learn more about it, click here.

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The information provided is for general information purposes only and is not intended to be any investment or financial advice. All views and opinions articulated in the article were expressed in Stanley Lim’s personal capacity and do not in any way represent those of his employer and other related entities. Stanley Lim does not own any companies mentioned.

Stanley Lim, CFA

Stanley Lim has spent the last decade in the investment industry. Over the course of his career, he has kick-started a few businesses, worked in the family office industry and most recently in the investment advisory industry. He has been a writer and analyst for The Motley Fool Singapore from 2013 to 2017. He has written close to 2000 articles online, on investment education and market analysis. He is the co-writer for the upcoming investment book: “Value Investing In Asia”, scheduled to be published late 2017. Stanley is currently the chief editor of Value Invest Asia.

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