Astro’s Q1 FY26 Performance: Navigating Headwinds with a Strategic Compass
Greetings, fellow investors! Today, we’re diving into the latest quarterly report from Astro Malaysia Holdings Berhad (AMH), a household name in Malaysian entertainment. This report for the first quarter ended 30 April 2025 offers a candid look at the company’s performance amidst a challenging market landscape. While some key financial figures show a decline compared to the same period last year, Astro is clearly doubling down on its long-term strategic initiatives to transform into Malaysia’s No.1 Entertainment and Streaming Destination. Let’s unpack the numbers and understand what this means for the company’s future.
Key Takeaway: Astro faced revenue and profit declines in Q1 FY26 compared to the previous year, primarily due to softer consumer sentiments and lower advertising spend. However, the company is actively executing a robust transformation strategy focused on content, customer value, and new business growth.
Core Financial Highlights: A Mixed Bag
A look at Astro’s consolidated performance for the first quarter of FY26 reveals a challenging period. Revenue, gross profit, and net profit all saw declines when compared to the same quarter last year. This reflects the broader economic environment and evolving consumer habits.
Q1 FY26 (Ended 30 April 2025)
Revenue: RM703.1 million
Gross Profit: RM176.0 million
Profit from Operations: RM45.4 million
Profit Before Tax: RM21.0 million
Net Profit: RM13.5 million
Earnings Per Share: RM0.003
EBITDA: RM157.7 million
EBITDA Margin: 22.4%
Q1 FY25 (Ended 30 April 2024)
Revenue: RM772.5 million
Gross Profit: RM212.9 million
Profit from Operations: RM76.1 million
Profit Before Tax: RM26.0 million
Net Profit: RM17.0 million
Earnings Per Share: RM0.003
EBITDA: RM205.7 million
EBITDA Margin: 26.6%
Compared to the first quarter of the previous financial year:
- Revenue decreased by 9.0%, from RM772.5 million to RM703.1 million. This was primarily driven by a reduction in subscription and advertising revenue.
- Gross Profit saw a 17% decline, landing at RM176.0 million.
- Profit from Operations fell significantly by 40%, from RM76.1 million to RM45.4 million.
- Profit Before Tax decreased by 19%, from RM26.0 million to RM21.0 million.
- Net Profit was down by 21%, from RM17.0 million to RM13.5 million.
- EBITDA declined by 23%, and the EBITDA margin decreased by 4.2 percentage points, primarily due to higher content costs, license, copyright and royalty fees, staff-related costs, impairment of receivables, and professional fees, though partially offset by a decrease in set-top box costs.
- Earnings per share remained at RM0.003, indicating that despite the profit decline, the impact on a per-share basis was minimal due to the large number of outstanding shares.
Segmental Performance: Television Holds Steady, Radio Faces Headwinds
Television Segment
The Television segment, Astro’s core business, experienced a revenue decrease of 7.9% to RM670.0 million, down from RM727.1 million in the corresponding quarter. This was mainly due to lower subscription and advertising revenue. Despite the revenue decline, the segment’s Profit Before Tax actually increased by 37% to RM8.2 million, compared to RM6.0 million in the previous year. This improvement in PBT, despite lower revenue, was supported by lower net financing costs, reduced amortisation of intangible assets, and lower tax expenses. Average Revenue Per User (ARPU) for Pay-TV residential subscribers saw a slight dip from RM99.4 to RM98.0.
Radio Segment
The Radio segment faced a steeper decline, with revenue falling by 27.3% to RM33.0 million from RM45.4 million. This was attributed to soft consumer sentiments leading to lower advertising spend. Consequently, EBITDA for the Radio segment also saw a significant drop of 52% to RM11.2 million, and Profit Before Tax decreased by 48% to RM11.6 million. Weekly Listeners also slightly decreased from 17.0 million to 16.3 million.
Financial Health: Balance Sheet and Cash Flow
Astro’s balance sheet as of 30 April 2025 shows a slight decrease in total assets by 1.8% to RM5,384.2 million from RM5,483.1 million at the end of the last financial year. Total liabilities also decreased by 2.6% to RM4,099.2 million, mainly due to lower borrowings and payables, partially offset by higher tax liabilities and derivative financial instruments.
One positive highlight from the report is the cash flow from operations. Net cash generated from operating activities significantly increased by 17.0% to RM230.2 million in Q1 FY26, compared to RM196.7 million in the same quarter last year. This indicates strong operational cash generation despite the revenue headwinds, which is a healthy sign for the company’s liquidity.
Strategic Focus and Future Outlook
Despite the challenging quarter, Astro’s management remains committed to its transformation journey, aiming to be Malaysia’s No.1 Entertainment and Streaming Destination. Their strategy is multi-pronged:
- Elevating Local Content: Astro is leveraging its competitive advantage by focusing on high-quality local productions through Astro Originals, signatures, and movies, producing 10,000 hours of new content annually. Customers now spend an impressive 82% of their time on Astro watching local content, a 3 percentage point increase quarter-on-quarter.
- Increasing Customer Value: The company is expanding content volume and diversity in lower-tier packages and reducing entry pricing for Astro and sooka products to grow its subscriber base.
- Growing Adjacent Businesses: Efforts are underway to increase the uptake of sooka (streaming), Astro Fibre (broadband), Enterprise, Addressable Advertising, and Studios, targeting both current and new market segments.
- Transforming Cost Structures: Astro is actively working on optimising its legacy cost structures to support these growth initiatives.
- Streaming Integration: Astro continues to enhance its content offerings by integrating global and regional streaming apps like Amazon Prime Video and Sun NXT onto its U-Boxes and Astro One TV packs, aiming to attract new customers and support long-term advertising growth.
A significant ongoing challenge for Astro is content piracy. The company is aggressively fighting this threat, having secured recent landmark court decisions in Malaysia against illegal streaming device sellers and F&B outlets. Astro continues to lobby for further regulatory reform and enforcement to protect its content and safeguard the future of the Malaysian creative industry.
Given the prevailing challenging environment, the Group maintains a cautious outlook, focusing on monitoring business conditions closely and ensuring effective cost discipline as consumers and businesses navigate internal reforms and external uncertainties.
Dividends
The Board of Directors did not recommend any interim dividend for the first quarter ended 30 April 2025.
Summary and Investment Recommendations
Astro Malaysia Holdings Berhad’s Q1 FY26 results reflect the ongoing pressures from a competitive landscape and evolving consumer preferences, particularly evident in the declines in revenue and profitability compared to the previous year. The softness in consumer sentiment and advertising spend has clearly impacted both the Television and Radio segments. However, the company’s strategic pivot towards local content, value creation for customers, and expansion into adjacent businesses demonstrates a clear roadmap for future growth and resilience.
While the financial performance for this quarter presents challenges, the strong cash flow generated from operations is a positive indicator of the company’s underlying operational efficiency. The aggressive stance against content piracy is also crucial for protecting its intellectual property and long-term revenue streams. Astro is clearly taking proactive steps to adapt to the new media landscape.
Key points to consider from this report:
- Revenue and net profit declined quarter-on-quarter, primarily driven by lower subscription and advertising revenues.
- Cost pressures, including content costs and staff-related expenses, impacted EBITDA margins.
- The Television segment’s profit before tax improved despite lower revenue, suggesting some efficiency gains or lower financing costs.
- The Radio segment was significantly impacted by soft consumer sentiments and reduced advertising spend.
- Operating cash flow remains strong, providing a solid foundation for the company’s strategic investments.
- Astro is actively pursuing a multi-faceted transformation strategy to enhance content offerings, grow its subscriber base, and expand into new revenue streams.
- Content piracy remains a significant threat, but Astro is making progress in its legal fight against it.
Looking ahead, Astro’s ability to execute its transformation strategy, manage costs effectively, and combat piracy will be critical for its future performance. The focus on local content and integrated streaming experiences could be key differentiators in the long run.
What are your thoughts on Astro’s latest quarter? Do you believe their strategic initiatives, particularly in local content and new business ventures, will be enough to turn the tide and drive sustainable growth in the coming years? Share your insights in the comments below!
