Astro Malaysia's net profit slipped 6.7% to MYR114.1m

Blame it on higher depreciation.

According to OCBC Investment Research, Astro Malaysia Holdings Berhad (Astro) reported 1QFY14 revenue of MYR1125.8m, +14.2% YoY, and met 23.2% of OCBC's full-year forecast. Growth was driven by the 11.8% YoY increase in subscription revenue to MYR972.8m and also the 29.6% jump in advertising revenue to MYR64.3m. EBITDA climbed 11.5% to MYR380.9m, while service margin was stable at 33.8% (versus 34.7% in 1QFY13). 

However, OCBC noted that due to higher depreciation, net profit fell 6.7% to MYR114.1m, but still met around 24.7% of OCBC's FY14 forecast.

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And as Astro remains highly cash generative (free-cash flow of MYR185m, or 163% of net profit), it is declaring a quarterly dividend of 2.0 sen per share (versus 1.5 sen in the previous two quarters).

Going forward, management remains relatively upbeat about its prospects, where it should be able to sustain the first quarter revenue growth for the rest of the year, encouraged by the strong demand for its comprehensive suite of value-added products and services.

Astro believes that it is on track to achieve an ARPU of MYR130 by FY18 (versus the current MYR94). Management also expects EBITDA service margin to remain around 32-33%, noting that it will still be reinvesting for growth this year; it also expects operating expenses to peak in FY14.

And with operations remaining highly cash generative, Astro remains committed to delivering total returns to shareholders, combining a progressive dividend policy with investment in the business to generate capital appreciation.