Asian Pay Television Trust - Still A 12% Yield And Paid Quarterly
- 1Q17 revenue and EBITDA were within our estimates. However, several non-cash items negatively affected headline earnings, namely FX and derivative loss. Both were the result of a stronger Taiwan dollar.
- We are lowering our earnings by 18% to incorporate these non-cash items. No change to our cash-flow assumptions or target price.
- Dividend guidance of 6.5 cents annually (paid 1.625 cents per quarter) has been maintained.
- YoY growth in revenue driven by cable TV: This was the result of 4% yoy improvement in subscribers.
- Subscribers were stable: Cable TV subscribers were flat qoq. There was also pick-up in premium digital subs.
- DPU guidance maintained: Management reaffirmed their full year distribution of 6.5 cents, payable 1.625 cents per quarter + Lower interest rates in future: The new trustee manager was successful in negotiating for a 30 basis points reduction in interest rates, effective 30Jun17. This implies an almost S$4m interest saving on the NT$28b (S$1.3b) loan.
- Higher than expected income tax: The jump in tax came from the almost doubling of deferred taxes.
- Higher than expected staff cost: This was due to long-term incentive plan for senior management.
- The outlook remains stable. We lowered our net profit by 18% to account for higher deferred tax, foreign exchange and amortization of debt financing fees.
- No change to our target price or cash-flow assumptions.
Maintain "BUY" rating with target price unchanged at S$0.64
- We maintain our BUY recommendation with an unchanged target price. The adjustments to our earnings are non-cash and do not materially affect our valuations.
- We find APTV dividends attractive and sustainable. It operates a monopolistic business where revenues are recurrent and barriers to entry high.