Asian Pay TV Trust - Phillip Securities 2022-11-21: Huge Drag From Currency


Asian Pay TV Trust - Huge Drag From Currency

  • Asian Pay TV Trust (SGX:S7OU)'s 3Q22 earnings was below expectations due to the 5% weakness in the Taiwan dollar. year-to-date22 revenue and EBITDA were at 73%/71% of our FY22e estimates. 3Q22 distribution was maintained at 0.25 cents per unit.
  • FY23e distribution forecast for Asian Pay TV Trust is raised 5% to 1.05 cents, paid half yearly. Broadband enjoyed healthy 11% revenue growth, but weakness in basic cable dragged group revenue to fall 6% y-o-y.
  • We lowered our EBITDA forecast for Asian Pay TV Trust by 6% as we cut our Taiwan dollar forecast. Our BUY recommendation for Asian Pay TV Trust is unchanged, but we lower our target price to S$0.13 (previously S$0.15). based on 8.5x FY23e EV/EBITDA, a 20% discount to Taiwanese peers.
  • Asian Pay TV Trust's dividend yield of 9.6%, or S$19mil payout, is supported by free cash flows of around S$73mil p.a.

Asian Pay TV Trust's 3Q22 – The Positive

High margin broadband growth.

  • Broadband continues to grow strongly led by higher subscriber growth and improvement in ARPU. Monthly subscribers expanded by 9k to 307k as marketing efforts together with wireless operators continue to gain traction. ARPU has risen 4% y-o-y to TWD379 (S$16.72) with more subscribers opting for higher speeds.

Asian Pay TV Trust's 3Q22 – The Negative

Rising broadcast and content costs.

  • Despite the 10% decline in basic cable TV revenue to S$51.9mil, content cost was stable at S$14.2mil. As a percentage of revenue, content cost in this quarter is a record 30.4% (excluding non-subscription revenue) of cable TV revenue.


  • We expect modest growth in Asian Pay TV Trust's EBITDA for FY23e. Cable subscribers have declined 14k over the past 12 months, but this was more than offset by a 33k jump in broadband subscribers. We estimate each cable subscriber contributes around S$15 of revenue (excluding content cost) compared with $S14 for cable. Margins from broadband can offset the structural decline in cable TV. The challenge is to lower content cost in line with falling cable TV revenue.
  • As for the impact of rising interest rates, until 2025, if we assume a 2% point rise in interest rates, the impact is around S$3mil to Asian Pay TV Trust's free cash flows.

Maintain BUY with a lower target price of S$0.13 (previously S$0.15)

Paul Chew Phillip Securities Research | https://www.stocksbnb.com/ 2022-11-21
SGX Stock Analyst Report BUY MAINTAIN BUY 0.13 DOWN 0.150