HLIB cuts Astro forecasts after weak Q1 results, maintains 'sell' at 13 sen
HLIB said Astro continues to grapple with mounting structural challenges, particularly due to cord-cutting trends and intensifying competition from over-the-top platforms.
The firm noted that the recent launch of the rebranded "Astro One", which offers simplified and lower-priced bundles such as entertainment, sports, and epic packs starting at RM49.90, aims to improve affordability and value perception.
"While this initiative may support subscriber acquisition, it has also led to average revenue per user dilution, which declined to RM98," HLIB said.
HLIB highlighted that subscription revenue has historically contributed between 62 per cent and 77 per cent of group revenue.
"As such, although the new pricing strategy may be tactically sound, it introduces near-term pressure on top-line performance and profitability.
"Despite Astro's strong position in local content creation, advertising expenditure (adex) remains muted, and revenue headwinds continue to persist," it added.
HLIB has maintained a "sell" rating on Astro, with a target price of 13 sen.
The firm believes that Astro's earnings visibility remains clouded in light of persistent subscription decline with cord-cutting behaviour and softening adex.
For the first quarter ended April 30, 2025, Astro recorded core profit after tax and minority interest of RM700,000, which only made up one per cent of HLIB's and consensus full-year forecasts.
The negative deviation was due to lower revenue caused by a decline in advertising and subscription revenue.
Meanwhile, year-on-year top-line was down by nine per cent on the back of the reduction in subscription and advertising revenue.
Segment-wise, both TV and radio fell by eight per cent and 28 per cent respectively.
The contraction in TV was due to lower subscription and advertising revenue, while radio was impacted by soft consumer sentiment leading to lower advertising spend.
In view of the results shortfall, HLIB has cut its financial year 2025 (FY25) and FY26 forecasts by 51 per cent and 58 per cent respectively.
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