KUALA LUMPUR: Declining demand, lower subscription revenues and sporting event deferments have become a stumbling block for Astro to gain traction in the coming years.
RHB in its research note today said it has cut future financial year (FY) core earnings forecast as year-on-year (yoy) earnings are expected to fall.
“We see FY12 core earnings falling another 11 per cent from deferred sports content (Olympics and Euro 2020). Our weighted average cost of capital assumption is raised to 9.8 per cent form nine per cent previously to factor in high-risk premium associated with the pandemic and the change in customer behaviour,” it said.
“The unprecedented impact brought about by the COVID-19 pandemic has resulted in an exceptionally weak Q1. However, we are of the view that earnings could see a gradual recovery for the coming quarters as the economy reopens following a period of lockdown,” it said.
The investment body is also expecting higher second-half earnings due to seasonality.
“We continue to favour the group for its rapid response in adapting to the new normal, on-going cost optimisation efforts and its ability to seize opportunities to create new revenue streams in its home-shopping, broadband, OTT and digital platforms,” it said.
Astro shares have been under pressure since yesterday after the results announcement and have continued their downward momentum, declining six sen to 92 sen as at 11.05 am with 11.17 million shares traded.