ASTRO-- FULLY VALUED BY HWANG DBS

Astro
Rumoured disposal of Sun Direct TV, capital distribution (Fully Valued; RM3.62; ASTR MK; TP RM2.70) The media reported that Astro disposing its 20% stake in Sun Direct TV in India (SunDTV) and potentially distributing RM0.80-1.00 per share. The article reported that SunDTV would be merged into Aircel (7th largest celco in India),which is part of Maxis. Both Maxis and Astro are owned by Ananda Krishnan.

SunDTV added 700k subscribers in the Apr09 quarter to 3.2m vs. 2.5m in Jan09, and vs. only 0.5m a year ago. We expect Astro’s FY1/10F net profit to jump by c. 60% from our current forecast of RM169m, should Astro dispose its entire 20% stake in SunDTV. A capital distribution of RM1.00 per share could raise Astro’s FY1/10F forecast net gearing to as high as c. 200% from 24% currently projected without factoring in the sale consideration The unconfirmed report of the capital distribution could trigger trading activity on the stock. However, value enhancement from such an exercise would depend on the valuation achieved for SunDTV. Until further development, we are maintaining our forecasts and sum-of-parts price target of RM2.70. Our Fully Valued call is retained.