Asian Pay Television Trust - Phillip Securities 2017-05-16: Still A 12% Yield And Paid Quarterly

Asian Pay Television Trust - Phillip Securities 2017-05-16: Still A 12% Yield And Paid Quarterly ASIAN PAY TELEVISION TRUST S7OU.SI

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.



The positives 

  • 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.


The negatives 

  • 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.


Outlook 

  • 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.




Paul Chew Phillip Securities | http://www.poems.com.sg/ 2017-05-16
Phillip Securities SGX Stock Analyst Report BUY Maintain BUY 0.640 Same 0.640



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