Astro-Waiting for Godot?

Any Further Push?

Numerous research houses are singing songs backing Astro as a top performer. But for holders of this dreadful stock, it has been one bitter rite. Perhaps, a rite of passage not to ever dabbled in Malaysian IPOs with its twists and turns particularly the Astro IPO.

Jeez, even cornerstone buyers can sell on Day 1.

Stupido!!

Imagine a company laden with debts more than its assets apparently, being foisted upon the Malaysian public just to get fresh new blood for its bleeding financials.

Astro's third quarter results is slated to be released on Dec 5. Will its price sprint?

So far, in spite of the slight push-up last week to RM 2.88, it has gone under water again. This is equivalent to about 4.3% below its IPO price of RM 3.00.

Standing firm behind Credit Suisse's outperform call on Astro, head of Malaysian equities at Credit Suisse Stephen Hagger says he is confident in the company due to its growing subscriber base, coupled with its increasing average revenue per subscriber, coming primarily from the adoption of high definition (HD) programme packages.

“Its subscriber base is still growing across all ethnic groups, particularly among the Malays, who love Astro's in-house productions.

As such, the company offers unique exposure to consumer spending that is both halaland discretionary, in a rapid growing population,” he says.

In Credit Suisse's report released on Tuesday, it expects Astro to grow its subscriber base as well as average revenue per user (arpu). Its arpu has grown steadily to RM 92 in the first half of 2013 from RM 89 in 2012, compared to RM 82 in 2010 when it was delisted.

“We believe Astro is a potential beneficiary of Malaysia's attractive demographics, a young and growing population, whereby a growing economy is driving income growth. Malay households, which account for 60% of Astro's subscribers have the highest income growth within the Malaysian population,” it says.

It says HD, PVR (personal video recorder), premium content and Internet protocol television (IPTV) services are potential arpu drivers for Astro in the longer term.

“There's also an opportunity for Astro to tap prepaid revenues via its NJOI offering, which doesn't incur any subscriber acquisition cost. Yet, NJOI could see long-term potential revenue upside if users buy prepaid content,” it says.

The investment bank had also set a discounted cash flow-based target price of RM3.50, implying a 21.9% potential upside.

“While financial year 2013 to 2014 earnings are dampened by significant cost related to a box swap, we expect profitability to rebound in financial year 2015, when the bulk of Astro's subscriber homes will be equipped with an HD box,” it says.

Hagger says while investors should take note of its upcoming quarterly results, short-term earnings are way less important than the long-term prospects of the company, in particular looking at subscriber and arpu growth which will provide a guide to the long-term value of this company.

“Despite its extremely strong cash-flow, I don't see Astro as a dividend yield stock quite yet, until such a time that the board feel comfortable with gearing and capital expenditure levels and crucially articulates a dividend policy. The dividend yield will however come and it will attract a new group of investors,” he says.

On the recent sell-down in Astro shares, Hagger says there were probably a number of factors responsible for this. One of which was a possible margin call on approved bumiputra investors under the International Trade and Industry Ministry portion.

“The process of the allocation is not transparent, but it is possible that a significant number of shares went to individuals, who may then have been hit by margin calls, sending the stock into a downward spiral. However, looking at the recent stability of share price, it seems that most of these weak holders have been cleared out,” he says.

Credit Suisses also notes that despite the sell-down, senior management comprising the CEO, COO, chief commercial officer and also the chief innovation officer, all bought Astro shares after the listing.

Currently, Astro commands a 99% pay-TV market share and 12% share of the broader communications industry in Malaysia as of financial year 2012. Its three million subscriber base translate into a household penetration rate of close to 50%, relatively lower compared to India's 80% and Singapore's 70%, which still represents a growth potential in the local market.

Looks like we may have to wait to 2015 to see some nest eggs.

Bad News All in a Day

Fractured femur

Two days ago, I had bad news.

As usual, in spite of all the cajoling to be careful, my dad fell and fractured his femur.

At 87, very few doctors will attempt an operation to set the bone right for him because the cons outweigh the pros.

Also the fears of infection and other complications can arise and also  the need for possible blood transfusion.

There is little choice but to counter pain with painkillers when he gets out from the Malacca General Hospital.

Ops required if hole does not close

The other sad news is that my grand niece has to undergo a hole-in-heart operation which costs more than a bundle of ringgits. A patch is required to prevent oxygen-low blood for inter-mingling with oxygen-rich blood in the heart compartments.

Hopefully, after the ops, she can grow up healthy like just any other little girl.

I have said prayers of protection for my father and yet he fell.

God sure works in mysterious ways.

FGV-Defying Market Gravity with Difficulty

Anti-gravity?

It's a pity that FGV, a political counter is under intense pressure to perform on the Bursa KL.

I guess one reason for the lack of interest is that it it a possibly propped up political counter awaiting a larger fall-out after the 13th GE.

At the moment, government funds are getting a load of this counter particularly the EPF which has been selling blue chips left and right to do its bidding to hold the shares up.

It has fallen because of lack of interest from both private funds; local and global.

Forget retail buying, there is just no money to be made.

Today it fell to to RM 4.54 below its IPO price of RM 4.55 and as long as the 13th GE is not called, it will go into slumberous mutation in price.

How sad for the FELDA settlers who bought the shares.

 There is just no way to defy price gravity!

Astro: Why the Big Push on Small Volume?

Who is buying?

There was actually no big buyer, no volume buys and yet the price of Astro climbed ever steadily all day  today after a false start in the wee hours of trading

The biggest were only in lots of 1000 units. It climbed 14 sen to close at the magic number of RM 2.88.

So, there is actually no push;merely retailers taking a bite or two.

Let us see whether there will be any follow-through tomorrow.

If there is a sudden stop in buying, then it will possibly be a flash in the pan.

Or is some one collecting it slowly?

A New Tense?

This is one unlikely cartoon.

A new tense?

Twitter- Are We Just Wasting Time?

Birdie-Birdie Num-Num

There were times that I felt Twitter was really one great  way to get up-dated information.

These days looking at what goes on Twitter, I think it is just one big waste of time.

Looking at what the politicians in Malaysia are doing with it and on it, certainly confirms it.

We really deserved these nuts in office if we want to be non-judgmental with the kind of garbage they are spewing on the internet!

Robberies, Business Security and Safety

Turning your backs?

I always advocated this:

If you want to attract foreign investment,there must be two pre-conditions.

Firstly, there must be law and order.

Secondly, there must be legal remedy if a wrong is done.

I fear we are coming short on both counts.

Politics aside, I think the fear factor has ratcheted up many times over the years.

Public perception of the police has taken an all time low especially  with the high rate of robberies, snatch thieves and lately even rapes of civilians at police stations.

As usual, the political football was panned out and PR exercises were offered with statistics ponied up that crime rate has gone down....way-way down.

Do we feel relieved?

Why Me, Worry?

No, wonder why?

Are we fooling ourselves or just attempting to protect the tourism trade?

I had a drink with a friend yesterday. He had to close his business down because his factories were hit time and again by the same group of robbers until no insurance companies wanted to cover his factories. He has appealed to all parties-from political parties, to the police and even the local taikohs for action but to no avail. If you trade in  businesses that utlises aluminum and copper, expect to be robbed dry!

As for the law, they do not seem to be effective!