KUALA LUMPUR, Dec 10 ― Prospects for Astro Malaysia Holdings Bhd are expected to be brighter as the company is hopeful its new subscription packages revealed on November 9 would drive its average revenue per user (ARPU).

RHB Investment Bank Bhd (RHBIB) said Astro has thus far invested RM300 million to improve customer experience via technology upgrades, with a similar amount to be spent in 2022.

"We see good avenues for deeper household engagement via the upselling of its fibre broadband-content bundle under the wholesale pact with Telekom Malaysia,” it said in a research note today.

The investment bank said Astro’s third quarter (Q3) and nine-month (9M) numbers for its financial year 2022 ending Jan 31, 2022 (FY22) numbers were broadly in line with its expectations but trailed consensus.

"We expect a better Q4 FY22 from the economic reopening and rebound in advertising expenditure (adex).

"The addition of more streaming services in the medium term should further bolster content proposition and draw in cord nevers (someone who never had such a subscription),” it said, while maintaining a 'Buy' rating for the stock.

Its new target price (TP) for Astro is however set lower at RM1.30 per share from RM1.45 previously with key risks include earnings miss, weaker ringgit/US dollar exchange and piracy.

Meanwhile, MIDF Research also continued to maintain a 'Buy' recommendation on Astro as it is sanguine on the recent developments in the group, including its partnership with Netflix and plans to become an Internet service provider which it believed will bode well for ARPU.

MIDF Research has an unchanged TP for the company RM1.18 per share.

AmBank Research shares similar views on Astro keeping its 'Buy' call with a lower fair value of RM1.33 per share from RM1.79 previously, which includes a three per cent premium for the research firm's four-star environmental, social and governance (ESG) rating.

It said the company declared a Q3 FY22 dividend per share (DPS) of 1.5 sen, which translates to 9M FY22 dividend of 4.5 sen (+13 per cent year-on-year) and a payout ratio of 70 per cent.

Year-on-year, the group’s 9M FY22 core net profit dropped nine per cent from weaker television (TV) earnings and halving of home shopping pre-tax margin.

"We are cautiously optimistic on Astro's earnings momentum as the home shopping segment, currently loss-making, could continue to drag the overall performance.

"On a positive note, we expect a strong Q4 FY22 rebound, similar to Q1 FY22 earnings from an adex recovery, underpinned by the relaxation of movement restrictions for fully vaccinated individuals,” it said.

As at 12.30pm, Astro share price was flat at 96.5 sen with 1.16 million shares transacted. ― Bernama