Asian Pay Television Trust - Phillip Securities 2020-02-12: Some Stability Creeping In


Asian Pay Television Trust - Some Stability Creeping In

  • Asian Pay Television Trust (APTT, SGX:S7OU)'s 4Q19 revenue and EBITDA were around 5% better than our expectations. Revenue and EBITDA fell 6% and 3% respectively in 4Q19. DPU guidance of 1.2 cents for FY20e is maintained.
  • Some signs of stability in operations - cable TV ARPU flat q-o-q after 13 quarters of decline and broadband revenue modest rise q-o-q.
  • We were surprised by the stability in certain operational data. Cable TV ARPU finally stopped sliding albeit subscribers are still contracting. Broadband subscribers responded well to the lower prices offered, which helped to keep revenues stable.
  • Asian Pay Television Trust has guided that data backhaul services offered to Taiwanese mobile operators will materialise when 5G services are rolled out. At present, there are limited data points for us to model this market opportunity.
  • Our target price will peg Asian Pay Television Trust at around 10x EV/EBITDA. This is a 10% discount to their much larger Taiwanese peer valuations. We maintain NEUTRAL and keep our target price unchanged at S$0.165.

The Positives

Cable TV ARPU flat q-o-q.

  • ARPU finally stabilise q-o-q after falling for 13 consecutive quarters. However, subscribers are still contracting at a rate of around 5,000 per quarter.

Broadband revenue turning more stable.

  • Another positive operating data was the flat q-o-q broadband revenue. Subscribers responded well to the lower prices, as a result, Broadband subscribers rose 10% y-o-y in 4Q19. However, the pricing strategy resulted in a 12% y-o-y fall in ARPU.
  • Nonetheless, this is a high margin business as there is no content cost and only the modem cost during installation.

Content cost falling to stabilize EBITDA.

  • The run-rate for broadcast cost was around S$16mn per quarter two years ago. This has declined to around S$13mn in FY19. 4Q19’s content cost was down almost 11% y-o-y.

The Negatives

FY19 capex still elevated.

  • FY19 Revenue and EBITDA is down around 6% y-o-y. However, capital expenditure remains unchanged at $75mn. Capex was incurred to deploy more fibre in the network, especially for the data backhaul business.
  • Guidance is for capex to trend down in FY20e. Another drain on cash-flow was $20mn spent on intangibles in FY19.


  • There are some positives we can look forward to in FY20e for Asian Pay Television Trust
    1. Further signs of stability in operational data which will signal business sustainability;
    2. Capital expenditure (and investments in intangibles) will start to trend downwards, as guided by Asian Pay Television Trust;
    3. Revenue from data backhaul from Taiwan mobile operators begin to contribute more meaningfully to Asian Pay Television Trust.

Maintain NEUTRAL and target price unchanged at S$0.165

Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2020-02-12
SGX Stock Analyst Report NEUTRAL MAINTAIN NEUTRAL 0.165 SAME 0.165