SINGAPORE (Apr 29): Phillip Capital is upgrading Asian Pay Television Trust (APTT) to a “buy” with a revised target price of 15 cents from 16.5 cents previously.
The brokerage is basing its upgrade on APTT’s better-than-expected revenue, corrected share price of 23%, stable broadband revenue and stable losses in cable TV subscribers, as well as sustainable dividends.
APTT announced a distribution per unit (DPU) of 0.30 cents for the quarter ended March.
Its overall revenue for 1Q2020 was 8.3% higher at $79.3 million from $73.2 million a year ago, due to the appreciation of the Taiwan dollar by 4.7%, and non-subscription revenue including sale of in-house content to channels, as well as additional advertising revenue.
Despite an increase in total operating expenses at 6.6% higher at $31.0 million from $29.1 million a year ago due to higher staff costs and other operating expenses, EBITDA came in 9.5% higher y-o-y at $48.3 million.
Additionally, APPT’s trustee-manager has proposed a rights issue to raise gross proceeds of about $46 million at 12.8 cents per share. The proceeds will partially go to repaying the offshore borrowing facilities secured by APTT Holdings 1 Limited, and APTT Holdings 2 Limited. Upon completion of the rights issue, APTT’s DPU will be cut from a quarterly 0.30 cents to 0.25 cents.
In its outlook, Phillip Capital’s head of research Paul Chew notes that “broadband is the bright spot with the growth in subscribers offsetting the weakness in ARPU”.
“Core cable TV remains problematic with cable TV subscribers falling close to 3% p.a. Therefore, the ability to reduce capex will be critical to offset the falling cash-flows from cable TV business,” he says in a Wednesday report.
“The larger driver to the share price in future will be the ability to generate new revenue streams from data backhaul services offered to wireless operator rolling out 5G,” he adds.
As at 12.27pm, units in Asian Pay Television Trust are trading flat at 12.9 cents.
