Asian Pay Television Trust - Phillip Securities 2017-08-15: Appreciating TWD Was Helpful, It Still Pays 11% Yield

Asian Pay Television Trust - Phillip Securities 2017-08-15: Appreciating TWD Was Helpful, It Still Pays 11% Yield ASIAN PAY TELEVISION TRUST S7OU.SI

Asian Pay Television Trust - Appreciating TWD Was Helpful, It Still Pays 11% Yield

  • Asian Pay Television Trust (APTT)'s 1Q17 revenue and EBITDA were in-line with estimates. The appreciation of Taiwan dollar (TWD) by ~7% yoy supported revenue growth. Cable TV subscribers were stable.
  • Broadband APRU continue to soften due to competition from unlimited 4G mobile data plans.
  • Dividend guidance of 6.5 cents annually (paid 1.625 cents per quarter) has been maintained.



The positives 

  • Premium cable digital beginning to gain some traction with customers as APTV introduced promotional content. Subscribers rose almost 11% yoy in 2Q17.
  • Cable TV subscribers were stable and DPU guidance maintained.
  • APTT is evaluating other business opportunities with new trustee owners but too early to disclose any details.


The negatives 

  • Broadband ARPU still on declining trend. The roll-out of unlimited 4G mobile data plans has affected ARPU. APTT had to react to the competition with new promotions.
  • Free cash-flow declined yoy and is still lower than dividends payable. As a result, APTV is still reliant on increased leverage to sustain dividends. Leverage is rising faster this year in order to fund $50m premium digital capital expenditure.


Outlook 

  • The outlook remains stable. We lowered our net profit by 4% to account for higher foreign exchange. There is 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 APTT dividends attractive and sustainable. 
  • Operating cash-flows are supported by a recurrent monthly cable TV subscription fees, and APTT operates in a monopolistic environment.




Paul Chew Phillip Securities | http://www.poems.com.sg/ 2017-08-15
Phillip Securities SGX Stock Analyst Report BUY Maintain BUY 0.640 Same 0.640



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