Tuesday October 23, 2012
Is it time to buy Astro?
By LIZ LEE
Analysts say drop in share price opens doors to new investors
PETALING JAYA: Astro Malaysia Holdings Bhd's share price fell due to the overall weak market sentiment and the perception that the shares might have been overvalued.
However, analysts said the freed supply of shares could also open doors to investors who failed to hop on the initial public offering (IPO) bandwagon. Affin Investment Bank Bhd, in a recent report, had valued the shares at RM3.12.
Astro shed 23 sen to RM2.77 or 7.7% lower on volume of over 120 million shares traded. The shares fell to an intra-day low of RM2.73.
An Affin Research analyst said Astro was a stock with potential although the upside might not be that interesting.
“It is a stock investors should own, provided the valuations are reasonable. Currently, it is still rich compared with its peers,” he said, reiterating a consensus opinion among analysts.
“However, the current dividend yield is not that exciting and though the yield, at 2% , should jump to 3% in one or two years, it may not be exciting enough” he added. Affin valued Astro's dividend yield for the financial year 2015 to be 3.1%, from the current 2.3% calculated based on the RM3 IPO price.
Some market watchers added that Astro's sell-down could have been driven by cornerstone investors dumping shares as they were not subjected to any lock-up period.
Aberdeen Asset Management Sdn Bhd managing director Gerald Ambrose said the rules for the major pay-TV operator's listing had been somewhat “perverted”, allowing cornerstone investors to cash out earlier than the usual moratorium period of a few months.
“The rules have been tweaked (for this IPO). The cornerstone investors were allowed to dispose of their shares unlike in the IHH Healthcare and Gas Malaysia listings,” he said.
Ambrose believed the issue of Astro not setting aside shares for retail investors as well as the high price could dampen market interest. “Companies usually leave a bit (of shares) on the table. The fact that it has taken a high price and was oversubscribed could have failed to raise conviction among the investors,” Ambrose said.