Asian Pay Television Trust - Phillip Securities 2017-11-15: Guiding For 11% Yield For 2018

ASIAN PAY TELEVISION TRUST S7OU.SI

Asian Pay Television Trust - Guiding For 11% Yield For 2018

Asian Pay Television Trust (APTV)'s 2Q17 revenue and EBITDA were in-line with our estimates.
Management has guided 2018 DPU at 6.5 cents (10.7% dividend yield), unchanged from 2017.
We downgraded to ACCUMULATE with an unchanged target price of S$0.64.

Our downgrade is due to the price appreciation of APTT and the resulting lower expected return. There has been no change in fundamentals.

Management has guided 6.5 cents DPU for FY18. This is unchanged from FY17 and still represents a 10.7% dividend yield.
Cable subscribers were stable and churn remains low. Cable subscribers were stable QoQ at 762k and churn rate low at 0.7%.
CapEx will decline in FY18e. As the lumpy analogue switch-off ends this year, we expect total CapEx to decline from S$80mn in FY17e to S$45mn in FY18e.

ARPU remains sluggish. ARPU across all 3 business segments - pay-TV, broadband and premium TV - declined QoQ. Broadband ARPU was lower in-view of the unlimited 4G data plans offered by mobile operators. The lower ARPU in premium TV is to stimulate pick-up rate of this services. However, we have not seen much growth yet.
Still reliant on incremental debt to sustain dividends. Our estimated FCF is around S$20mn in 3Q17. This remains below the S$23.3mn needed every quarter to sustain dividends.

The outlook remains stable. We shaved our FY17e earnings by 15% due to higher FX loss and higher effective tax. As we enter 2018, cash flows should improve as CapEx for premium digital ends. There is no change in our target price.

Our downgrade to ACCUMULATE is due solely to the price appreciation of APTV. There is no change in the fundamentals of the company.
APTV dividend yield is attractive and sustainable.
Operating cash-flows are supported by a recurrent monthly cable TV subscription fees and APTV operates in a monopolistic environment.

Paul Chew Phillip Securities | http://www.poems.com.sg/ 2017-11-15

Phillip Securities SGX Stock Analyst Report ACCUMULATE Downgrade BUY 0.640 Same 0.640