PP 7767/09/2010(025354)

Malaysia Corporate Highlights

RHB Research
Institute Sdn Bhd
A member of the
RHB Banking Group
Company No: 233327 -M

R e su l ts / B ri e f i ng N o t e
31 March 2010
MARKET DATELINE

Astro Share Price

Fair Value
:
:
RM4.26
RM4.30
Results In Line But Dividend Surprises On The Upside Recom : Market Perform
(Maintained)

Table 1 : Investment Statistics (ASTRO; Code: 5076) Bloomberg: ASTR MK

Net Core EPS Net
FYE Turnover Profit EPS EPS# Growth# PER# C.EPS* P/NTA Gearing ROE NDY
Jan (RMm) (RMm) (sen) (sen) (%) (x) (sen) (x) (x) (%) (%)
2009 2,971.5 (529.2) (27.4) (23.0) nm nm - 23.0 net cash (36.8) 2.3
2010 3,258.3 233.0 12.0 10.0 nm 42.7 - 17.8 0.5 22.8 2.9
2011f 3,535.8 142.3 7.4 7.4 -26.3 57.9 11.7 20.3 1.0 16.9 2.5
2012f 3,811.7 224.5 11.6 11.6 57.7 36.7 17.4 17.4 1.0 28.0 2.6
Main Market Listing / Non-Trustee Stock / Not Syariah-Approved Stock By The SC # Ex-EI * Consensus Based On IBES Estimates

♦ 4Q core profit down 26.5% qoq. Excluding unrealised forex gains and a RHBRI Vs. Consensus
reorganisation exercise charge of RM25.3m for the Library, Licensing and Above
Distribution segment, Astro’s 4Q core net profit of RM58.5m (-26.5% qoq) In Line
was within our but below consensus expectations with FY10 core net profit Below
of RM193m accounting for 104% of our and 89% of consensus full-year
estimates respectively. Issued Capital (m shares) 1,934.4
Market Cap (RMm) 8,240.4
♦ Operating statistics – largely stable qoq. 4Q revenue was up Daily Trading Vol (m shs) 2.2
marginally qoq but operating profit fell 31% qoq largely due to a 52wk Price Range (RM) 2.16 – 4.26
combination of the reorganisation charge mentioned above as well as Major Shareholders: (%)
higher depreciation expense and lumpy legal expenses. 4Q gross adds was Khazanah Nasional 21.4
down slightly to 131k (3QFY10: 155k) while there was a sharper qoq drop All Asia Media Equities 20.1
in net adds to 55k (3Q: 94k) due to higher churn. 4Q ARPU was down East Asia Broadcast 8.6
1.6% qoq to RM84.10 as a result of the lower incoming ARPU but content
cost (as a % of revenue) was surprisingly stable at 32.8% (in the past FYE Jan FY11 FY12
three years, content cost tends to trend back up in 4Q). EPS chg (%) - -
Var to Cons (%) (37.2) (33.5)
♦ Dividend. Astro declared a 4th interim tax exempt DPS of 5 sen (4QFY09:
final DPS of 2.5 sen, net), which was above our expected TE DPS of 2.5 Share Price Chart
sen. This amount also represents the maximum DPS that shareholders can
receive without affecting the privatisation offer price of RM4.30/share
(distribution in excess of the 5 sen would result in an equivalent amount
being deducted from the offer price). YTD tax exempt DPS was 12.5 sen
(FY09: 10 sen, net), which translates to a net yield of 2.9%.

♦ Teleconference highlights. Given the privatisation offer, the

teleconference was largely a muted affair. Management guided for FY11
net adds of 250-300k while ARPUs are expected to stay at current levels
with lower incoming ARPUs cushioned by the uplift from Astro B.yond fees Relative Performance To FBM KLCI
(take-up todate around 50k). Margins, however, would be impacted by the
higher content cost. Our assumptions (see Table 5) are broadly in line with Astro
management’s guidance. As for Astro’s investment plans, around RM1-
1.2bn would go towards the domestic business over the next three years
while another RM1-1.5bn has been budgeted for regional investments. FBM KLCI

♦ Risks. The key risk, in our view, is if the privatisation offer fails to go
through.

♦ Forecasts. No change to our earnings forecasts.

♦ Investment case. We have retained our indicative fair value of RM4.30, David Chong, CFA
which is based on Astro Holdings’ offer price to privatise Astro. Given the (603) 9280 2186
limited upside potential to our fair value, we are maintaining our Market david.chong@rhb.com.my
Perform recommendation on the stock.

RHB Investment Bank has been appointed as advisers to Astro All Asia Networks plc.
Please read important disclosures at the end of this report.

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 31 March 2010

Table 2 : Results Review

QoQ YoY YoY
FYE Jan (RMm) 4Q09 3Q10 4Q10 (%) (%) FY09 FY10 (%) Comments
Revenue 774.6 863.5 879.2 1.8 13.5 2,971.5 3,258.3 9.7 Higher yoy mainly due to higher
subscription revenue following the
growth in customer base and sports
package price hike.

EBITDA 178.0 258.5 213.4 (17.4) 19.9 669.1 808.1 20.8 Stronger yoy revenue filtered down to
EBITDA. Content cost averaged around
32.8% of revenue in 3QFY10 (vs.
3QFY10: 32.7% and 4QFY09: 35.2%).

Depn & amort (38.9) (46.4) (55.4) 19.4 42.4 (142.9) (190.7) 33.4
Costs of cessation (46.2) 0.2 (11.8) >100 (74.5) (687.4) (22.7) (96.7) FY10 costs mainly relates to legal fees.
of DTH business in
Indonesia and to
provide services
to PTDV
previously

EBIT 92.9 212.3 146.2 (31.1) 57.4 (161.2) 594.7 >100

Net interest exp (18.5) (45.6) (26.3) (42.3) 42.2 (47.2) (126.3) >100 Higher yoy due to higher borrowings for
investment in SDTV as well as finance
lease. Total debt (including finance
lease) as at end-4QFY10 was RM1.69bn
(3QFY10: RM1.65bn; 4QFY09:
RM1.53bn).
Unrealised forex (20.5) 53.5 4.4 (91.8) >100 (83.8) 65.3 >100
gains/(loss)
Associates (34.1) (24.5) (24.3) (0.8) (28.7) (80.1) (102.8) 28.3 Losses largely relate to SDTV.

Pre-tax profit 19.8 195.7 100.0 (48.9) >100 (372.3) 430.9 >100
Tax (48.7) (62.6) (62.4) (0.3) 28.1 (158.2) (197.9) 25.1
Minority interest 0.0 0.0 0.0 nm nm 1.3 0.0 (100.0)
Net profit (28.9) 133.1 37.6 (71.8) >100 (529.2) 233.0 >100
Core net profit (8.4) 79.6 58.5 (26.5) >100 (445.4) 193.0 >100 Net profit ex-unrealised forex
gains/losses and reorganisation charge
(for 4QFY10 and FY10).

Margins (%)
EBITDA 23.0 29.9 24.3 22.5 24.8
EBIT 12.0 24.6 16.6 (5.4) 18.3
Pre-tax 2.6 22.7 11.4 (12.5) 13.2
Effective tax rate 246.0 32.0 62.4 (42.5) 45.9 Above statutory tax rate as losses for
foreign operations and certain
Malaysian subsidiaries were not
available for tax relief and non-
deductibility of certain expenses for tax
purposes.
Net profit (3.7) 15.4 4.3 (17.8) 7.2
Core net profit (1.1) 9.2 6.7 (15.0) 5.9
Source: Company, RHBRI

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Table 3: Key Operating Statistics

QoQ YoY
FYE Jan (RMm) 4Q09 3Q10 4Q10 (%) (%) Comments
Gross additions 147 155 131 (15.5) (10.9) Continued growth as Astro continues to make in-roads into the Malay
segment and suburban areas.
Net additions 81 94 55 (41.5) (32.1) 4Q impacted by slight uptick in churn rate.
No. of customers 2,646 2,875 2,930 1.9 10.7 Household penetration reached 49% as at end-Jan ‘09.
Churn (%) 9.7 11.3 11.4 na na
ARPU (RM) 80.3 85.5 84.1 (1.6) 4.7 3QFY10 ARPU lifted by sports package price hike.
SAC/unit (RM) 710.0 717.0 678.0 (5.4) (4.5)
Content cost (% 35.2 32.7 32.8 na na
of rev)

Table 4 : Earnings Forecasts Table 5 : Forecast Assumptions

FYE Jan (RMm) FY09a FY10a FY11F FY12F FYE Jan FY11F FY12F

Turnover 2,971.5 3,258.3 3,535.8 3,811.7 Subscribers ('000) 3,129 3,348

Turnover growth (%) 14.2 9.7 8.5 7.8 Net adds ('000) 232 219
ARPU (RM) 84.0 84.8
EBITDA (18.2) 778.9 698.8 827.2 Content cost (% of rev) 39.0 37.0
EBITDA margin (%) (0.6) 23.9 19.8 21.7

Depn & amort (143.1) (184.2) (206.2) (225.1)

EBIT (161.2) 594.7 492.6 602.1

EBIT margin (%) (5.4) 18.3 13.9 15.8
Net interest expense (131.0) (61.0) (63.8) (61.3)
Associates (80.1) (102.8) (115.0) (100.0)
EI - - - -

Pretax Profit (372.4) 430.9 313.8 440.8

Tax (158.1) (197.9) (171.5) (216.3)
Minorities 1.3 0.0 0.0 0.0
Net Profit (529.2) 233.0 142.3 224.5
Source: Company data, RHBRI estimates

IMPORTANT DISCLOSURES

This report has been prepared by RHB Research Institute Sdn Bhd (RHBRI) and is for private circulation only to clients of RHBRI and RHB Investment Bank
(previously known as RHB Sakura Merchant Bankers). It is for distribution only under such circumstances as may be permitted by applicable law. The opinions and
information contained herein are based on generally available data believed to be reliable and are subject to change without notice, and may differ or be contrary to
opinions expressed by other business units within the RHB Group as a result of using different assumptions and criteria. This report is not to be construed as an
offer, invitation or solicitation to buy or sell the securities covered herein. RHBRI does not warrant the accuracy of anything stated herein in any manner whatsoever
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have an interest in the securities mentioned by this report.

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persons who receive it. The securities discussed in this report may not be suitable for all investors. RHBRI recommends that investors independently evaluate
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may at any time hold positions, and may trade or otherwise effect transactions, for its own account or the accounts of customers, in debt or equity securities or loans
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services from the companies in which the securities have been discussed/covered by RHBRI in this report or in RHBRI’s previous reports.

This report has been prepared by the research personnel of RHBRI. Facts and views presented in this report have not been reviewed by, and may not reflect
information known to, professionals in other business areas of the “Connected Persons,” including investment banking personnel.

The research analysts, economists or research associates principally responsible for the preparation of this research report have received compensation based upon
various factors, including quality of research, investor client feedback, stock picking, competitive factors and firm revenues.

The recommendation framework for stocks and sectors are as follows : -

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Stock Ratings

Outperform = The stock return is expected to exceed the FBM KLCI benchmark by greater than five percentage points over the next 6-12 months.

Trading Buy = Short-term positive development on the stock that could lead to a re-rating in the share price and translate into an absolute return of 15% or more
over a period of three months, but fundamentals are not strong enough to warrant an Outperform call. It is generally for investors who are willing to take on higher
risks.

Market Perform = The stock return is expected to be in line with the FBM KLCI benchmark (+/- five percentage points) over the next 6-12 months.

Underperform = The stock return is expected to underperform the FBM KLCI benchmark by more than five percentage points over the next 6-12 months.

Industry/Sector Ratings

Overweight = Industry expected to outperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Neutral = Industry expected to perform in line with the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

Underweight = Industry expected to underperform the FBM KLCI benchmark, weighted by market capitalisation, over the next 6-12 months.

RHBRI is a participant of the CMDF-Bursa Research Scheme and will receive compensation for the participation. Additional information on recommended securities,
subject to the duties of confidentiality, will be made available upon request.

This report may not be reproduced or redistributed, in whole or in part, without the written permission of RHBRI and RHBRI accepts no liability whatsoever for the
actions of third parties in this respect.

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