ADEX +6% | COMMERCE +35% GROWTH IN REVENUE
Astro Malaysia Holdings Berhad | Result highlights for the first quarter of the financial year ending 31 January 2019 (FY19)
- Resilience and diversification underpinned respectable results in a challenging market
- Revenue stable at RM1.31bn
- Strong EBITDA at RM461.3mn
- PATAMI -11% y-o-y to RM174.7mn
- Strong FCF of RM338mn, enabling attractive dividend yield
- Customer and Adex growth supported by scale and reach
- Total customers +6% y-o-y to 5.5mn
- Adex +6% y-o-y to RM151mn, outperformed market
- Strong ecommerce performance; Go Shop revenue +35% y-o-y to RM84mn
Tun Zaki Azmi, Chairman of Astro, said: “In what continues to be an evolving and increasingly borderless media landscape, Astro is focused on delivering sustainable growth over the long term. We continue to be highly cash generative and disciplined in our cost and capital management. The Board is pleased to declare a first interim dividend of 2.5 sen per share.”
Dato’ Rohana Rozhan, Group Chief Executive Officer of Astro, said: “We are strongly executing against our strategic imperatives to defend our market position, augment our business model to ensure best in class consumer engagement and expand for scale and growth. Our market reach has grown 6% y-o-y to 5.5mn, or 75% of Malaysian households, with stable revenues at RM1.31bn, and a strong EBITDA at RM461.3mn.
This is the result of our ability to defend and grow our customer base and reach, thus giving us a larger monetisable base across our verticals of pay, prepaid, ad sales, commerce and Go Shop. We saw an increase in TV Adex of 17% y-o-y to RM83mn and are encouraged by the growth of relatively new revenue adjacencies such as commerce and Go Shop, NJOI prepaid and digital Adex; signifying encouraging trajectory as traditional subscription revenues are under competitive pressure.
In parallel, we continue to build our complementary digital ecosystem capabilities, driving efficiencies, better customer experiences, and fit for purpose cost structures. When combined, these are the building blocks for Astro to effectively compete in the New World Order as we strongly reinforce our household reach and viewership with immersive engagement digitally across our media assets.”
The value of Astro’s products and services, quality entertainment for the whole family, increased seamless viewing, control and flexibility in how customers watch at home and on the go - have successfully deepened the customers’ engagement with Astro via 23mn TV viewers, 16.5mn weekly radio listeners and 6.7mn monthly unique visitors on Astro’s digital properties. Astro’s Connected Home Entertainment services recorded a strong growth of 52% y-o-y to reach 869k households with over 11mn On Demand programmes downloaded and watched. Astro customers continue to enjoy content portability and unprecedented multiscreen access to their favourite live, catch up and On Demand programmes on Astro GO and NJOI Now apps which continue to register more active viewers and a higher level of usage. Astro GO registered users increased by 43% y-o-y to 1.7mn with active viewers watching an average 203 minutes of content monthly.
Rohana said, “Astro is developing deep customer personas and data analytics to drive increased immersion and personalization across its media assets, and at the same time, rationalizing cost benefit of spent to address the potential wallet and advertisers for each customer persona.
While focused on our strategic priorities, we have remained committed to our digital first transformation initiatives and a razor focus on cost management, which have created headroom for us to reinvest into creating more local and Nusantara content IPs that will underpin our Pay TV viewership and Tribe’s regional expansion.
Recent announcements by the Government to make internet access more affordable at higher speeds, will have positive impact on the broader economy. This will result in a wider access to high-speed broadband infrastructure and Astro looks forward to strengthening and widening its entertainment and Connected Home propositions so that more Malaysian homes can enjoy broadband, entertainment and telephony services at greater value.”
Driving New Engines of Growth
Astro started FY19 with another strong quarter of Adex performance which outperformed the market, by registering a 6% growth y-o-y. Astro’s total Adex of RM151mn in Q1FY19 was primarily driven by a 17% increase in TV Adex to RM83mn, underpinning Astro’s strong share of 44% and 69% in TV Adex and Radex respectively.
The company is strengthening its consumer and digital data analytics capabilities to better serve its targeted consumer personas to enable greater personalisation and more compelling innovative propositions for its B2B and B2C customers.
Astro’s eCommerce business registered good performance this quarter. Go Shop saw its Q1FY19 revenue rising by 35% y-o-y to RM84mn, spurred by its growing base of customers in Malaysia and Singapore, mainly driven by its dynamic product mix, analytics driven campaigns and innovative show formats.
Astro’s other growth engines like Production, Theatrical and Talent have collectively grow by RM10mn y-o-y to RM20mn.
Astro’s regional online video streaming service, Tribe, continues to grow in Indonesia, the Philippines, Thailand and Singapore by forging complementary win-win partnerships in the region. In April, Tribe started to offer its content as part of Indonesia-based Telkomsel’s bundled video streaming product, giving Tribe the opportunity to tap into Telkomsel’s strong customer base.
Investing in Vernacular and Local content
Astro’s collective strength in talent and vernacular IPs, its brands, its customer reach and engagement across its media assets lends the company a unique and differentiated edge to sustain strong demand amongst all Malaysian customer personas. The company has every intention to build on these strengths, for example, the Karangkraf JV in creating a deeper engagement with the Malaysian customers.
Astro’s 51% JVCo with Karangkraf, Nu Ideaktiv is slated to premier its inaugural TV shows based on popular content IPs, namely ‘Mingguan Wanita’, ‘Pa & Ma’ and ‘Rasa’ in July, with accompanying apps by year-end. Astro’s investment into Nu Ideaktiv is aimed at deepening its content offerings for the Malay-language segment in Malaysia and Nusantara. In addition, the company has added Karangkraf’s 15 content IPs to grow its partner network to 50 digital brands.
It is Astro’s aspiration to produce trending content that resonate with viewers. During GE14, Astro Awani delivered live news updates for Malaysians; and garnered unique TV viewers of 9.2mn on 10 May, unique visitors of 12.0mn and page views of 84.5mn on its digital platforms in the month of May and 5.3mn followers on social media.
Reclaiming our premium segment
Rohana said: “We are excited to bring 2018 FIFA World Cup Russia™, this year’s largest sporting event globally, to all Malaysians. The 2018 FIFA World Cup will mark our commitment to reclaim our premium customer personas like never before. All 64 matches will be seen LIVE in HD, of which 37 are exclusive to Astro on TVs and smart devices via Astro GO, NJOI Now and Stadium Astro apps, as well as on-ground activities such as viewing events. Football fans can also enjoy an immersive World Cup 2018 experience via the Stadium Astro Virtual Reality app. As sports is live and social, Astro is partnering with Twitter to provide ‘near-live’ World Cup clips and content on @stadiumastro to spark real-time conversation among Malaysians on social media.
This will be followed by broadcast of EPL in never seen before Ultra HD in October 2018 setting another historical milestone with the first Ultra HD broadcast in Malaysia. In total we expect to launch four Ultra HD channels comprising live sports and general entertainment.
Our Malaysian customers will also have upgrade access to unlimited content via cloud, personalised UI/UX interface for each member of household, and with content portability for seamless viewing across all personal devices where each member of household may pause and continue viewing on another device.”
Outlook
Rohana said: “We entered this financial year cognizant of the dissipating tailwinds in consumer facing businesses and increasingly, the growing presence of global digital, social platforms and OTT entrants battling for higher shares of consumer eyeballs and engagement time. Advertising-funded models and the trend towards service unbundling are now precipitating a gradual re-rating of consumer’s value perception and giving them cheaper alternatives. Against this backdrop, the broader global media industry is undergoing structural changes with global media giants pursuing acquisitions and consolidations to strategically position themselves for growth.
It is our aim to remain our customers #1 media provider of choice by reinventing ourselves, embracing digitalisation and new technologies, thus defending our customer reach and engagement. Concurrently, we will deepen our content in local vernacular and Nusantara, products and services ecosystem across our media assets, diversifying revenue streams in new adjacencies and digital growth engines like Tamago, eGG Network, Go Shop and Tribe, coupled with cost efficiencies and scale to deliver strong operating and financial results.”
