Asian Pay TV share price is at all time low

[YH Loke]

Hi,

in 2022 and 2023, the depreciation of Taiwan dollar against Singapore dollar and some increase in interest costs have resulted in the 9% negative variance on EBITDA. The FYE2023 dividend yield at 8.8 cents is 11.9%. Do you have a view on APTT fundamentals ?

regards, Loke

[Peg]

APTT’s net book value is likely to fall after the year-end asset revaluation exercise, largely due to higher discount rate and stronger S$ vs NT$. Gearing would rise (Sep 23: 48.2%), but we do not expect a cash call as APTT is a business trust and not subject to the 50% gearing cap.

Free cash flow of about S$70mn is more than adequate to cover FY24e distribution guidance of S$19mn. We believe the yield of 12% (at current price of S$0.085) is in the bag. Excess funds will be used to lower higher-cost offshore debt and revolving credit. It has offshore debt of S$46.6mn and S$75mn revolving facility, which will help lower interest cost.

Longer-term, however, APTT faces a structural issue as cable TV assets are losing appeal due to demographic changes. Capex cut by mobile operators could slow the take up of data backhaul for the broadband segment. EBITDA fell at a CAGR of 3.5% over last 5 years.

[YH Loke]

Hi Peggy Mak,

Thank for you an insightful analysis on APTT. Much appreciated.

The CEO has guided that “We are exercising prudence with our 2024 distribution guidance of 1.05 cents per unit, which is the same as this year. Key considerations include the heightened interest rates and a weaker NT$ against S$. At this distribution level, we are comfortable that our disciplined debt repayments can continue, while capital expenditure can still continue to support our aggressive Broadband growth strategy.”

So far in 2023, APTT has managed to lower gearing. Can you please enlighten me on the possible reasons for your expectations on gearing to rise in the future ?

kind regards, Loke

[Author]

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