09 August 2012

Astro Malaysia IPO Update: Astro Malaysia unveils draft prospectus, plans to use 58% of the money that would potentially be raised for capital expenditure, 29.3% for repayment of bank borrowings, 8.6% for working capital and the rest for paying off its listing expenses

Astro Malaysia Holdings Bhd aims to list on the Main Market of Bursa Malaysia and has unveiled its draft prospectus on the Securities’ Commission website yesterday.

The joint principal advisers and joint managing underwriters to this pending initial public offering (IPO) exercise are CIMB Investment Bank Bhd, Maybank Investment Bank Bhd and RHB Investment Bank Bhd.

The satellite television (SatTV) and digital radio broadcaster said in the prospectus that it planned to use 58% of the money that would potentially be raised for capital expenditure, 29.3% for repayment of bank borrowings, 8.6% for working capital and the rest for paying off its listing expenses.

The draft prospectus for the sole SatTV provider in Malaysia showed that its revenues were on a steady upward trend increasing from RM3.24bil in the financial year ended Jan 31 (FY10) to RM3.66bil in the next year and eventually grew to RM3.89bil in FY12.

Net profits including minority interests, however, showed a more erratic trend initially increasing from RM613.93mil in FY10 to RM827.48mil in FY11, then declining to RM629.62mil in FY12.

Trend for earnings before interest, taxes, depreciation and amortisation (EBITDA), however, showed an increasing trend as well from RM986.2mil in FY10 to RM1.37bil in the next year and then seeing further growth to RM1.41bil in FY12.

The SatTV services provider saw net profit margins recorded in FY12 at 16.2% while EBITDA margins were at 36.4% in the same financial year as well.

“Pro forma depreciation and amortisation increased by RM100.9mil, or 40.3%, from RM250.4mil for FY11 to RM351.3mil for FY12,” it said.

“The increase was primarily attributable to depreciation arising from a higher deployment of Astro B.yond set-top boxes as a result of an increase in HD and PVR take-up by new and existing subscribers as well conversion,” it added.

Astro Malaysia, which had previously been listed under the name Astro All Asia Networks Plc, provides SatTV services to both Malaysian and Bruneian homes, the draft prospectus showed.

It also showed that total intangible assets stood at RM1.76bil against the next biggest asset component of property, plant and equipment at RM1.71bil.

Astro Malaysia’s total equity as at April 30 was a negative RM1.13bil while it said its total indebtedness, which also comprised contingent liabilities, was at RM4.56bil.

“The deficit position is primarily due to the reorganisation, whereby for accounting consolidation purposes, our acquisition of Measat Broadcast Network Systems Sdn Bhd (MBNS), our largest operating subsidiary, was accounted for as a capital reorganisation of MBNS and the difference between the consideration for MBNS and the net assets of MBNS at the date of acquisition has been taken to capital reorganisation reserve,” it explained in the draft prospectus.

“Notwithstanding the above, after taking into account the public issue, our group’s shareholders’ equity as it appears in the pro forma consolidated balance sheets as at April 30, is no longer in deficit,” it said.

It was previously reported before that the Astro relisting could be raising up to US$1.5bil (RM4.65bil).
Astro Malaysia Holdings Bhd is supported by about three million residential pay-TV users, making it the largest pay-TV operator in South-East Asia by subscriber base.

According to its draft prospectus, Astro has a market penetration of about 50% of Malaysian TV households, of which it has a market share of 99% in the residential pay-TV market in 2011.

The company surpassed its one million residential pay-TV subscriber mark in 2003, and the figure hit two million in 2007.

“Our leading position is reflected by our 156 TV channels as at June 30, of which 68 are Astro-created and branded channels.

“We distribute content to our customers via broadcast and on-demand programmes through our Direct-To-Home satellite TV, IPTV and Over-the-Top platforms, making our TV offerings increasingly platform agnostic in reaching our customers,” it said.

In the financial year ended Jan 31, the company produced about 8,000 hours of TV content and have produced or commissioned for production over 40,000 hours of TV content as at June 22, being the last practical date for certain information to be obtained and disclosed in the draft prospectus.

“Based on our existing position, we believe we are well positioned to capitalise on the potential growth of the Malaysian economy and a young population demography that is open to the adoption of new technologies,” it said.

This was based on the Independent Market Research (IMR) Report that forecast Malaysia's nominal gross domestic product to grow at a compounded annual growth rate (CAGR) of 8% from 2011 to 2016, and the expected growth of Malaysian average monthly household income at a CAGR of 5.3% from 2011 to 2016.

“We believe this economic growth will contribute to higher consumer spending in media, expansion of the advertising market and an increase in residential pay-TV subscriber penetration from 50% of Malaysian TV households in 2011 to 63% in 2014,” it said.

In its draft prospectus, Astro mentioned several strategies to maintain its leadership in the consumer media entertainment sector in Malaysia, notably to leverage on new technologies to develop products that enhance reach and service proposition.

“We will continue to capitalise on the emergence of new technologies and develop new products to expand our customer reach and enhance our service proposition to consumers,” it said, along with its plans to pursue a targeted acquisition strategy to grow its subscriber base.

Astro's radio comprises nine commercial stations available over FM, DTH satellite TV, IPTV and mobile platforms as well as the Internet, which includes the highest-rated radio stations in Malay, Chinese, Indian and English languages in terms of listenership.

In April, the company's radio operations recorded about 13 million weekly listeners, capturing 52% share of listenership in Malaysia. It also commands 53% share of the radio advertising expenditure for the three months ended April 30.
Source: www.thestar.com.my

01 August 2012

Lafarge, Malaysia's largest cement producer by capacity confirmed raising cement prices

The usually staid cement industry got a bit hot under the collar recently when rumours surfaced of a hike in prices that will, in fact, take effect today.

The Master Builders Association Malaysia (MBAM) kicked up a fuss last week after it was notified by one its members, which happens to be a large listed developer, that one of the “major” local cement manufacturers had all but decided to raise the list price of cement in the Klang Valley.

A few days earlier, the Building Materials Distributors Association of Malaysia came out to say that the price for a 50kg bag of cement was set to climb RM1 and the price per tonne RM20, according to market talk.

This means a 6% increase from the current prices of RM16.75 per 50kg and RM320 per tonne. The last time prices were higher was in March 2011, also by 6%.

Naturally, those who would be affected were up in arms, alleging that collusion and even an artificial shortage had taken place among the six producers, namely YTL Cement Bhd, Tasek Corp Bhd, Cement Industries of Malaysia Bhd, Lafarge Malayan Cement Bhd, CMS Cement Sdn Bhd and Holcim (M) Sdn Bhd.

Then yesterday, Lafarge let the cat out of the bag when the country's largest cement producer by capacity confirmed it was raising prices.

“The decision was made unilaterally and taking into consideration our increasing costs associated with manufacture and delivery of cement, which we have endeavoured to absorb over the years,” its executive director, Chen Theng Aik, was quoted as saying by a local daily.

He also refuted claims of collusion, insisting that a shutdown of its facilities for maintenance earlier this year had led to lower production.

When contacted, MBAM president Matthew Tee said the organisation, which represents the local construction industry, had made its stand and was sticking to it.

In a statement last week, MBAM appealed to the Domestic Trade Ministry to look into the matter, saying the increase in price would “definitely” result in a spike in the price of all concrete and cement-based products, and inevitably the cost of construction.

“Contractors will be impacted as they have signed fixed-price contracts with project developers. Ultimately, the price increase will be passed on to end-purchasers and house buyers.

“We see no reason for the said increase as production costs have not gone up but in fact fuel and energy costs have come down this year. We would like to draw the attention of the Malaysia Competition Commission to investigate whether the major cement manufacturer is making use of its dominant position to lead in the said price increase and thus control the market price.”

Tee also told StarBiz by phone that the association did not oppose a price rise per se, but rather the lack of “due and proper notice.”

“As long as there is proper notice, and based on fair market conditions, we are OK with higher prices,” he said, noting that the two sides had in the past engaged each other on this very issue.

He also questioned the view that Lafarge's decision was motivated by supply and demand, stressing that price hikes should not be done erratically. “What if it goes up again in September, or later?”

Another industry player pointed out that once Lafarge began charging its new rates, the rest were sure to follow suit, if past experience was anything to go by.

So far, only Sarawak-based CMS Cement has said publicly it will keep prices as they are. The other firms did not immediately respond to queries from StarBiz.

Meanwhile, the Cement and Concrete Association of Malaysia (CNAC) has steered clear of the debacle, saying it has no role whatsoever in the setting of prices by its members.

“I have made it quite clear. Pricing is not a matter for CNAC to collate as that would be against competition laws. Each company has the right to raise prices on its own volition,” executive director Grace Okuda explained.

On the repercussions of this for property developers, Real Estate and Housing Developers Association president Datuk Seri Michael Yam said any increase in building material costs would, due to the compounding effect, lead to more expensive homes and offices.

“We are concerned because there is only so much the customer can bear,” he said, but added he was cognisant cement companies were entitled to a return on their business.

Be that as it may, analysts are of the opinion that the price rise was driven by market forces as massive infrastructure projects, including the Klang Valley My Rapid Transit and extension of the Light Rail Transit, get under way, giving a fillip to demand.

One industry watcher rubbished claims that more costly cement would cause a plunge in consumption or some such adverse reaction.

“The market will adjust itself. Supply and demand will take precedence at the end of the day,” he said.

Source: www.thestar.com.my