Analysts raise Astro to ‘Buy’

Astro has been the weakest of the major IPOs in Malaysia this year. — Reuters picAstro has been the weakest of the major IPOs in Malaysia this year. — Reuters picKUALA LUMPUR, Nov 29 ― Maybank IB Research, CIMB, UBS, Credit Suisse, Goldman Sachs and Citi are recommending a “Buy” rating of between RM3.00 and RM3.70 for Astro shares that have been languishing at some 11.7 per cent below its market debut price.

The satellite television operator’s shares fell to a 52-week low of RM2.59 on November 12, but rallied after it won broadcasting rights for the next three seasons of the popular English Premier League (EPL).

It was trading at RM2.80 at 2.45pm today.

“We believe Astro is a potential beneficiary of Malaysia’s attractive demographics: a young and growing population, whereby a growing economy is driving income growth,” Credit Suisse said in its equity research report this week, giving Malaysia’s sole satellite TV broadcaster an “Outperform” call.

It noted that noted that Malay households account for 60 per cent of Astro’s subscribers, and have the highest income growth within the Malaysian population.

“We believe that advertisers will seek to advertise more on Astro’s Malay channels,” Maybank IB said.

The brokerages reported that the country’s largely young population is urbanising rapidly with a huge appetite to spend even as their income grows.

“This should enable the company to provide a broader content offering and value-added services to capture new subscribers and increase ARPU growth,” UBS Investment Research ssaid, referring to the average revenue per user.

Astro shares fell to an all-time low of RM2.59 on Monday but rallied to RM2.67 at noon today, as news of the rights win circulated.

Astro has been the weakest of the major initial public offerings in Kuala Lumpur this year despite securing 22 cornerstone investors, including US hedge fund Och-Ziff Capital Management.

The weakness in the share price could also be due to a change in rules also allowed the cornerstone investors to exit Malaysia’s largest pay-TV operator without a lock-up period.


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