ASTRO IPO - Another A-K's Company Re-Lists

Astro Malaysia Holdings Berhad, once awhile listed in Bursa Malaysia, is going to enter the Bursa again, 2 years after privatised by Ananda Krishnan (AK). Not like the Astro All Asia Network last time, the new ASTRO listing just includes the operation in Malaysia. This would be the 3rd AK's company to relist in Bursa in 3 years, after MAXIS & ARMADA. With the offer price of RM 3.60 per share, ASTRO is valued at market cap of RM 18.7 billion upon listing.

Is ASTRO IPO good enough to be subscribed? ASTRO is offered at historical PE of 30x with the net earnings of RM 629.6 million last year. The borrowings of RM 3.66 billion is very high for ASTRO since the total asset of ASTRO is just standing around 5 billion as per 30 April 2012. Even ASTRO brands itself as a dividend yield player by promising to pay out at least 75% of the earnings as dividend to their shareholders, the dividend yield is around 2.5% (base on 75% payout ratio).

However, the market cap of RM 18.7 billion upon listing sounds a bit controversial since AK privatised Astro All Asia Network at RM 8.1 billion in 2010. Even the number of subscribers for ASTRO is still increasing, I believe the number will be growing slower in the next few years. The market share of ASTRO may be affected as well since TM is starting their paid TV business Hypp TV. While we can see the success of Unifi, I believe TM will become a strong challenger to ASTRO in the future.

I think the offer price of RM 3.60 for ASTRO is really, fully, valued already, I believe the fair value shouldn't be higher than RM 3.60 for this moment. Anyway, institutional & retail investors will still go for ASTRO because of its big name & the company size. AK's companies are always trading at premium, like MAXIS & ARMADA which traded over 10% of the IPO price upon listing. You still can try your luck to apply for ASTRO IPO on speculation that the price will trade at 10% premium on the 1st days ASTRO lists in the market. Why luck is important? Because they are going to offer 5% or 260 million shares to retail investors only.



Note: The above content is just a blogging activity that purely share my investment thoughts & ideas and should not be used as recommendation to buy or sell any securities. I may already have position in the above securities. Any action that you take from the opinions or information of this blog is solely on your own responsibility. Please consult your investment advisor before you make any investment decision.