PUBLIC INVESTMENT

PublicInvest Research Company Update Thursday, November 07, 2019 KDN PP17686/03/2013(032117) ASTRO HOLDINGS BERHAD Outperform

DESCRIPTION iQIYI App To Capture New Subscribers A leading consumer media entertainment group, renowned as Malaysia’s sole satellite TV service provider, with pay-tv, Astro Malaysia (Astro) has launched its new online video application radio, publications and digital media broadcasting operations. (app) with -based online entertainment service producer iQIYI, marking the latter’s first app outside China. This is part of the strategic 12-month Target Price RM2.00 Current Price RM1.39 partnership sealed between Astro and iQIYI in June, where Astro has the Expected Return 44% exclusive rights to broadcast iQIYI content in Malaysia via TV, On Demand and Over-The-Top (OTT). The app will be offered free of charge Market Main Sector Media for a month before the Gold and Diamond packs are introduced with Bursa Code 6399 monthly subscriptions. All in all, we do not expect this partnership to Bloomberg Ticker ASTRO MK translate to higher earnings in the near term. Nevertheless, we remain Shariah-Compliant No positive in the long run as the partnership will help to expand Astro’s

offering of vernacular content in Malaysia as well as allowing locally- SHARE PRICE CHART produced content to penetrate the China market (as a start, three original

1.55 Astro shows will be made available on the iQIYI platform in China). Maintain Outperform with an unchanged earnings forecasts and DCF- 1.50 based TP of RM2.00. 1.45 § iQIYI, the leading video streaming provider in China. In June 1.40 2019, Astro announced a strategic partnership with iQIYI, the largest 1.35 video streaming service provider based in Beijing, China. Since July, iQIYI content has been made available to all Astro customers 1.30 through TV (channel 300) and Astro Go. In a short span of 9 years, 1.25 iQIYI has grown to become a leader in China with 600-700m active users, of which 100m are paid subscribers. Astro is iQIYI’s first 1.20 partner outside China. We believe the key attraction of Astro is its May-19 Jun-19 Jul-19 Aug-19 Sep-19 Oct-19 Nov-19 capability in offering multi-cultural and multi-lingual content, providing 52 Week Range (RM) 1.05-1.70 a ready market for iQIYI to grow outside China, as well as data 3-Month Average Vol (‘000) 2153.6 analytics. Meanwhile, Astro should benefit from technology transfer

SHARE PRICE PERFORMANCE (iQIYI is essentially a tech-based entertainment company that produces high-quality content and has introduced the trendy concept 1M 3M 6M of web drama to Astro) and more new content offering to its Absolute Returns -5.4 1.3 1.3 vernacular viewers. Also, with the availability of Bahasa Malaysia and Relative Returns -2.1 -2.7 3.0 Tamil subtitles, we believe it could well target the non-Mandarin speaking viewers.

KEY STOCK DATA § Minimal earnings impact. Nevertheless, we do not expect this partnership to make any significant contribution to earnings in the Market Capitalisation (RMm) 7,248.2 No. of Shares (m) 5,214.5 near term. The offering of iQIYI content on TV and On Demand comes with no extra charge while the app is only expected to garner 100,000 new subscribers initially, providing an additional revenue MAJOR SHAREHOLDERS stream estimated at less than RM1m.

% Pantai Cahaya Bulan Ventures 20.7 All Asia Media Equities 19.4 Employees Provident Fund 8.4 KEY FORECAST TABLE FYE Jan (RM m) 2018A 2019A 2020F 2021F 2022F CAGR

Revenue 5,530.8 5,479.0 5,485.8 5,513.1 5,548.6 0.1%

Pre-tax Profit 1,073.2 651.1 878.2 862.3 908.9 -4.1%

Net Profit 770.6 462.9 669.5 657.5 692.9 -2.6% Core Net Profit 678.0 462.9 669.5 657.5 692.9 0.5%

EPS (Sen) 14.8 8.9 12.8 12.6 13.3 -2.6%

P/E (x) 9.3 15.5 10.8 11.0 10.4

DPS (Sen) 12.5 9.0 10.3 10.1 10.6 Wong Ling Ling Dividend Yield 9.3 6.7 7.7 7.5 7.9 T 603 2268 3000 (%) F 603 2268 3014 Source: Company, PublicInvest Research estimates E [email protected]

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PUBLIC INVESTMENT BANK BERHAD

KEY FINANCIAL DATA

INCOME STATEMENT DATA FYE Jan (RM m) 2018A 2019A 2020F 2021F 2022F Revenue 5,530.8 5,479.1 5,485.8 5,513.1 5,548.6 Gross Profit 2,260.9 1,972.1 2,134.0 2,100.3 2,214.5 Operating expenses -1,141.2 -1,013.6 -1,040.3 -1,045.5 -1,137.5 Operating Profit 1,119.6 931.7 1,093.7 1,054.9 1,077.1 Net Finance Costs -65.3 -279.3 -226.4 -203.5 -179.1 Pre-tax Profit 1,073.2 651.1 878.2 862.3 908.9 Taxation -309.2 -190.3 -210.8 -207.0 -218.1 Effective Tax Rate 28.8% 29.2% 24.0% 24.0% 24.0% Net Profit 770.6 462.9 669.5 657.5 692.9 Core Net Profit 678.0 562.9 669.5 657.5 692.9

Growth Revenue -1% -1% 0% 0% 1% Gross Profit 5% -14% 10% -2% 5% Net Profit 24% -40% 45% -2% 5%

Source: Company, PublicInvest Research estimates

BALANCE SHEET DATA FYE Jan (RM m) 2018A 2019A 2020F 2021F 2022F Property, Plant & Equipment 2,400.8 2,233.1 2,045.5 1,835.8 1,612.0 Cash and Cash Equivalents 233.6 283.5 333.4 371.8 407.6 Receivables and prepayment 1,147.6 988.5 989.5 993.5 998.8 Other Assets 3,065.9 2,754.5 2,653.3 2,637.7 2,625.1 Total Assets 6,847.9 6,259.6 6,021.8 5,838.8 5,643.4

Payables 2,042.0 1,669.5 1,604.7 1,622.1 1,620.2 Borrowings 3,965.2 3,263.8 2,931.8 2,599.9 2,267.9 Deferred tax 96.1 116.2 116.2 116.2 116.2 Other Liabilities 91.1 624.9 649.9 649.9 649.9

Total Liabilities 6,194.4 5,674.3 5,302.6 4,988.1 4,654.2

Shareholders’ Equity 653.6 585.3 719.2 850.7 989.2

Total Equity and Liabilities 6,847.9 6,259.6 6,021.8 5,838.8 5,643.4

Source: Company, PublicInvest Research estimates

PER SHARE DATA & RATIOS

FYE Jan 2018A 2019A 2020F 2021F 2022F Book Value Per Share (RM) 0.13 0.11 0.14 0.16 0.19 EPS (Sen) 14.8 8.9 12.8 12.6 13.3

DPS (Sen) 12.5 9.0 10.3 10.1 10.6 Payout Ratio (%) 84.6 80.0 80.0 80.0 80.0 ROA (%) 11.3 7.4 11.1 11.3 12.3 ROE (%) 117.9 79.1 93.1 77.3 70.0

Source: Company, PublicInvest Research estimates

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PUBLIC INVESTMENT BANK BERHAD

RATING CLASSIFICATION

STOCKS

OUTPERFORM The stock return is expected to exceed a relevant benchmark’s total of 10% or higher over the next 12months.

NEUTRAL The stock return is expected to be within +/- 10% of a relevant benchmark’s return over the next 12 months.

UNDERPERFORM The stock return is expected to be below a relevant benchmark’s return by -10% over the next 12 months.

TRADING BUY The stock return is expected to exceed a relevant benchmark’s return by 5% or higher over the next 3 months but the underlying fundamentals are not strong enough to warrant an Outperform call.

TRADING SELL The stock return is expected to be below a relevant benchmark’s return by -5% or more over the next 3 months.

NOT RATED The stock is not within regular research coverage.

SECTOR

OVERWEIGHT The sector is expected to outperform a relevant benchmark over the next 12 months.

NEUTRAL The sector is expected to perform in line with a relevant benchmark over the next 12 months.

UNDERWEIGHT The sector is expected to underperform a relevant benchmark over the next 12 months.

DISCLAIMER

This document has been prepared solely for information and private circulation only. It is for distribution under such circumstances as may be permitted by applicable law. The information contained herein is prepared from data and sources believed to be reliable at the time of issue of this document. The views/opinions expressed herein are subject to change without notice and solely reflects the personal views of the analyst(s) acting in his/her capacity as employee of Public Investment Bank Berhad (“PIVB”). PIVB does not make any guarantee, representations or warranty neither expressed or implied nor accepts any responsibility or liability as to its fairness liability adequacy, completeness or correctness of any such information and opinion contained herein. No reliance upon such statement or usage by the addressee/anyone shall give rise to any claim/liability for loss of damage against PIVB, Public Bank Berhad, its affiliates and related companies, directors, officers, connected persons/employees, associates or agents.

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