KUALA LUMPUR: Analysts are not anticipating a significant recovery in Astro Malaysia Holdings Bhd's advertising expenditure (adex) in the upcoming quarters due to sluggish consumer sentiment.
As a result, Public Investment Bank Bhd (PublicInvest) has reduced its earnings forecast for the financial year 2025 (FY25) by 21 per cent.
Similarly, Hong Leong Investment Bank Bhd (HLIB Research) has revised its FY25 and financial year 2026 (FY26) projections down by 35 per cent and 13 per cent, respectively.
According to HLIB Research, Astro's management is planning to restructure its package options into three tiers, with the lowest-priced package expected to align with most over-the-top (OTT) services, ranging between RM40 and RM50.
"This would increase the likelihood of customer acquisition. Despite the simplification which could increase customer's traction, we view that this may reduce the group's average revenue per user (ARPU) even further," it said.
The firm also noted that the management notes that despite the possible subscription revenue decline, the group is looking to increase its customer base by skewing towards more volume.
"Despite its expertise on producing local content, we view that the outlook may still be hampered by softening adex and weakening subscription."Looking ahead, the structural substitution by consumers to other OTTs is expected to persist," said HLIB Research.
PublicInvest noted that, alongside increasing competition from other video streaming platforms, Astro's TV subscription revenue is expected to stay subdued."While we believe content cost should ease in financial year 2026 (FY26) due to a more favourable exchange rate, topline growth is expected to be restricted by a challenging industry landscape," it said in a note.
Astro reported headline net profit of RM53.2 million in the second quarter financial year 2025 (2QFY25), jumping 170 per cent year-on-year (YoY) due to lower net financing costs on favourable unrealised foreign exchange.However its revenue fell 6 per cent YoY, due to a 6 per cent decline in its TV subscription revenue while advertising revenue was down 19 per cent.
Meanwhile, Astro's core profit after tax and minority interests (PATAMI) at RM14 million, were below HLIB Research's expectations.
PublicInvest has a 'Neutral' rating on the company, with a target price of 30 sen, while HLIB Research maintained its 'Sell' call with a lower target price of 22 sen, from 23 sen previously.
Astro's share price jumped more than nine per cent on the increase in profit for 2Q.
It was up 7.5 per cent earlier to 28.5 sen.