PhillipCapital has maintained its "buy" rating for Asian Pay Television Trust (APTT) with an unchanged target price of 15 cents following its 4QFY2020 results that were within expectations.

Despite a decrease in cable TV subscribers by 7,000 q-o-q, PhillipCapital analyst Paul Chew remains upbeat on APTT as average revenue per user remained stable at NT$482 ($23.13). The trust’s cable TV revenue also benefitted from the 6.1% appreciation of the Taiwan dollar in FY2020.

Chew's rating and target price is underpinned by APTT’s growth in adjusted free cash flow for FY2020, which increased from $29 million to a record $67 million due to a significant decrease in capital expenditure by $21 million or 29%.


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Based on the higher free cash flow, Chew believes the trust will sustain a distribution per unit (DPU) of 0.25 cents per quarter in FY2021 for a full-year DPU of 1 cent, which translates to a yield of 9.3%.

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Chew also anticipates growth opportunities from a 5G data backhaul for mobile operators in Taiwan that will help counter shrinking cable subscribers.

“No guidance has been provided but we expect a 14,000 fall in cable-TV subscribers in FY2021 to be offset by a 15,000 increase in broadband subscribers,” he says.


SEE: Asian Pay Television Trust to use $46.2 mil from rights issue for partial repayment of offshore facilities, and fees


Chew’s target price of 15 cents is based on EV/EBITDA of 9 times, which is a 20% discount to Taiwanese peers given its “smaller scale, higher leverage and softer growth profile”.

As at 11.34am, shares in APTT are down 0.1 cents or 0.94% lower at 10.6 cents.