KUALA LUMPUR: Astro Malaysia Holdings Bhd's lower core net profit of RM244.4 million in the six months of the financial year 2023 (FY23) falls below Affin Hwang Capital's expectations.
The firm said this was due to weaker-than-expected profits from its pay-TV and home shopping divisions.
Affin Hwang said while there was an increase in Astro's broadband cost, marketing and distribution expenses, license, copyright and royalty fees and impairment of receivables during the period, this was partially mitigated by lower merchandise costs and content costs, as a percentage of revenue.
For the second quarter (Q2), Astro's revenue was lower by 4.3 per cent quarter-on-quarter (QoQ) to RM921.1 million due to a decline in advertisements, subscription revenue and merchandise sales.
Its pre-tax profit was relatively flat QoQ at RM127.2 million.
Higher pre-tax profit at the TV division was partially offset by lower profit seen at the radio division and losses remained at the home shopping division.
After excluding one-off items, Astro's Q2 FY23 core net profit was lower QoQ by 11.4 per cent to RM114.8 million.
Astro also announced a lower second interim dividend per share (DPS) of one sen, bringing the total six-month FY23 DPS to 2.25 sen.
Given the weaker-than-expected six-month results, Affin Hwang cut Astro's FY23-FY25 core earning per share (EPS) to account for lower contribution from the pay-TV and home shopping divisions.
"We are cautious on the economic outlook in the second half of FY23 given uncertainties amid the rising pressure of inflation, further interest rate hikes, strength of the US dollar and spillover from geopolitical events," it said.
Affin Hwang has maintained its "Hold" call on Astro, with a lower target price of 80 sen from RM1 previously.