Asian Pay Television Trust - Phillip Securities 2022-05-17: Broadband Growth Keeps Revenue Stable

ASIAN PAY TELEVISION TRUST (SGX:S7OU)

Asian Pay Television Trust - Broadband Growth Keeps Revenue Stable

Asian Pay TV Trust (SGX:S7OU)'s 1Q22 results met our expectations. Revenue and EBITDA were at 25%/24% of our FY22e estimates. No change to the quarterly distribution of 0.25 cents per unit.

Broadband revenue rose 16% y-o-y to around $16mil. Growth is supported by expansion in subscribers (+13%) and expansion in ARPU (+5%).
No change to our ACCUMULATE recommendation and FY22e forecast. Asian Pay TV Trust pays an attractive dividend yield of 7.5% well supported by cash flows.

Broadband added 7,000 subscribers (1Q21: +5000), while ARPU rose 5% y-o-y to TWD373. ARPU has expanded q-o-q for the fourth consecutive month. Higher speed broadband plans of 300Mbps to 1Gbps are driving the rise in ARPU. Only 40% of its cable TV subscriber use Asian Pay TV Trust broadband.

Basic cable TV declined 5% y-o-y to S$54.7mil. The largest contraction was from the 10% drop in non-subscription revenue to S$7.5mil. Leasing channels to third parties (e.g. home shopping networks) is expected to deteriorate further as households shift their spending towards online shopping.

We believe higher interest rates will not impact the ability to sustain dividends. From the S$1.5bn debt outstanding, around S$1bn has interest rates fixed or swapped to a fixed rate of 0.89%. The more expensive S$160mil Singapore dollar offshore loans bear an interest of 2.6%.
We expect S$60mil of the loan to be pared down from the current $127mil cash holdings. The remaining S$300mil unhedged offshore loans will be partially hedged. Assuming a 1% rise in interest for unhedged S$500mil loans, increment interest is S$5mil.
There is sufficient buffer from S$80mil annual FCF to cover the $18mil dividend. Asian Pay TV Trust aims to lower current net debt to EBITDA of 7.4x to 5x-6x to lower borrowing costs.

No change to our ACCUMULATE recommendation and FY22e forecast for Asian Pay TV Trust. The target price of S$0.15 is based on 9x FY21e EV/EBITDA, a 20% discount to Taiwanese peers due to its smaller scale and higher leverage.
Asian Pay TV Trust's dividend yield of 7.5% or S$18mil payout, is backed by our estimated free cash flows of around S$80mil p.a. Around S$1.0bn of the S$1.5bn of the total debt has been hedged at 0.89% till July 2025.
See

Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2022-05-17

SGX Stock Analyst Report ACCUMULATE MAINTAIN ACCUMULATE 0.150 SAME 0.150