ASTRO 11.7% Lower Than IPO RM3Shares of Astro drifted to its lowest closing price yesterday since its re-listing three weeks ago as even as speculation swirls over who the sellers are Astro closed down three sen at RM2 65 and is now down 11 7 per cent from its initial public offering IPO price of RM3. There have been no announcements of selling by major shareholders so far leading some market observers to suspect that the selling pressure could be coming from Astro employees themselves who took out financing in order to buy shares of Astro and who cannot meet the margin calls as the share price kept dropping resulting in automatic sell orders.
It was reported by The Star that Astro management met with their staff over the disappointing share price performance and efforts were being made to get the financing banks to give more time before making margin calls or to lower the margin threshold for Astro employees. Analysts and brokers said that the selling pressure could possibly also be due to a combination of other factors including an unsustainable price premium given the lack of dividend yield as well as foreigners exiting the market especially telecommunication stocks.
One analyst said that Astro s incumbent position and monopoly on satellite TV gave it a premium price upon listing which could also mean a limited upside and investors could be shifting their money to where they perceived they could get better yields. “Investors might just be biting the bullet and shifting their money elsewhere ” said the analyst. One broker said that those who took out margin financing to buy Astro shares could be hitting their cut loss thresholds.
“If the buyers who took margin financing can't top up the difference their bankers will auto sell” said the broker He also said that foreigners have been taking profit and reallocating their assets outside the country “When they cut, they cut everything ” the broker noted.
Astro has been the weakest of the major IPOs in Kuala Lumpur this year although it secured 22 cornerstone investors including US hedge fund Och-Ziff Capital Management. The weakness in the share price could also be due to a change in rules also allowed the cornerstone investors to exit Malaysia’s largest pay-TV operator without a lock-up period Malaysia’s pension fund giant Employees Provident Fund EPF did not invest in the company possibly because it did not find the dividends expected to be between 2-3 per cent attractive enough.
Astro started in 1996 just before the Asian financial crisis It was listed on Bursa Malaysia in 2003 as Astro All Asia Networks AAAN but delisted in June 2010 after its major owners Ananda Krishnan and Khazanah Nasional decided to take it private. The rationale for de-listing was losses from its overseas operations — India and Indonesia. Both operations required more capital and gestation which would have impacted Astro’s bottomline if it had stayed listed. Two years have passed and it is back on Bursa as AMH Astro Malaysia Holdings with Ananda Krishnan holding about 50 per cent and Khazanah holding 20.8 per cent.
Some analysts said however that Malaysia’s largest pay-TV operator is poised for robust growth thanks to the country’s low pay-TV penetration rate rising income levels and its large content offerings. MIDF Research said that Astro’s average revenue per user ARPU is expected to be maintained due to rising household income and upgrading of subscribers and that its stated 75 per cent payout ratio would make it a good defensive stock to hold.
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