Asian Pay Television Trust - Phillip Securities 2021-05-14: Free Cash Flows Stable

ASIAN PAY TELEVISION TRUST (SGX:S7OU)

Asian Pay Television Trust - Free Cash Flows Stable

Asian Pay TV Trust (SGX:S7OU)'s 1Q21 revenue and EBITDA were within expectations, at 26%/25% of our FY21e forecasts.
Revenue was down S$5mn or 6% y-o-y, dragged down by a 9.8% contraction in cable TV. Weakness was partly offset by a 9.5% rise in broadband revenue. FCFs rose modestly to S$25mn from a S$4mn decline in capex.
Asian Pay TV Trust's current dividend yield of 9% from a S$18mn payout is well supported by FCF of S$77mn.

Asian Pay TV Trust's broadband revenue expanded almost 10% y-o-y in 1Q21. Net subscriber adds were 5,000, the highest in four quarters with ARPU almost unchanged. Asian Pay TV Trust has been partnering wireless operator shops to distribute their high-end 500MB/1GB broadband plans since end-2019.

Cable TV revenue declined around 10% y-o-y in 1Q21. Subscription revenue was stable at S$49mn but non-subscription dropped 43% to S$8.4mn due to an absence of in-house content sales and lower channel leasing revenue. Both were popular during the lockdown in Taiwan.

We expect Asian Pay TV Trust's free cash flow (FCF) to be stable despite weaker revenue as capex is trending down the next two years. Investments in the past three years have driven homes to fibre node density from 750 to 250 currently. This should be sufficient to meet demand for 5G data backhaul. We lower our FY21e capex forecast by 10% to S$45mn.

Asian Pay TV Trust's DPU guidance of S$0.0025 per quarter for FY21e maintained. Asian Pay TV Trust's current dividend yield of 9% from a S$18mn payout is well supported by FCF of S$77mn.
Our FY21e earnings forecast is largely unchanged. BUY recommendation and target price of S$0.15 for Asian Pay TV Trust maintained. Valuation is pegged at 9x FY21e EV/EBITDA, a 20% discount to Taiwanese peers for its smaller scale, higher leverage and weaker growth profile.
See
5G data backhaul to be key component of broadband business in the next few years, though we have yet to model any revenue.

Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2021-05-14

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