Satellite TV Provider’s Profits Soar, But Taxes Loom

  • Astro Malaysia Holdings shares rise after second-quarter net profit more than doubles
  • Net profit for Q2 reached 54.7 million ringgit compared to 23.7 million ringgit in the same period last year
  • Lower net financing costs due to favorable foreign exchange impact
  • Quarterly revenue fell 6% YoY to 787.3 million ringgit
  • No recurrence of UEFA Euro Cup and Summer Olympics content cost expected to lead to better earnings ahead
  • Additional tax bill of 734.88 million ringgit remains a headwind
  • Macroeconomic challenges and weaker customer sentiment may slow growth
  • Stronger ringgit benefits Astro as half of content costs are in foreign currencies
  • TA Securities upgrades rating to buy from sell on better risk-reward profile

Astro Malaysia Holdings shares surged early Tuesday after the satellite TV provider’s second-quarter net profit more than doubled. Shares rose as much as 7.5% in morning trade and were up 5.7% at 0.28 ringgit (equivalent to 7 U.S. cents), reducing year-to-date losses to 29%. The company reported a net profit of 54.7 million ringgit for the three months ended July 31, compared to 23.7 million ringgit in the same period last year, mainly driven by lower net financing costs due to a favorable foreign exchange impact. However, quarterly revenue fell 6% year-over-year (YoY) to 787.3 million ringgit. The non-recurrence of UEFA Euro Cup and Summer Olympics content cost is expected to lead to better earnings ahead, but the overhang from an additional tax bill of 734.88 million ringgit remains a headwind. Maybank Investment Bank analyst Yin Shao Yang said, ‘Until this matter is resolved, we remain cautious due to the sheer size of the additional tax assessments.’ Maybank raised Astro’s rating to hold from sell and trimmed the target price to 0.28 ringgit from 0.29 ringgit. Astro’s revenue and earnings are expected to rise in the second half of fiscal 2025, driven by new TV packages and improved advertising spending but macroeconomic challenges and weaker customer sentiment may slow growth. TA Securities analyst Lee Yun Leon added that a stronger ringgit versus the dollar will also benefit Astro as half of its content costs are in foreign currencies, but this impact will be seen after fiscal 2025 due to existing hedging measures. TA Securities has a 0.30 ringgit target price on Astro and upgraded its rating to buy from sell on a better risk-reward profile following its recent share price decline.

Factuality Level: 8
Factuality Justification: The article provides accurate and objective information about Astro Malaysia Holdings’ financial performance, including net profit, revenue, and analysts’ opinions on the company’s future prospects. It also includes relevant details about the impact of foreign exchange rates and tax issues. The article does not contain any digressions or irrelevant information, nor does it present personal perspectives as universally accepted truths.
Noise Level: 2
Noise Justification: The article provides relevant information about the company’s financial performance and analyst opinions, with no irrelevant or misleading content. It also includes specific numbers and data to support claims. However, it lacks a broader context or analysis of long-term trends or possibilities, and does not explore consequences for those affected by decisions or provide actionable insights.
Public Companies: Astro Malaysia Holdings (ASTRO)
Key People: Yin Shao Yang (Analyst at Maybank Investment Bank), Lee Yun Leon (Analyst at TA Securities)

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Financial Relevance: Yes
Financial Markets Impacted: Astro Malaysia Holdings shares
Financial Rating Justification: The article discusses the financial performance of Astro Malaysia Holdings, a satellite TV provider, and its impact on the company’s stock price. It also mentions analyst opinions on the company’s future earnings and tax issues that may affect the stock value.
Presence Of Extreme Event: No
Nature Of Extreme Event: No
Impact Rating Of The Extreme Event: No
Extreme Rating Justification: There is no extreme event mentioned in the article.
Move Size: The market move size mentioned in the article is 5.7%.
Sector: Technology
Direction: Up
Magnitude: Medium
Affected Instruments: Stocks

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