Highlights

Astro Holdings - Launching of Sooka

Date: 09/06/2021

Source  :  HLG
Stock  :  ASTRO       Price Target  :  1.25      |      Price Call  :  BUY
        Last Price  :  1.13      |      Upside/Downside  :  +0.12 (10.62%)
 


Astro launched its own streaming service named sooka on 8 June 2021, which offers both free and paid content. We view this development positively as sooka will help Astro to penetrate in to a market segment that it currently underserves, i.e. young millennials who are not currently subscribed to Astro and prefer instead to stream and consume their content online through mobile platforms. Maintain BUY with a higher DCF-based TP of RM1.25 (WACC: 7.5%, TG: 0%) from RM1.11. We raised our terminal growth rate from -1% to 0% as we anticipate the longer term decline in its traditional pay-TV revenue will be cushioned by the growing segment of its streaming services partnership and offerings as well as from the growing home shopping segment. We continue to like Astro as we view positively its proactive efforts in adapting to the changing landscape in the media sector as well as its attractive dividend yield at 6.4%.

NEWSBREAK

The Edge reported that Astro launched its own streaming service named sooka on 8 June 2021, which offers both free and paid content. Astro said sooka focuses on aggregating and curating content such as live global sports action, Malaysian dramas and entertainment programs, and sooka exclusives and originals that resonates with millennials on a mobile-based streaming platform.

HLIB’s VIEW

Penetrating in to the underserved market segment. We view this development positively as sooka will help Astro to penetrate in to a market segment that it currently underserves, i.e. young millennials who are not currently subscribed to Astro and prefer instead to stream and consume their content online through mobile platforms. Sooka offers a low entry price to its users with no commitment period via three options, i.e. free viewing option with advertisements, RM15.90 per month subscription for VIP Entertainment plan and RM41.90 per month subscription for VIP+Sports plan. These low cost options are suitable for young working adults who have lower spending power and prefer the flexibility to unsubscribe from the platform at any time. The launching of sooka is also timely as it coincides with major sporting events, such as Euro 2021 this month and Olympics next month, which will likely draw further interest to the platform.

Leading aggregator for streaming services. With the launch of sooka, Astro continues to make headways as the leading aggregator of streaming services in Malaysia. Astro could potentially further monetize its streaming services partnerships in the future through bundling these streaming services to its subscription package offerings as well as expanding its Astro Go on-demand libraries by adding the titles from its streaming service partners.

Forecast. We leave our forecasts unchanged as we do not think the bottom line contribution from sooka will be significant as the platform is still in its gestation period.

Maintain BUY with a higher DCF-based TP of RM1.25 (WACC: 7.5%, TG: 0%) from RM1.10. We raised our terminal growth rate from -1% to 0% as we anticipate the longer term decline in its traditional pay-TV revenue will be cushioned by the growing segment of its streaming services partnership and offerings as well as from the growing home shopping segment. We continue to like Astro as we view positively its proactive efforts in adapting to the changing landscape in the media sector as well as its attractive dividend yield at 6.4%.

 

Source: Hong Leong Investment Bank Research - 9 Jun 2021

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Labels: ASTRO

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