Asian Pay Television Trust - Delivering on stability


2Q EBITDA growth of 2.4% yoy brought 1H EBITDA to 48% of our full-year estimate, which was in line with expectations. Dividends of 2.0 Scts were declared for 2Q and guidance for 8.25 Scts for FY15 reaffirmed. Operationally, the economic weakness in Taiwan remained a drag but premium cable TV and broadband subscribers began to grow again as management adjusted marketing strategies. We reiterate our Add call and our target price rises, still based on DCF (COE 9.1% vs. 9.7% previously, LTG 0%). We have raised estimates slightly for higher EBITDA. APTT remains an attractively stable income play in the current volatile markets.

2Q stable and in line with expectations
Revenue rose 4.4% yoy, driven by increasing subscriber penetration for premium digital cable TV, up 1.4% yoy, and stable ARPU. Management expects this to continue to grow due to increasing HD content. Basic cable TV subscribers and ARPU were stable yoy. Broadband subscribers began to grow again, up 1.0% yoy, but this was offset by slightly lower ARPU (-0.8% yoy). Operating expenses, however, rose 7.7% yoy due to FX and higher broadcasting and production and staff costs. Most of the increase was one-off for the Greater Taichung expansion and, therefore, the trajectory should be flat going forward. EBITDA expanded 2.4% yoy, representing an EBITDA margin of 61.0%, down 1.2% pts yoy. Digital STB penetration has reached 100%.

Taichung expansion
Network expansion continued, with currently well over 30% of homes passed. Commercial and marketing operations began in the previous quarter and cable TV services were expected to be launched by the year-end once negotiations with content aggregators were finalised. Network capex was reconfirmed at S$30m-40m for 2015-16, to be funded internally and via borrowings. Management anticipates no impact on EBITDA and distributions in 2015, although we project contributions from 2016 onwards with c.5% yoy growth.


Technical Analysis
Daily Chart
Value and stability
APTT currently trades at a forward dividend yield of 9.9%, which is attractive relative to other Singaporean income plays’ c.5-6%. The company has a good track record of stable dividends and cash flow. (Read Report)

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Source : CIMB Research

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