Asian Pay Television Trust
Taichung expansion confirmed
▊ 3Q13 results were in line with forecasts and reaffirmed its dividend distribution for FY13-14. Management is also proceeding with its expansion into Greater Taichung which should raise distribution in the medium term. Our growth thesis has received a boost. 9M13 results were in line with asset EBITDA of S$150m accounting for 74% of our FY13 forecast. 2H13 DPU of 4.13Scts was reiterated. We maintain our Outperform rating and DCF-based (COE 11.0%, LTG 1%) target price. We make minor changes to our forecasts after some housekeeping. Catalysts are expected from NCC certification for the start of operations in Greater Taichung, which we expect in 1Q14.
3Q13 in line
3Q13 revenue of S$79m was in line, with 9M13 accounting for 74% of our FY13 forecast. Basic cable and broadband subscriptions were below full-year run rates and are likely to miss guidance. The weaker growth was attributed to a worse-than-typical typhoon season with staff focus diverted to service outages rather than new sign-ups. The shortfall was made up by premium digital cable, which enjoyed stronger subscriber growth (exceeding year-end targets) and higher ARPU, driven by increasing digital content and strong demand. Management reaffirmed its full-year revenue target. 3Q13 asset EBITDA of S$51m was also in line, with 9M13 accounting for 74%.
Management also confirmed that it is proceeding with its expansion into the Greater Taichung licence zone (refer to our 6 Nov 13 note, Growth sprouts?). Management reaffirmed FY13-14 DPU and said its expansion capex would be funded by debt. We think this will have minimal impact on debt ratios and a positive impact on distribution in the medium term (which we take to mean from FY15 onwards). Discussions during the analyst briefing were all in keeping with our estimate of a 25% increase in dividends from FY18 onwards.