Asian Pay Television Trust - Phillip Securities 2017-12-18: An 11% Payout In 2018

Asian Pay Television Trust - Phillip Securities 2017-12-18: An 11% Payout In 2018 ASIAN PAY TELEVISION TRUST S7OU.SI

Asian Pay Television Trust - An 11% Payout In 2018

  • Asian Pay Television Trust (APTV) generates stable and recurrent monthly subscription fees from its monopolistic cable TV business.
  • Management has guided 2018 DPU of 6.5 cents (11% dividend yield), unchanged from 2017.
  • Maintain ACCUMULATE rating with a target price of S$0.64.



COMPANY BACKGROUND

  • Asian Pay Television Trust (APTV) is a business trust that operates cable pay-tv and broadband services in Taiwan. It owns all the fibre and cable connections to customers’ homes. This “last-mile” access to homes is cost-prohibitive and extremely difficult to replicate. 
  • The company has a stable customer base of 760,000.


Investment Merits / Outlook

  1. Attractive yield paid quarterly. APTV has guided for a 6.5-cent DPU for FY18. In addition, the dividends are paid on a quarterly basis.
  2. Revenue is recurrent with high barriers. Cable TV is an entrenched form of viewing TV in Taiwan. Cable has an 80% share of the TV market. Internet TV has not gained any footing due to a lack of local content. Revenue is recurrent for APTV. It collects an annuity-like S$220m revenue p.a. from its 760,000 customers who are paying a S$24 subscription fee every month.
  3. The outlook remains stable. As we enter 2018, cash flows should improve as capital expenditure for premium digital rollout expires. Capital expenditure is expected to decline from S$80mn to S45mn.


RECOMMENDATION

  • We maintain our ACCUMULATE rating with a target price of S$0.64
  • APTV dividend yield is attractive and sustainable. 
  • Recurrent monthly cable TV subscription fees support operating cash flows, and APTV operates in a monopolistic environment.









Paul Chew Phillip Securities | http://www.poems.com.sg/ 2017-12-18
Phillip Securities SGX Stock Analyst Report ACCUMULATE Maintain ACCUMULATE 0.640 Same 0.640



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