+ Premium cable digital beginning to gain some traction with customers as APTV introduced promotional content. Subscribers rose almost 11% yoy in 2Q17.
+ Cable TV subscribers were stable and DPU guidance maintained.
+ APTV is evaluating other business opportunities with new trustee owners but too early to disclose any details.
– Broadband ARPU still on declining trend. The roll-out of unlimited 4G mobile data plans has affected ARPU. APTV had to react to the competition with new promotions.
– Free cash-flow declined yoy and is still lower than dividends payable. As a result, APTV is still reliant on increased leverage to sustain dividends. Leverage is rising faster this year in order to fund $50m premium digital capital expenditure.
The outlook remains stable. We lowered our net profit by 4% to account for higher foreign exchange. There is no change to our target price or cash-flow assumptions.
Maintain BUY rating with target price unchanged at S$0.64
We maintain our BUY recommendation with an unchanged target price. The adjustments to our earnings are non-cash and do not materially affect our valuations. We find APTV dividends attractive and sustainable. Operating cash-flows are supported by a recurrent monthly cable TV subscription fees, and APTV operates in a monopolistic environment.