Its home shopping venture represents a differentiated entry into Malaysia’s growing e-retailing market. More importantly, it signals AStro’s evolution into an entertainment/lifestyle company, which should improve the company’s long term growth profile – the key reason market observers turn positive.
Astro’s original content production will be an increasing competitive differentiator, offering cost mitigation and potential for further monetization. With the set top box swap out nearing completion, anticipate margin recovery will drive earnings growth. A 30% earnings growth is expected for the next few years from 2014.
Market conditions are ripe for e-commerce to take off in Malaysia, given an expanding middle class, relatively high broadband/mobile penetration and developed e-payment/billing systems.
Astro’s hjome shopping offering will be a unique proposition, given its live TV broadcasts and multiplatform strategy.
Expect home shopping to be earnings accretive from financial year 2016 ending Jan 31 (FY2016). While contributors may initially be small, home shopping bears the significance of potentially altering Astro’s long term growth profile.
Its key risk include competition, ability to secure exclusive content, content costs, foreign exchange, regulations and consumer sentiment.
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