Astro Malaysia Holdings Bhd - Credit Suisse

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27 November 2012

Asia Pacific/Malaysia

Equity Research

Radio & TV Broadcasting

Astro Malaysia Holdings Bhd

(ASTR.KL / ASTRO MK) INITIATION

A media powerhouse

■ Initiating coverage with an OUTPERFORM. Astro is the only satellite pay

TV operator in Malaysia, with a subscriber base of over 3 mn. We expect

Astro to grow its subscriber base as well as ARPU at the same time. We

initiate coverage on Astro with an OUTPERFORM rating and a DCF-based

target price of RM3.50, implying c.32% potential upside.

■ Proxy for rising Malay household income. We believe Astro is a potential

beneficiary of Malaysia’s attractive demographics: a young and growing

population, whereby a growing economy is driving income growth. Malay

households, which account for 60% of Astro’s subscribers, have the highest

income growth within the Malaysian population. Astro’s wide range of

content is suited to Malaysia’s multi-lingual population, whereas free-to-air

(FTA) TV has limited capacity to offer dedicated vernacular channels.

■ Growth drivers. Astro’s ARPU grew 8.5% from FY10A to FY12A. Potential

ARPU drivers include high definition (30% take-up currently), personal video

recorder (PVR), Super Pack and IPTV. We have baked in mid-single-digit

ARPU growth for FY14-16E but if management delivers high single-digit

ARPU growth, we estimate, 16% further potential upside to our target price.

■ Trading 11% below IPO price. We apply a mid-point 15% discount-to-DCF

to arrive at our RM3.50 target price. Historically, Astro has traded at a 3%-

29% discount to DCF valuations—this suggests a share price range of

RM2.90-4.00. Key risk factors, in our view, include content cost, satellite

transponder capacity, technical/broadcast failure, competition, regulatory

risks and currency. While FY13-14E EBITDA is dampened by significant

costs related to a box swap, we expect profitability to rebound in FY15E

when the bulk of Astro’s subscriber homes will be equipped with an HD-box.

Share price performance

80

90

100

110

120

2

3

4

5

6

Oct-12

Price (LHS) Rebased Rel (RHS)

The price relative chart measures performance against the

FTSE BURSA MALAYSIA KLCI IDX which closed at 1614.32

on 23/11/12

On 23/11/12 the spot exchange rate was RM3.06/US$1

Performance over 1M 3M 12M Absolute (%) -7.0 — — Relative (%) -3.5 — —

Financial and valuation metrics

Year 1/12A 1/13E 1/14E 1/15E Revenue (RM mn) 3,888.8 4,317.5 4,701.9 5,065.7 EBITDA (RM mn) 1,414.7 1,366.3 1,467.8 1,730.1 EBIT (RM mn) 990.4 755.6 744.2 869.5 Net profit (RM mn) 624.1 420.7 415.4 489.8 EPS (CS adj.) (RM) 0.12 0.08 0.08 0.09 Change from previous EPS (%) n.a. EPS growth (%) -24.2 -32.6 -1.3 17.9 P/E (x) 22.2 32.9 33.3 28.2 Dividend yield (%) 0 1.1 2.3 2.7 EV/EBITDA (x) 12.1 11.3 10.4 8.9 P/B (x) 28.6 24.8 20.9 17.9 ROE (%) 258.5 80.8 68.1 68.3 Net debt/equity (%) 657.6 281.1 207.9 207.5

Source: Company data, Thomson Reuters, Credit Suisse estimates

Rating OUTPERFORM* [V] Price (23 Nov 12, RM) 2.66 Target price (RM) 3.50¹ Upside/downside (%) 31.6 Mkt cap (RM mn) 13,827 (US$ 4,522) Enterprise value (RM mn) 15,432 Number of shares (mn) 5,198.30 Free float (%) 30.0 52-week price range 3.00 - 2.61 ADTO - 6M (US$ mn) 31.9

*Stock ratings are relative to the coverage universe in each

analyst's or each team's respective sector.

¹Target price is for 12 months.

[V] = Stock considered volatile (see Disclosure Appendix).

Research Analysts

Foong Wai Loke

60 3 2723 2082

[email protected]

Regional Consumer Research Team

Regional Head: Karim P. Salamatian, CFA

Gabriel Chan, CFA

Kevin Yin

Sonia Kim

Foong Wai Loke

Ella Nusantoro

Dian Haryokusumo

Chung Hsu, CFA

Arnab Mitra

Chai Techakumpuch

Vivian Zhao

Thaniya Kevalee

Isis Wong

27 November 2012

Astro Malaysia Holdings Bhd (ASTR.KL / ASTRO MK) 2

Focus charts Figure 1: FY12A revenue, by segment Figure 2: Monthly ARPU (USD)

TV93%

Radio5%

Others2%

0

10

20

30

40

50

60

70

80

90

100

DirecTV

Austa

r

DIS

H U

S

SK

Y N

Z

BS

kyB

Sta

rhub

Naspers

Astr

o

PC

CW

i-C

able

MN

C S

ky

KT S

kylif

e

DIS

H India

Source: Company data Source: Company data, Credit Suisse estimates

Figure 3: Astro subscriber base, by ethnic group Figure 4: Malay households have the fastest growing

incomes (%)

Malay, 28%

Malay, 60%

Chinese, 55%

Chinese, 22%

Indian, 13% Indian, 11%

Other, 4%Other, 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 Current

Malay Chinese Indian Other

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Malay Indian Chinese

CAGR 07-09

Source: Company data Source: Economic Planning Unit

Figure 5: Global pay TV penetration rates Figure 6: Pay TV penetration trends

0%

20%

40%

60%

80%

100%

120%

140%

Kor

ea

Tai

wan

Hon

g K

ong

Indi

a

Sin

gapo

re

New

Zea

land

Mal

aysi

a

Chi

na

Aus

tral

ia

Japa

n

Vie

tnam

Tha

iland

Phi

lippi

nes

Indo

nesi

a

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1965

1975

1981

1983

1985

1987

1989

1991

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

USA UK Australia

New Zealand Malaysia

Source: Media Partners Asia Source: Value Partners, Screen Digest, Credit Suisse estimates

27 November 2012


A media powerhouse We initiate coverage on Astro with an OUTPERFORM rating and a DCF-based target

price of RM3.50. Astro is the only DTH satellite pay TV operator in Malaysia, with a

subscriber base of over 3 mn. In addition to its leadership in pay TV, Astro is also the

leading radio operator in Malaysia, with 20 channels and a 52% share of radio advertising

expenditure (adex). While its FY13-14E EBITDA is dampened by significant costs related

to a box swap, we expect profitability to rebound in FY15 when the bulk of Astro’s

subscriber homes will be equipped with an HD-enabled box.

Proxy for rising Malay incomes

We expect Astro to grow subscribers and ARPU; it is well-positioned to tap Malaysia’s

attractive demographics: a young and growing population, whereby a growing economy is

driving income growth. The ethnic breakdown of Astro’s subscriber base is a close

reflection of Malaysia’s multi-cultural population (60% of its subscribers are Malays).

Hence, Astro is likely to be a prime beneficiary of rising income growth of the Malay

population, the highest growth for any race in Malaysia. Astro’s monthly ARPU accounts

for a tiny proportion of household incomes (1%-3%); this suggests affordability of its

services is relatively high. The company’s 3 mn-plus subscribers translate into a

household penetration rate of close to 50%, which is low compared to India’s 80% and

Singapore’s 70%; hence, there is potential for Malaysia to catch up, in our view.

Competition is limited

We believe Astro is in a strong competitive position as FTA TV is hampered by structural

issues while IPTV competitors lack scale. Print has historically dominated Malaysia’s adex

pie and this effectively serves to cap FTA TV revenues (effectively limiting its content

budgets). Astro offers 156 TV channels (of which 68 are Astro-created and branded)

compared to six channels for FTA (which are also aired on Astro’s platform) and 71 for

HyppTV (IPTV). As Astro’s subscriber base has grown and viewership has risen, pay TV

adex growth has outstripped FTA adex growth. Meanwhile, IPTV offerings by telcos are

relatively limited as FTH lacks scale (TM’s UniFi has 450,000 subscribers). We believe the

telcos are also keen to avoid margin erosion from overzealous spending on IPTV content

as they have significant dividend commitments to meet.

New growth drivers

HD, PVR, premium content and IPTV services are potential ARPU drivers for Astro in the

longer term. There’s also an opportunity for Astro to tap prepaid revenues via its NJOI

offering, which doesn’t incur any subscriber acquisition cost (the consumer pays for the set

top box and installation). Yet, NJOI could see long-term potential revenue upside if users

buy prepaid content.

Trading 11% below IPO price

We apply a mid-point 15% discount to DCF to arrive at our RM3.50 target price for Astro.

Historically, Astro has traded at a 3%-29% discount to DCF valuations, which suggests a

share price range of RM2.90-4.00 (which spells 9-50% upside from current levels). We

have baked in mid-single-digit ARPU growth for FY14-16E but if management delivers

high single-digit ARPU growth, there is 16% potential upside to our target price. In our

view, the key risk factors for Astro include content costs, satellite transponder capacity,

technical/broadcast failure, competition, regulatory risks and currency.

On the positive side, the senior management comprising CEO, COO, Chief Commercial

Officer and also the Chief Innovation Officer all bought Astro shares after the listing.

Initiating coverage on Astro

with a target price of

RM3.50, which spells 32%

potential upside from current

levels

Pay TV penetration is still

low in Malaysia, in our view

FTA TV has a limited

content budget because

Malaysia’s adex pie is

dominated by print

HD, PVR, premium content

and IPTV services are

potential ARPU drivers for

Astro

We have baked in mid-

single-digit ARPU growth for

FY14-16E but if

management delivers high

single-digit ARPU growth,

there is 16% potential

upside to our target price

27 November 2012


Astro Malaysia Holdings Bhd ASTR.KL / ASTRO MK Price (23 Nov 12): RM2.66, Rating: OUTPERFORM, Target Price: RM3.50, Analyst: Foong Wai Loke

Target price scenario

Scenario TP %Up/Dwn Assumptions Upside 3.90 46.62 5% Discount to DCF Central Case 3.50 31.58 15% Discount to DCF Downside 3.10 16.54 25% Discount to DCF

Key earnings drivers 1/12A 1/13E 1/14E 1/15E

Pay TV residential subs ('000)

3,067 3,257 3,424 3,561 Astro Household penetration (%)

47.4 49.3 51.1 52.3 Residential ARPU (RM/month)

89.0 95.0 99.0 103.0 Net adds ('000) 136.0 190.0 166.9 136.9 MAT Churn (%) 7.00 9.00 9.00 9.00

Income statement (RM mn) 1/12A 1/13E 1/14E 1/15E

Sales revenue 3,889 4,318 4,702 5,066 Cost of goods sold 2,237 2,770 3,069 3,237 SG&A — — — — Other operating exp./(inc.) 237.5 181.7 164.7 98.1 EBITDA 1,415 1,366 1,468 1,730 Depreciation & amortisation 424.3 610.7 723.6 860.6 EBIT 990.4 755.6 744.2 869.5 Net interest expense/(inc.) 126.0 165.3 161.6 183.6 Non-operating inc./(exp.) — — — — Associates/JV — — — — Recurring PBT 864.4 590.3 582.5 685.9 Exceptionals/extraordinaries — — — — Taxes 234.7 165.3 163.1 192.0 Profit after tax 629.7 425.0 419.4 493.9 Other after tax income (0.05) (0.05) (0.05) (0.05) Minority interests 5.5 4.3 4.0 4.0 Preferred dividends — — — — Reported net profit 624.1 420.7 415.4 489.8 Analyst adjustments — — — — Net profit (Credit Suisse) 624.1 420.7 415.4 489.8

Cash flow (RM mn) 1/12A 1/13E 1/14E 1/15E

EBIT 990.4 755.6 744.2 869.5 Net interest — — — — Tax paid (164.2) (165.3) (163.1) (192.0) Working capital (212.5) 336.7 362.0 241.1 Other cash & non-cash items 90.1 610.7 723.6 860.6 Operating cash flow 704 1,538 1,667 1,779 Capex (538.5) (452.0) (725.5) (745.9) Free cash flow to the firm 165 1,086 941 1,033 Disposals of fixed assets — — — — Acquisitions — — — — Divestments — — — — Associate investments — — — — Other investment/(outflows) (1,449) 86 86 73 Investing cash flow (1,988) (366) (639) (673) Equity raised — — — — Dividends paid (1,331) (147) (312) (380) Net borrowings 3,505 (500) (300) (200) Other financing cash flow (912.1) 604.1 (566.6) (587.8) Financing cash flow 1,262 (43) (1,178) (1,167) Total cash flow (22) 1,129 (151) (61) Adjustments — — — — Net change in cash (22) 1,129 (151) (61)

Balance sheet (RM mn) 1/12A 1/13E 1/14E 1/15E

Cash & cash equivalents 478 1,607 1,456 1,395 Current receivables 798.2 847.6 923.1 994.5 Inventories 13.3 22.8 25.2 26.6 Other current assets 116.3 116.3 116.3 116.3 Current assets 1,406 2,594 2,521 2,532 Property, plant & equip. 1,654 1,944 2,220 2,809 Investments 48.1 48.1 48.1 48.1 Intangibles 1,771 1,771 1,771 1,771 Other non-current assets 1,635 135 135 135 Total assets 6,514 6,491 6,694 7,295 Accounts payable 1,581 1,699 1,489 1,753 Short-term debt 43.5 43.5 43.5 43.5 Current provisions 86.5 86.5 86.5 86.5 Other current liabilities 66.2 66.2 66.2 66.2 Current liabilities 1,777 1,895 1,685 1,949 Long-term debt 3,666 3,168 2,824 2,997 Non-current provisions 323 600 1,250 1,300 Other non-current liab. 256.0 256.0 256.0 256.0 Total liabilities 6,022 5,920 6,016 6,502 Shareholders' equity 482.9 558.0 661.9 772.1 Minority interests 8.6 12.9 16.9 20.9 Total liabilities & equity 6,514 6,491 6,694 7,295

Per share data 1/12A 1/13E 1/14E 1/15E

Shares (wtd avg.) (mn) 5,198 5,198 5,198 5,198 EPS (Credit Suisse) (RM)

0.12 0.08 0.08 0.09 DPS (RM) — 0.03 0.06 0.07 BVPS (RM) 0.09 0.11 0.13 0.15 Operating CFPS (RM) 0.14 0.30 0.32 0.34

Key ratios and valuation

1/12A 1/13E 1/14E 1/15E

Growth(%) Sales revenue 6.1 11.0 8.9 7.7 EBIT (7.2) (23.7) (1.5) 16.8 Net profit (24.2) (32.6) (1.3) 17.9 EPS (24.2) (32.6) (1.3) 17.9 Margins (%) EBITDA 36.4 31.6 31.2 34.2 EBIT 25.5 17.5 15.8 17.2 Pre-tax profit 22.2 13.7 12.4 13.5 Net profit 16.0 9.7 8.8 9.7 Valuation metrics (x) P/E 22.2 32.9 33.3 28.2 P/B 28.6 24.8 20.9 17.9 Dividend yield (%) — 1.06 2.25 2.75 P/CF 19.6 9.0 8.3 7.8 EV/sales 4.39 3.57 3.24 3.05 EV/EBITDA 12.1 11.3 10.4 8.9 EV/EBIT 17.2 20.4 20.5 17.8 ROE analysis (%) ROE 258 81 68 68 ROIC 38.8 18.4 25.1 27.6 Asset turnover (x) 0.60 0.67 0.70 0.69 Interest burden (x) 0.87 0.78 0.78 0.79 Tax burden (x) 0.73 0.72 0.72 0.72 Financial leverage (x) 13.3 11.4 9.9 9.2 Credit ratios Net debt/equity (%) 658 281 208 208 Net debt/EBITDA (x) 2.28 1.17 0.96 0.95 Interest cover (x) 7.86 4.57 4.60 4.74

Source: IBES, Credit Suisse estimates

27 November 2012


Proxy for rising Malay incomes We initiate coverage on Astro with an OUTPERFORM rating and a DCF-based target

price of RM3.50. Astro is currently trading 11% below its 19 October, 2012 IPO price of

RM3.00. It is the only DTH pay TV operator in Malaysia, currently offering 156 channels

(of which 22 are HD). In addition to its leadership in pay TV, Astro is also the leading radio

operator in Malaysia, with 20 channels and 52% share of the radio advertising

expenditure.

Figure 7: FY12A revenue, by segment

TV93%

Radio5%

Others2%

Source: Company data

Figure 8: FY12A TV revenue breakdown

Subscription91%

Airtime Sales7%

Others2%


Even if we were to exclude the FTA channels aired on its platform, Astro still offers a wider

range of TV channels (150) than the FTA (6) and IPTV players (64) combined.

According to Astro’s website, the most basic pack starts at RM37.95 and includes 41 basic

TV channels and 20 radio channels.

27 November 2012


Figure 9: Most popular TV content by language

Malay content Description

Maharaja Lawak Mega Comedy reality show across Malaysia, Indonesia and Singapore

Imam Muda Islamic reality show in search of the new Imam

Kilauan Emas Singing competition for senior citizens

Tanah Kubur Tales from grave-diggers

Chinese content Description

Astro Classic Golden Melody Singing competition for senior citizens

Hua Hee Everyday The first locally-produced Hokkien sitcom in Malaysia

Miss Astro Chinese International Pageant Beauty pageant, with its winner representing Malaysia to compete in the Miss Chinese International

Pageant.

My New Village Stories Documentary series of Chinese villages, cultures and heritage in Malaysia

Indian content Description

Vaanavil Super Star Singing competition

Aattam 100 Dance competition

Vagai Thigil Documentary on horror and supernatural stories in Malaysia

Viyarvai Documentary of community involved in dirty jobs such as cleaning toilets and rubbish for a living


Exclusive channels include National Geographic, Disney channel, Discovery channel,

AXN, ESPN and Fox Movie Premium. Astro also offers key sporting content such as

Barclays Premier League, UEFA Champions League and FIFA World Cup.

Astro’s exclusivity for DTH transmission is due to expire in 2017 while its licence for DTH

transmission is due to expire in 2022. Given that the company has invested heavily in the

business in the past few decades, we expect it to seek a renewal of the exclusivity in due

time.

Astro operates on Ku-band DTH satellite which has the advantage of small dishes (as

opposed to much larger C-band dishes) but is susceptible to rain fade.

Astro is a multi-platform operator

Astro operates on various platforms:

■ DTH satellite,

■ IPTV, and

■ OTT (Astro-On-The-Go).

IPTV: In 2011, Astro launched Astro B.yond IPTV, delivered through fibre optics

broadband as a triple play offering, with high-speed broadband and telephony services.

This currently has an infrastructure tie-up with TIME dotCom which is in the midst of wiring

up multi-dwelling units (condominiums). On 30 August, Maxis announced that it has

entered into a JV for Astro to be its exclusive content service provider for Maxis’ IPTV on

its fibre broadband service for three years.

Astro-On-The-Go: This is an OTT online and mobile application service, offering 11 linear

TV channels and non-linear content.

Astro is part of the Ananda Krishnan group of companies, which include Maxis

(telecommunications) and Bumi Armada (oil & gas).

27 November 2012


Figure 10: Astro’s group structure

Astro Malaysia

TV Radio Content & Publishing Others


Positive cash flow cycle

Astro’s subscriber acquisition strategy is supported by vendor financing. It enjoys vendor

financing ranging from 24-36 months for its set top boxes (STBs) at rates of 1%-5%. The

STB portion of the subscriber acquisition cost (SAC) is capitalised and depreciated over

three years while the remainder is expensed. We estimate that a new subscriber turns

cash flow positive for Astro within four months, assuming a new subscriber generates an

ARPU which is 25% lower than the average ARPU.

Attractive demographics

Malaysia’s favourable demographics are one of the growth drivers for Astro. The country

has a young and growing population, with 65% of the population aged 35 and below.

Astro’s monthly ARPU accounts for a tiny proportion of household incomes (1%-3%),

making affordability of its services relatively high. What’s more, a growing economy means

income levels are also rising. These factors suggest there is potential for Astro to grow its

ARPU in the longer term.

The penetration rate for pay TV is still low in Malaysia compared to other countries: close

to 50% for Malaysia compared to Singapore’s 70% and India’s 80%. We believe there is

potential for Astro to drive up penetration rates.

Young and growing population

Malaysia has one of the youngest (and a growing) population with 65% of the population

aged 35 and below.

Figure 11: Malaysia’s population breakdown by age

0-1938%

20-3527%

36-5928%

60-745%

75+2%

Source: Department of Statistics

Malaysia’s favourable

demographics are one of

the growth drivers for Astro

27 November 2012


Affordability is high and growing

Pay TV ARPU is growing, yet it accounts for a tiny proportion of household incomes. The

2Q FY13 monthly ARPU of RM92 is equivalent to 1-2 family visits to a cinema without a

meal (the cost of a cinema ticket ranges from RM12-60). Astro’s ARPU has grown as it

has added more channels and introduced premium services, such as HD, NVOD and PVR,

which indicates a willingness to pay for content.

We measured Astro’s FY12A average monthly ARPU as a proportion of average

household incomes across various parts of Malaysia. Astro’s FY12A average monthly

ARPU of RM89 accounted for less than 2.5% of household incomes in Malaysia (with the

exception of Perlis state where it accounted for 3.1% of income). Perlis accounts for 0.8%

of Malaysia’s total population).

Figure 12: Astro’s FY12A monthly ARPU as a percentage of household incomes

0.0

0.5

1.0

1.5

2.0

2.5

3.0

3.5

Joho

r

Ked

ah

Kel

anta

n

Mel

aka

N S

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lan

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ang

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ak

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anu

KL

Put

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Sab

ah

Labu

an

Sar

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2011 Malaysia average

Source: Company data, Economic Planning Unit, Credit Suisse estimates

Figure 13: Malaysia’s middle income population is growing

58%49%

33%

33%

36%

42%

10%15%

24%

-20%

0%

20%

40%

60%

80%

100%

1999 2002 2009

HH Annual Income < RM24,000 RM24,001-59,999 > RM60,000


Pay TV ARPU is growing,

yet it accounts for a tiny

proportion of household

incomes

27 November 2012


Astro is aligned to rising Malay household incomes

Figure 14: Astro subscribers by race

Malay, 28%

Malay, 60%

Chinese, 55%

Chinese, 22%

Indian, 13% Indian, 11%

Other, 4%

Other, 7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2003 Current

Malay Chinese Indian Other


The ethnic breakdown of Astro’s subscriber base is a close reflection of Malaysia’s multi-

racial population. Almost 60% of its subscribers are Malays. Hence, Astro is likely to be a

prime beneficiary of rising income growth of the Malay population, at 7%—the highest

growth for any ethnic group in Malaysia. Chinese and Indians account for 22% and 11% of

the company’s subscriber base, respectively.

Figure 15: Malay households have the fastest growing incomes (%)

0.0%

1.0%

2.0%

3.0%

4.0%

5.0%

6.0%

7.0%

8.0%

Malay Indian Chinese

CAGR 07-09


Demographics are attractive: Malaysia has a fast-growing working population, which

suggests a positive household formation rate and this bodes well for Astro. A young

population means this trend will likely continue, in our view. In addition, the Malaysian

economy is growing: Credit Suisse expects 4.7%-4.8% GDP growth for 2012E-13E and

this is likely to translate into rising incomes. Average household incomes for Malaysia

grew at a CAGR of 5.4% over 2007-09.

Almost 60% of Astro’s

subscribers are Malays

27 November 2012


Figure 16: Average household income by race

50115222

3318

39994243

2644

3640

4830

1995

3624

4458

2460

0

1,000

2,000

3,000

4,000

5,000

6,000

Total Urban Rural

(RM/month)


A multi-ethnic society needs targeted programming

Astro caters to Malaysia’s multi-cultural society and offers a wide selection of vernacular

content in Malaysia TV: Hokkien, Tamil programming. As there are only six FTA channels

in Malaysia, none of them are dedicated to such vernacular programming, e.g. Mandarin,

Hokkien or Tamil. Some of the FTA channels do not even offer 24-hour programming.

Figure 17: Malaysia population by ethnic group

Bumiputera50%

Other bumiputera12%

Chinese22%

India7% Others

1%

Non-Msian citizens8%


Penetration rate has room to grow

While the overall penetration rate for Malaysia is close to 50%, the various states in

Malaysia have varying penetration rates. The penetration rate of 73% in Kuala Lumpur

suggests that, where consumers can afford it, they will pay for content and there is room

for other states to catch up in the longer term.

Given that the penetration rate for pay TV is still relatively low in Malaysia compared to

other countries, we believe there is potential for Astro to drive up penetration rates.

The penetration rate for pay

TV is still relatively low in

Malaysia

27 November 2012


Figure 18: Global pay TV penetration rates

0%

20%

40%

60%

80%

100%

120%

140%K

orea

Tai

wan

Hon

g K

ong

Indi

a

Sin

gapo

re

New

Zea

land

Mal

aysi

a

Chi

na

Aus

tral

ia

Japa

n

Vie

tnam

Tha

iland

Phi

lippi

nes

Indo

nesi

a

Source: Media Partners Asia

ARPU still low versus other markets

Astro’s ARPU of RM91 as of 1Q FY13A is still relatively low versus other markets and has

potential to grow, in our view.

Figure 19: Monthly ARPU (US$)

0

10

20

30

40

50

60

70

80

90

100

Dire

cTV

Aust

ar

DIS

H U

S

SK

Y N

Z

BS

kyB

Sta

rhub

Nas

pers

Ast

ro

PC

CW

i-C

able

MN

C S

ky

KT S

kyl

ife

DIS

H India

(US$/month)

Source: Company data, Credit Suisse estimates

Rising urbanisation

Urbanisation is on the rise in Malaysia, which points to rising income levels and hence,

greater potential to spend on leisure and entertainment.

27 November 2012


Figure 20: Rising urbanisation in Malaysia

0.0%

10.0%

20.0%

30.0%

40.0%

50.0%

60.0%

70.0%

80.0%

90.0%

0

5,000

10,000

15,000

20,000

25,000

30,000

1950 1955 1960 1965 1970 1975 1980 1985 1990 1995 2000 2005 2010 2015 2020

Rural population (thousands) Urban population (thousands) Percentage urban (%)

Urban (%)('000)

Source: United Nations

Piracy is not a problem

Pay TV piracy in Malaysia is very low compared to other countries. Piracy is estimated to

be 2% in the country compared to 23% in India, 61% in Thailand and 69% in Indonesia.

Figure 21: Piracy rates across Asia (illegal connections as a percentage of total)

68.9%

60.8%

33.7%30.4%

23.2%

10.1%

1.8% 1.1% 1.1% 0.8%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Indonesia Thailand Vietnam Philippines India Taiwan Malaysia Australia Hong Kong Singapore

Source: Value Partners

In our view, Astro is likely to enjoy economies of scale benefits from its large subscriber

base which exceeds 3 mn (similar in absolute size to the postpaid subscriber base of top

cellular operator, Maxis). We believe this large subscriber base likely gives Astro better

negotiating power when purchasing content, STBs, etc.

27 November 2012


Competition is limited FTA TV is hampered by structural issues. Print has historically dominated Malaysia’s adex

pie and this effectively serves to cap FTA revenues. Astro currently offers 156 TV

channels compared to six channels for FTA (which are also aired on Astro’s platform) and

71 for HyppTV (IPTV). As Astro’s subscriber base has grown and viewership has risen,

pay TV adex growth has outstripped FTA adex growth. Meanwhile, IPTV offerings by

telcos are relatively limited as FTH (fibre-to-home) lacks scale. Fixed line incumbent, TM

(Telekom Malaysia), has 450,000-plus HSBB subscribers currently, whereby coverage is

limited to 1.3 mn premises unlike DTH coverage which is likely to be close to 100%.

Telcos are also keen to avoid margin erosion from overzealous spending on IPTV content

as they have significant dividend commitments to meet.

Structural issues

FTA is hampered by structural issues; Malaysia’s adex pie has historically been dominated

by print media. In recent years, pay TV has been eroding the market share of FTA. The

FTA offering is limited compared to Astro’s range of channels. Astro’s content is superior

to FTA, which has a limited purchasing power for content because Malaysia’s adex pie is

unusually dominated by print (50% market share). Within TV adex, pay TV is gaining

share at the expense of FTA. With only six FTA channels, we believe it is difficult for FTA

to fully cater to Malaysia’s multi-lingual population (there are no dedicated vernacular FTA

channels). MediaPrima’s TV revenues were just short of RM700 mn (primarily driven by

advertising) in 2011 versus RM3.6 bn (primarily driven by subscription fees) for Astro in

FYJan12.

Figure 22: Pay TV adex market share has been growing at the expense of FTA TV adex

0

5

10

15

20

25

30

35

2010 2011 9M12

Pay TV FTA TV

Source: Nielsen Media Research

According to Nielsen, pay TV adex grew 12.8% YoY in 2011 and 14% YoY in 9M12

whereas FTA TV adex fell 7% YoY in 2011 and 0.3% in 9M12. The market share for pay

TV adex has risen from 20.3% in 2010 to 24.3% in 9M12 whereas FTA TV’s adex market

share has fallen from 30.1% in 2010 to 27.6% in 9M12, according to Nielsen.

Print has historically

dominated Malaysia’s adex

pie and this effectively

serves to cap FTA revenues

27 November 2012


Other IPTV players lack scale

In the IPTV space, Astro presently has an infrastructure tie-up with TIME dotCom which is

in the process of wiring up multi-dwelling units (condominiums). We believe IPTV offers an

advantage over DTH satellite, e.g., rain fade doesn’t occur for IPTV whereas Ku-band

satellite signals are vulnerable to rain fade.

Maxis announced a much-awaited content tie-up with Astro on 30 August 2012. The ten-

year partnership makes Astro the exclusive content service provider to Maxis’s fibre

broadband service for three years. Maxis and Astro will jointly co-market the service via

their respective distribution channels. We believe this combined offering will be the best

IPTV offering in the market, exceeding TM’s HyppTV in terms of content breadth (number

of channels) while surpassing the Astro-TIME dotCom’s IPTV offering in terms of coverage

(Astro-Maxis’ current coverage will be 1.3 mn compared to 100,000 premises for Astro-

TIME dotCom). In comparison, TM’s UniFi service offers 71 TV channels (including FTA

and VOD channels but excluding interactive channels) and coverage of 1.3 mn premises.

Within the IPTV segment, Astro’s key competitor is HyppTV (owned by Telekom Malaysia),

where the basic channels are built into TM’s HSBB (fibre-to-home) service called UniFi.

UniFi currently has 450,000-plus subscribers (compared to Astro’s 3+mn subscriber base)

but coverage for TM’s HSBB is limited to 1.3 mn premises currently, unlike DTH coverage

which is likely to be close to 100% of Malaysia’s 6.7 mn households. According to TM,

about 20% of its UniFi subscribers subscribe for premium content. TM’s smaller subscriber

base doesn’t warrant significant content spend (we estimate <1% of its revenues) unlike

Astro’s content spend which amounts to 32%-35% of its TV segment revenues each year.

Maxis and Astro plan to roll out IPTV packages in the first quarter of 2013. We believe the

Astro-Maxis IPTV offering could be a credible threat to TM’s HSBB service, particularly

given that a rising proportion of UniFi subscribers will see their contracts mature in 2013.

Maxis currently offers similar coverage of 1.3 mn premises (as the bulk of its fibre

broadband services utilise TM’s HSBB pipe) which is significantly more than TIME

dotCom’s agreement with Astro (100,000 households covered currently).

Are the telcos a long-term threat?

We evaluate the possibility of the telcos becoming more aggressive in their IPTV offerings

but conclude that this is not likely in the next one-two years. The telcos have significant

dividend commitments; hence, we believe cash flow generation is of primary importance

and this could limit their budget for content. Also, relative to Astro’s 100% population

coverage for satellite transmission, TM’s HSBB coverage is relatively limited, at 1.3 mn

premises (for which there are 450,000+ subscribers currently) and about 20% of TM’s

HSBB subscribers pay for premium content currently. Hence, the economics may not

justify TM getting into a full blown war on content with Astro. Given TM’s relatively smaller

base of HSBB subscribers, we believe it may have to incur premium pricing on content,

which suggests significant ‘cash burn’ will become necessary if TM becomes more

ambitious in IPTV.

HyppTV (owned by Telekom Malaysia)

TM’s HyppTV currently offers 71 channels, including premium content costing

RM30/month for 30 channels. HyppTV is bundled together with TM’s HSBB service, UniFi.

Maxis announced a much-

awaited content tie-up with

Astro on 30 August 2012 for

IPTV

27 November 2012


Figure 23: HyppTV platinum pack channels (premium content)

News Kids

Aljazeera Nick Jr

Capital TV Cbeebies

Local & Asian selection Baby First

Star Chinese movies 2 Entertainment

Star Chinese channel Warner TV

TVB8 Universal channel HD

tvN HD Syfy HD

UTV Movies Fox Crime HD

Screen Red Lifestyle

Emas BBC Lifestyle

UTV Bindass Trace sports HD

Jayamax Channel V

MNC International Fashion tv

SETI i-concerts HD

Educational Nat Geo Music

BBC Knowledge MTV Live HD

Nat Geo Adventure MUTV


Comparing Astro-TIME dotCom IPTV with UniFi:

■ Astro offers a greater range of channels.

■ UniFi has superior coverage currently, of 1.3 mn premises.

■ Astro’s IPTV tie-up with TIME dotCom currently covers 100,000 premises in major

Malaysian cities.

Comparing Astro-TIME dotCom IPTV with Astro DTH:

■ Unlike Astro’s DTH services, Astro IPTV is not susceptible to rain fade.

■ Astro IPTV allows users more interactive options such as VOD (video on demand).

■ Pricing for Astro IPTV is similar to the DTH service (stripping out the broadband cost)

but the Super Packs are slightly cheaper on the IPTV platform.

27 November 2012


Figure 24: HyppTV channels bundled with UniFi

HyppTV channels bundled with UniFi Premium channels Cost of premium channel (RM/month)

TV (no additional cost) BBC Entertainment 6.00

TV1* BBC Knowledge 6.00

TV2* BBC Lifestyle 6.00

TV3* Cbeebies 9.00

NTV7* STAR Chinese Movies 2 9.00

8TV* STAR Chinese Channel 6.00

TV9* Channel [V] Taiwan 6.00

Bernama TV Fashion TV HD 9.00

Hikmah MUTV 9.00

DW Warner TV 6.00

Australia Network Screen Red 9.00

Channel News Asia BabyFirst 6.00

Euronews iConcerts HD 9.00

Travel Channel HD UTV Movies 6.00

Luxe.TV HD UTV Bindass 3.00

Bloomberg TV Jaya Max 3.00

Radio (no additional cost) Universal Channel HD 9.00

Hot FM SETI 6.00

Fly FM MNC International Channel 6.00

One FM Fox Crime HD 9.00

tvN HD 9.00

Nat Geo Adventure HD 9.00

Nat Geo Music 6.00

Syfy HD 9.00

SS Music 3.00

Nick Jr. 6.00

EMAS 3.00

Al-Jazeera 3.00

MTV Live HD 6.00

TVB 8 6.00

Trace Sports HD 9.00

The Capital 6.00

France 24 20.00

Outdoor Channel HD 9.00

UTV Stars 6.00

KidsCo 6.00

EC Inspirasi 3.00

Hyppsports HD 15.00

Fox Football 15.00

* Free to air.


27 N

ov

em

ber 2

012

Astro

Mala

ysia

Ho

ldin

gs B

hd

(AS

TR

.KL

/ AS

TR

O M

K)

17

Figure 25: Astro TIME dotCom IPTV versus TM UniFi's packages

Monthly Internet price Astro TIME dotCom Internet TM UniFi

(RM/month) 128 148 198 298 149 199 249

Speed (Mbps) 3 10 12 24 5 10 20

Data volume Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited Unlimited

Voice

Same network Free Free Free

Pay per use 15 sen/min 15 sen/min 15 sen/min 15 sen/min 10 sen/min 10 sen/min 10 sen/min

Value plan monthly RM10 10 sen/min 10 sen/min 10 sen/min 10 sen/min

IDD calls with value plan USA, UK, Canada, Australia, Japan. Hong Kong, South Korea,

Singapore, Taiwan, China

Note RM300 activation fee waived RM200 installation fee waived

Astro pay TV HyppTV

Monthly pay TV price

(RM/month)

37.95 100.00 130.00 182.90 0.0 30.0

TV pack Basic family pack

only

Super pack Super pack (w

new emperor

plus pack)

Super pack (w 1

box office, 1 add-

on item and AOD)

HyppTV HyppTV

Platinum pack

Channels 33 44+ channels 44+ channels 44+ channels 18 30

TV Notes Astro First movies very limited (only 3 Malay movies atm – 15 Aug 2012)

– RM15 for 48 hours

Additional channels are between RM6 and RM10 per

month

Video on demand movies – RM8 SD, RM10 HD for

48 hours

Video on demand series – RM15 for 1 month

Comparable packages

prices test

Astro Note TM Note

Internet speed (Mbps) 3 10 24 5 10 20

w/ most basic pay TV

(RM/month)

165.95 185.95 335.95 Basic family pack

only

149.00 199 249 Basic bundled

HyppTV

w/ mid range pay TV

(RM/month)

228.00 248.00 398.00 Basic super pack 179.00 229.00 279.00 HyppTV platinum

pack pay TV

w/ high-end pay TV

(RM/month)

310.90 330.90 480.90 Super pack (w 1

box office, 1 add

item & AOD)

229.00 279.00 329.00

Assume 5 VOD

movies/1 TV series


27 November 2012


Maxis (sister company to Astro)

Maxis is in the midst of ramping up its home fibre broadband division, while some of the

fibre is the company’s own, the bulk of its home fibre service rides off TM’s HSBB network.

On 30 August, Maxis announced that has entered into a JV for Astro to be its exclusive

content service provider for Maxis’s IPTV on its fibre broadband service for three years.

OTT: Astro-On-The-Go

Astro attempts to address the threat of OTT via Astro-On-The-Go, an authenticated

service accessible via smartphones, PCs and tablets.

Although OTT remains a long-term competitor for consumers’ attention, we believe it is not

likely to be a major issue for Astro for at least several more years because the majority of

the population doesn’t have HSBB (there are only 450,000-plus HSBB subscribers

currently). HSBB coverage is still limited to selected major urban areas whereby total

premises covered amounts to 1.3 mn (whereas total households amount to 6.7 mn). From

2013, TM is no longer bound to any coverage target by the government and the company

says that rollout will be determined by market demand.

PC penetration is also relatively low in Malaysia. Meanwhile, wireless broadband is priced

by volume in Malaysia and cellcos do not offer unlimited data packages. Even TM’s HSBB

service which is currently offering unlimited data has a notice which stipulates a potential

volume cap of 60GB (for the entry level package) may be applied in future.

Figure 26: Household PC penetration is relatively low in Malaysia (%)

0

10

20

30

40

50

60

Joho

r

Ked

ah

Kel

anta

n

Mel

aka

Neg

eri

Pah

ang

Per

ak

Per

lis

Pen

ang

Sel

ango

r

Ter

engg

anu

Sab

ah

Sar

awak KL

Mal

aysi

a

2007 2009

Source: SKMM

ADSL and wireless broadband speeds in Malaysia are generally not sufficient to provide

consumers with a top quality online video experience. Of the 37 mn cellular subscribers in

Malaysia, only 30% have 3G subscriptions. TM’s HSBB service, UniFi, starts at 5 Mbps

and the bulk of its subscribers are at this level, according to TM’s management. Most of

the popular OTT content tends to be from foreign sites where data speed is again an issue

for most homes.

According to BSkyB, the time spent watching TV continues to dwarf time spent online. In

1Q 2011 TV viewing averaged about 230 minutes per day, versus 7-10 minutes on

YouTube and 15-20 minutes on Social Media.

PC penetration is also

relatively low in Malaysia

27 November 2012


Figure 27: Live TV is as important as ever

Note: Trademarked icons used.

Source: BSkyB, BARB TechEdge, ComScore, Sky Media research

Live TV still represents 85% of total viewing, according to BSkyB’s research of viewing in

BSkyB homes. BSkyB argued that investors should not underestimate how important

viewing of live TV still is in the UK.

Figure 28: On-The-Go services

Channels Selection of 11 linear TV channels across kids, news and entertainment

Live sports Selection of live sport matches and signature events or programmes

Pay per view Offering movies on demand and Astro First content

Catch up “Catch-up” and SVOD services for previously aired signature programmes

Note: 11 linear channels include: Astro AEC, Astro Awani, Astro Ria plus, Astro Shung Xing, Astro Warna,

Astro Xiao Tai Yang, CNN, Disney Channel, Disney Junior, One HD, Astro TVIQ.


Low churn reflects weak competition

Astro has sustained a relatively low churn rate of 7%-11% for the past three years. The 1Q

FY13 churn rate stood at 8%. We believe Astro’s relatively low churn rate may be

attributable to strong affordability (monthly ARPU is just 1%-3% of household incomes)

and its content portfolio.

Astro has sustained a

relatively low churn rate of

7-11% for the past three

years

27 November 2012


New growth drivers We believe a rising take-up of HD, PVR, premium content and IPTV services bodes well

for Astro. In developed markets, we have seen HD take-up rates of 40%-57% (e.g., 43%

for BSkyB, 40% for DISH, 57% for DirecTV, etc). There’s also an opportunity for Astro to

tap prepaid revenues via its NJOI offering, which does not incur any subscriber acquisition

cost (consumer pays for STB and installation), yet could see potential upside if users buy

prepaid content.

Long-term drivers

We believe a rising take up of HD, PVR, premium content and IPTV services could bode

well for Astro.

HD migration

Having launched HD in 2010, Astro is in the midst of migrating its subscriber base over to

the HD-enabled B.Yond box and plans to have the bulk of its subscriber base fully

converted by FYJan2014. Thereafter, we expect the company to encourage these

subscribers to take up HD services, which entail an extra RM20 a month (a potential 21%

uplift to the current ARPU of RM91). Even though only 1.4 mn Astro subscribers have an

HD-enabled B.Yond box, Astro’s HD take-up rate currently stands at 30%, which is

equivalent to a 66% take-up rate if measured as a proportion of households with a B.Yond

box. This suggests it should see its take-up rate rise beyond 30% once the migration is

completed for its entire 3.1 mn subscriber base.

Figure 29: Astro’s HD channels

Basic HD Movies Variety Learning Sports Local / vernacular / others News

One Fox Premium Star World Discovery World Astro Supersport Astro Zhi Zun (Chinese) Sky News HD

Be HBO Disney XD National Geographic Astro Supersport 2 Astro Mustika

AXN Sundance History ESPN Astro First

FX Astro 'Signature'

KIX

Celestial

Food Network Asia

Life Inspired


Russia’s largest satellite TV operator, Tricolor just launched HD services in July 2012 and

expects its ARPU to rise from R629 in 2011 to R1,200 next year. Austar in Australia which

launched PVR and HD in 2008-09 saw a 12% increase in ARPU in two years. HD is also

one of the key ARPU drivers for BSkyB in the UK.

We believe a rising take-up

of HD, PVR, premium

content and IPTV services

bodes well for Astro

27 November 2012


Figure 30: HD is a major ARPU growth driver for BSkyB (£)

25

27

29

31

33

35

37

39

41

43

2004 2005 2006 2007 2008 2009 2010 2011 2012E 2013E 2014E

Par TV ARPU excl HD HD ARPU


PVR

PVR allows for time-shifted viewing. PVR currently costs an additional RM10 a month for

Astro subscribers. Its Beyond PVR box is being rolled out across its subscriber base. In

the UK, we expect TiVo subscribers to make up a growing proportion of VMED’s total

subscribers, rising above 50% in 2015E.

Figure 31: TiVo accounts for a growing proportion of VMED’s TV customer base

1.3%4.3%

11.6%

17.9%

23.3%

27.3%29.9%

38.9%

46.1%

53.3%

60.5%

0%

10%

20%

30%

40%

50%

60%

70%

2Q11 3Q11 4Q11 1Q12 2Q12E 3Q12E 4Q12E 2013E 2014E 2015E 2016E


Premium packages

Astro also offers premium packages such as Super Pack. There are currently four Super

Packs available, targeting a different customer segment. Super Pack ARPUs are relatively

high, ranging from RM125 to RM255.

In the UK, TiVo subscribers

are projected to make up a

growing proportion of

VMED’s total subscribers,

rising above 50% in 2015E

27 November 2012


Figure 32: Astro Super Packs

Package Super Pack 1 Super Pack 2 Super Pack 3 Super Pack 4

Price (RM/month) 125 125 255 125

1 Basic Family package Basic Family package Basic Family package Basic Family package

2 Any 3 mini packages Any 3 mini packages Any 3 mini packages Any 3 mini packages

News News News News

Learning Learning Learning Learning

Variety Variety Variety Variety

Kids Kids Kids Kids

3 Prime Packages Prime Packages Prime Packages Prime Packages

Movies Movies Movies Movies

Sports Sports Sports Sports

Dynasty

4 Plus Package Plus Package Plus Package Plus Package

Mustika Maharaja New Emperor Metro

Celestial Movies

5 Astro box office Astro box office Astro box office Astro box office

Tayangan Hebat Thangathirai On Demand Dragon pack

6 HD service HD service HD service HD service

PVR PVR PVR PVR


NJOI: A prepaid opportunity

Astro has a new pay TV business segment, NJOI, which incurs zero subscriber acquisition

cost, yet, offers long-term upside from prepaid content. While we have only modelled for

minor contributions from NJOI initially, a dominant prepaid telecommunications market

suggests it could become a major growth driver in the longer term. NJOI was launched in

February 2012.

Astro utilises basic set top boxes for the NJOI service. Subscribers pay for the box and

installation fees. In return, Astro provides 37 free TV and radio channels. The upside for

Astro lies with additional prepaid content which users may purchase.

Figure 33: NJOI channels

Entertainment Music Educational News

Astro Prima Tvi Astro Tutor TV SPM Astro Awani

Astro Oasis Astro Tutor TV UPSR CCTV4

Makkal TV Astro Tutor TV PMR Bernama TV

Jia Yu

TV1*

TV2*

Astro Vaanavil

i130

iView

Astro AEC


27 November 2012


Figure 34: NJOI radio channels

Astro Radio's commercial stations Direct-to-user (DTU) radio stations

ERA India Beat

Sinar FM Golden Oldies

THR.fm Raaga Jazz

THR.fm Gegar Opus

MY FM Rock

Hitz.fm Melody

Mix FM Osai

Lite FM Bayu

XFM(3) Kenyalang

Musiq'a


There are also some 50,000 NJOI set top boxes, provided free to lower-income

households via the government’s E-kasih programme. We believe NJOI will enable Astro

to widen its penetration of rural households and at the same time, limit the potential

downside risk via a prepaid model.

Experience in Russia: Tricolor

Tricolor (National Satellite Company, JSC) is Russia’s largest satellite TV operator with a

subscriber base in excess of 10 mn households (as of March 2012) of which 7.7 mn are

paying subscribers.

Tricolor began its services in 2005 with a package of 15 free Russian and regional

channels, where hardware was the only cost to subscribers. Subsequently, it launched 12

new pay channels in May 2007 via low-cost packages, by which time, its subscriber base

had reached 800,000. Tricolor has since expanded its portfolio: it currently offers 100

channels for an annual fee of R600 (equivalent to €15).

Pay TV: Malaysia versus global markets

Figure 35: Pay TV market dynamics

Malaysia UK US India

Penetration Low High High High

ARPU Low High High Very low

Competition Low High High High

Threat from IPTV & OTT Low Medium-high High Low

Source: Credit Suisse estimates

We believe the growth prospects for Astro are supported by positive market dynamics and

favourable demographics. In contrast, pay TV operators in developed markets are faced

with mature industry conditions (high penetration and slowing basic ARPU growth),

competition from IPTV and OTT, in our view. Within Asia, India is another market which

has a low penetration rate for pay TV and attractive demographics but competition is

strong and ARPU is very low (US$3).

27 November 2012


Figure 36: Global pay TV—competitive landscape by country

Country No. of operators Pay TV operators

UK 6 BSkyB, Youview, VirginMed, BT, Top up TV, Smallworld Cable

USA >5 Cable: Time Warner, Comcast, Cox communications, Charter communications, Cablevision; Satellite: DISH, DTV

South Korea >5 C&M co, KT Skylife, Tbroad Hanvit, Hyundai HCN, SK Broadband, LG Dacom, Hanaro Telecom

New Zealand 2 Sky Network, Telstra clear (most content offered on behalf of Sky)

India >10 APTV network, Shri Balaji cable, Hathway, Asianet, Dish TV, JAK communications, Barasat Cable TV

Singapore 3 Starhub, Singtel, M1

South Africa 5 Multichoice, Telkom Media, E-Sat, On Digital Media, Walking on Water

Hong Kong 2 PCCW, i-cable

Australia 3 Telstra, Foxtel, Yes Optus

Source: Company data.

Figure 37: Global pay TV penetration rates

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

1965

1970

1975

1980

1981

1982

1983

1984

1985

1986

1987

1988

1989

1990

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

USA UK Australia New Zealand Malaysia

Source: Value Partners, Screen Digest, Credit Suisse estimates.

Pay TV penetration in the US reached about 84% in 4Q09/1Q10 and has been falling

since, causing major operators like DirecTV to focus on customer retention as opposed to

new customer acquisition.

Figure 38: Multi-channel video penetration of US households

79.5%

80.4%

81.0%

81.9%

82.5% 82.5%

83.5%

83.2%

82.4%82.5%

79.0%

79.5%

80.0%

80.5%

81.0%

81.5%

82.0%

82.5%

83.0%

83.5%

84.0%

2003 2004 2005 2006 2007 2008 2009 2010 2011 1Q12 HH data include occasional use, URE (usual residence elsewhere), and seasonal housing units.

Source: Company data, SNL Kagan, Credit Suisse estimates

27 November 2012


BSkyB in the UK has been facing more competition from the telcos, which are offering

triple-play services. Notably, BT will spend £700 mn for some Premier League matches in

the next season for its IPTV service, BT Vision. Meanwhile, TalkTalk has launched

YouView whose pricing is in between BSkyB (premium) and Freeview (no charge but no

interactive services offered).

Figure 39: BSkyB—net additions are running at substantially lower levels than historical

experience

0

50,000

100,000

150,000

200,000

250,000

300,000

Q1

2002

Q3

2002

Q1

2003

Q3

2003

Q1

2004

Q3

2004

Q1

2005

Q3

2005

Q1

2006

Q3

2006

Q1

2007

Q3

2007

Q1

2008

Q3

2008

Q1

2009

Q3

2009

Q1

2010

Q3

2010

Q1

2011

Q3

2011

Q1

2012

Q3

2012

net adds (subscribers)

Source: Company data.

The Malaysian economy is fine

Unlike its peers in developed markets, Astro is not grappling with weak economic

conditions. The Malaysian economy is growing and unemployment is low, resulting in

favourable indicators, e.g., consumer sentiment is robust and retail sales are growing.

Figure 40: Malaysia’s GDP growth is positive (% YoY) Figure 41: Consumer sentiment is robust

-3.0

-2.0

-1.0

0.0

1.0

2.0

3.0

4.0

5.0

6.0

7.0

8.0

2007 2008 2009 2010 2011F 2012F 2013F

(%

60

70

80

90

100

110

120

130

Mar-00 Apr-01 May-02 Jun-03 Jul-04 Aug-05 Sep-06 Oct-07 Nov-08 Dec-09 Jan-11 Feb-12

Source: Bank Negara, Credit Suisse estimates Source: MIER

27 November 2012


Figure 42: Unemployment is relatively low, at 3% Figure 43: Retail sales are growing (% YoY)

0%

1%

2%

3%

4%

5%

6%

7%

8%

1982

1984

1986

1988

1990

1993

1996

1998

2000

2002

2004

2006

2008

2010

YT

D 2

012

0%

2%

4%

6%

8%

10%

12%

14%

0

10

20

30

40

50

60

70

80

90

2002 2003 2004 2005 2006 2007 2008 2009 2010 2011

(RM bn)

Retail sales (RM mn) Retail sales YoY

Growth (%)

Source: Department of Statistics Source: Malaysia Retailers Association

27 November 2012


Trading 11% below the IPO price We use DCF as the primary valuation methodology for Astro as we believe it is most

suited to give a true representation of Astro's underlying cash flows, in our view. We apply

a mid-point 15% discount to DCF to arrive at our RM3.50 target price for Astro.

Historically, Astro has traded at a 3%-29% discount to DCF valuations, suggesting a share

price range of RM2.90-4.00.

Our key assumptions

Based on DCF valuation methodology, and applying a WACC of 8.4%, we derive an equity

valuation of RM21.5 bn for Astro.

In our view, P/E valuation is not suitable in this case because Astro's earnings will be

prone to fluctuating depreciation and amortisation of STBs, programme rights and satellite

transponder capacity. For example, while Astro is aggressively swapping out old STBs to

HD-enabled ones (which may generate higher ARPUs), we expect near-term net profits to

be depressed by exceptionally high depreciation charges.

Key drivers

Figure 44: Key assumptions

2010 2011 2012 2013E 2014E 2015E

Y/e pay TV subs (’000) 2930.0 2931.0 3067.0 3257.0 3423.9 3560.7

Subscriber growth (%) 0.0 4.6 6.2 5.1 4.0

Net adds (’000) 284.0 1.0 136.0 190.0 166.9 136.9

MAT churn (%) 11.0 10.0 7.0 9.0 9.0 9.0

Total JOI subs (excl NJOI) 2930.0 2931.0 3220.0 3415.0 3586.9 3728.7

Astro household penetration (%) 44.4 45.9 48.1 49.8 51.0

Total Malaysia households (’000) 6220.0 6605.0 6675.0 6775.1 6876.8 6979.9

Astro penetration of TV households (%) 45.7 47.4 49.3 51.1 52.3

Adex/TV revenues (%) 4.9 6.7 7.0 6.9 6.8 6.7

Adex growth (%) 56.6 8.5 10.0 8.0 7.5

Residential ARPU (RM) 82.0 85.0 89.0 95.0 99.0 103.0

ARPU growth (%) 3.7 4.7 6.7 4.2 4.0


Subscriber base: We have imputed 4%-7% growth in residential subscribers a year. This

suggests Astro's household penetration rate could rise to 51% by FY15E. If its FY14 net

adds are 50,000 more than we have assumed, this would imply 6.7% subscriber growth

(versus our forecast of 5%), and there could be 1% potential upside to our FY14E EBITDA

forecast.

ARPU: Over FY10-12, Astro’s ARPU rose from RM82 to RM89, and we have modelled for

it to rise to RM103 in FY15E. For an additional RM2 of ARPU above our current forecast

of RM99 for FY14E, there is 2.6% potential upside to EBITDA.

Content cost: Over FY10-12, Astro’s content cost was 32-35% of TV segment revenues.

We have allowed for content cost to be 32.5-35% of TV revenues from FY13-15E. If

content cost is 32% of TV revenues for FY13E instead of the 35% which we have built in,

there's 7.6% potential upside to EBITDA.

Administrative costs: Over FY10-12, administrative costs were about 8%-9% of revenues.

For FY13-15E, we have assumed administrative costs will be 9.0%-9.5% of revenues.

Marketing/distribution costs: Over FY10-12, distribution costs were 8%-9% of revenues.

For FY13-15E, we have assumed distribution costs will be stable at 10% of revenues.

Historically, Astro has

traded at a 3%-29%

discount to DCF valuations

27 November 2012


Figure 45: FY2012A TV revenue, by segment

Subscription91%

Airtime Sales7%

Others2%


Figure 46: FY2012A revenue breakdown—subscription versus airtime sales

Subscription84%

Airtime Sales12%

Others4%


DCF scenario analysis

Using DCF valuation methodology, applying a WACC of 8.4%, we derive an equity

valuation of RM21.5 bn for Astro. We apply a mid-point 15% discount to DCF to arrive at

our RM3.50 target price for Astro. Historically, Astro has traded at a 3%-29% discount to

DCF valuations, suggesting a share price range of RM2.90-4.00.

Our base case scenario is for ARPU growth of 4.0%-6.7% over FY13-16E and this leads

to our DCF-based target price of RM3.50. If Astro’s ARPU growth is high-single digit (from

6.4% to 8.4%) from FY13E to FY16E, we see 16% further potential upside to our target

price. However, if Astro’s ARPU growth is low single digit (from 2.0% to 3.4%) from FY13E

to FY16E, there is 9% potential downside to our target price.

We apply a mid-point 15%

discount to DCF to arrive at

our RM3.50 target price for

Astro.

27 November 2012


Figure 47: Target price range (RM) for Astro based on various ARPU growth rates (%)

and terminal growth rates (%)

Annual ARPU growth / terminal growth rates 2.5% 3.0% 3.5%

6-8% 3.80 4.07 4.39

4-6% 3.28 3.50 3.78

2-3% 2.96 3.16 3.41


Figure 48: Target price range (RM) for Astro based on various ARPU growth rates (%)

and WACC (%)

Annual ARPU growth / WACC 8.0% 8.4% 9%

6-8% 4.38 4.07 3.60

4-6% 3.77 3.50 3.10

2-3% 3.40 3.16 2.80


Figure 49: Key discount rate assumptions

Beta 0.9

Cost of equity 9.8%

Cost of debt 5.0%

Terminal growth 3.0%

WACC 8.4%


(1) Base case: Moderate ARPU growth

Our base case scenario is for ARPU growth of 4.0%-6.7% over FY13-16E; ARPU could

reach RM107 by FY16E, and this implies a DCF-based target price of RM3.50 (using a

mid-point 15% discount to DCF).

(2) High ARPU growth

If Astro’s ARPU growth is high-single digit (from 6.4% to 8.4%) over FY13-16E, ARPU

could reach RM117 by FY16E; this implies a DCF-based target price of RM4.07, 16%

above our current target price of RM3.50 (using a mid-point 15% discount to DCF).

(3) Low ARPU growth

If Astro’s ARPU growth is low-single digit (from 2.0% to 3.4%) over FY13-16E, ARPU

could reach RM98 by FY16E; this implies a DCF-based target price of RM3.17, 9.4%

below our current target price of RM3.50 (using a mid-point 15% discount to DCF).

Historical discount to DCF

Historically, Astro has traded at a discount to its DCF valuations, ranging from 3%-29% .

(We have excluded the period during which there was a problematic Indonesian joint

venture in existence.)

If Astro’s ARPU growth is

high-single digit (from 6.4%

to 8.4%) from FY13E to

FY16E, there is 16%

potential upside to our target

price.

27 November 2012


Figure 50: Astro’s historical discount to DCF

0%

10%

20%

30%

40%

50%

60%

Oct-03 May-04 Dec-04 Jul-05 Feb-06 Sep-06 Apr-07 Nov-07 Jun-08 Jan-09

Indonesia problems


We scoured the globe for pay TV operators but failed to find a suitable valuation

benchmark for Astro (which operates in a growth environment, buoyant consumer

spending, expanding population and relatively limited competition). Developed market

peers in the US and the UK are grappling with weak economic conditions and mature

industry conditions, leading to negative or falling net additions.

In these markets, investors are also wary of the longer-term threat from online video

content (e.g., Youtube) and OTT movie aggregators such as Netflix and Lovefilm. BSkyB

currently trades at a 40% premium to the country index, on 15.6x FY6/12 P/E. In the US,

Dish and DirecTV are trading on low teen P/E valuations and mid-single digit EV/EBITDA.

Within Asia, India is a high-growth market but a competitive one. Pay TV ARPU is also

very low (US$3/month) in India. Dish India is likely to turn in maiden net profits of US$22

mn in FY14E, from a loss of US$29 mn in FY12.

27 N

ov

em

ber 2

012

Astro

Mala

ysia

Ho

ldin

gs B

hd

(AS

TR

.KL

/ AS

TR

O M

K)

31

Figure 51: Global Pay TV valuations

Price Mkt

cap

Div

yield

P/E EV/EBI

TDA

EBITDA

growth

EBITDA EV/sub

scriber

Company Ticker (LC) (USD) Rec TP 2012E 2013E 2014E 2012E 2013E 2014E 2012E 2013E 2014E 2012E 2013E 2014E Margin

(t+1)

(US$)

BSkyB BSY.L 766 20,013 N 6.1 3.2% 3.5% 3.6% 14.7 13.9 13.6 8.8 8.0 7.8 10% 10% 2% 23.8% 2,157

DirecTV DTV 49.34 29,808 N 58 0.0% 0.0% 0.0% 11.9 9.6 8.3 5.7 5.2 4.9 7% 9% 7% 25.2% 2,132

DISH US DISH 35.09 15,841 O 38 0.0% 0.0% 0.0% 23.9 16.9 15.6 7.6 7.4 7.2 -16% 2% 2% 20.7% 1,601

KT Skylife 053210.KS 32900 1,444 N 3250; 0.0% 0.0% 1.5% 25.4 16.5 11.4 11.9 8.4 6.2 47% 41% 36% 28.4% 472

Naspers NPNJn.J 541 24,147 O 500 0.6% 0.8% 0.9% 32.5 23.2 17.4 8.7 8.4 6.8 -3% 4% 24% 16.5% 955

StarHub STAR.SI 3.63 5,090 N 3.60 5.5% 5.9% 6.2% 18.2 17.1 16.2 9.4 9.0 8.6 5% 5% 4% 29.7% 10,170

PCCW 0008.HK 3.19 2,993 O 3.63 5.0% 5.0% 5.5% 15.8 14.6 12.2 5.3 5.0 4.8 3% 6% 3% 32.7% 4,678

DISH India DSTV.BO 73.3 1,410 O 82.00 0.0% 0.0% 0.0% NM 103.0 15.3 17.7 15.0 10.5 109% 18% 43% 29.7% 127

Sky Network NZ SKT.NZ 5.05 1,604 NR NA 3.6% 5.0% 5.6% 15.9 14.8 13.2 7.1 6.8 6.3 2% 4% 6% 38.8% 2,318

MNC SKY Vision MSKY.JK 2175 319 NR NA 0.1% 0.5% 0.8% 68.0 36.9 25.4 15.4 11.2 8.6 46% 37% 27% 38.8% 1,349

Astro ASTR.KL 2.66 4,520 O 3.50 NA 2.1% 2.7% 32.6 34.0 28.6 12.5 11.7 10.0 -3% 6% 17% 31.2% 1,715

Source: Company data, Credit Suisse estimates, IBES

27 November 2012


Lack of comparables in Malaysia

There is a scarcity of large-cap and liquid consumption-related stocks in Malaysia. We

view Astro as a proxy for domestic consumption, particularly given its exposure to a

growing Malay middle class. In our view, the Malaysian telcos are not directly comparable

to Astro because the former are in a relatively mature phase compared to the latter.

Cellular penetration in Malaysia has reached 128.7% whereas Astro’s household

penetration is only approaching 50%.

Consumer stocks in Malaysia

There is a scarcity of large-cap and liquid consumption-related stocks in Malaysia. We view

Astro as a proxy for domestic consumption, particularly given its exposure to a growing

Malay middle class. Consumer staples such as Nestlé, Guinness and Carlsberg trade at P/E

valuations in the range of 15-28x for FY13E and average daily values of US$2.0-6.2 mn,

with market capitalisations ranging from US$4.8 bn to US$18.1 bn. Genting Malaysia is a

proxy for discretionary consumer spending but provides exposure to the non-Muslim

segment only.

Figure 52: Malaysia consumer comparison

Price Market cap ADV P/E (x)

Company Ticker (RM) (US$ mn) (US$ mn) 2012E 2013E 2014E

BAT ROTH MK 58.0 5,304 2.3 21.0 20.8 20.3

Nestle NESZ MK 59.0 4,431 0.5 27.7 25.9 24.1

Aeon AEON MK 11.9 1,339 1.2 19.9 18.1 17.0

GAB GUIN MK 16.6 1,605 0.4 23.9 22.3 20.9

Carlsberg CAB MK 12.6 1,246 0.5 21.2 19.1 17.7

Source: Company data, Bloomberg estimates, Credit Suisse estimates

Astro versus the telcos

In our view, the Malaysian telcos are not directly comparable to Astro because the former

are in a relatively mature phase compared to the latter. Cellular penetration in Malaysia

has reached 128.7% whereas we estimate that Astro’s penetration of TV households is

only about 47%. While we expect Astro’s penetration rate to rise over the long term, the

cellular operators are presently focusing on customer retention. We are projecting revenue

growth of 1%-5% for the Malaysian telcos in FY13E compared to 8.9% for Astro in

FYJan14E. The competitive landscape for the telcos comprises three key cellular players

but the data segment is more crowded, comprising TM (fixed broadband), Maxis, Celcom,

DiGi as well as WiMax players, P1 and YES. Whilst Astro’s ARPU grew 8.5% from FY10-

12A, average ARPUs for the cellcos fell 7%-9%. Reflecting the relatively mature stage of

growth for the telcos, the dividend commitments are significant, resulting in attractive

dividend yields of 3.5-6.2% for FY12E.

27 November 2012


Figure 53: 2011A Astro versus Malaysia cellular penetration rates

47%

128%

0%

20%

40%

60%

80%

100%

120%

140%

Astro Cellular

Source: Company data, SKMM

Figure 54: CY13E revenue growth comparison

8.9%

4.7%

2.0%

0.9%

0%

1%

2%

3%

4%

5%

6%

7%

8%

9%

10%

Astro Digi Celcom Maxis


27 November 2012


Investment risks

Content cost

Content cost has accounted for a significant proportion of Astro’s costs and in the past

three years, amounting to 32%-35% of TV segment revenues. If content costs increase

significantly, this could negatively impact Astro's earnings. The Malaysian rights for live

Premier League football matches (for three seasons) have just been awarded to Astro for

the next three years for 2013/14 to 2015/16. If Astro fails to renew this contract in future,

there could be an impact on ARPU.

Satellite transponder capacity

Astro is currently utilising 17 transponders on two satellites, namely Measat 3 and Measat

3A. Another satellite, Measat 3B is currently scheduled for launch in 2014, which should

enable Astro to increase its channels to 180, from 156 currently. If Measat 3B is delayed,

Astro will not be able to expand the number of channels as planned and this could hamper

ARPU growth.

Technical/broadcast failure

In the past 16 years, Astro has not suffered any major outage or interruption to its service,

save for rain-fade. If either of the satellites were to suffer technical difficulties, Astro will not

be able to provide its full range of channels using the one remaining satellite. If there is

prolonged service interference, Astro could potentially lose subscribers.

Regulatory risk

Astro’s licences are subject to renewal and while it can apply to renew them, there is no

guarantee that it can secure the necessary approvals. Astro has a 25-year renewable

broadcasting licence with exclusivity on DTH satellite TV services till 2017 and non-

exclusivity until 2022.

According to the local media reports, the regulator could be contemplating potential

measures on content sharing which is deemed to be of national significance and this

includes international sports content. There has not been any official directive from the

regulator on this matter.

Online versus Astro

In developed markets, online content (OTT) and low-priced online video options are

deemed as a potential threat to pay TV operators, particularly as subscribers download

video content directly from the Internet.

Figure 55: Why people don’t subscribe to pay TV

50%

23% 23% 22%

16%14%

2%

0%

10%

20%

30%

40%

50%

60%

Too expensive Use Netflix/Hulu/Youtubeetc as substitute

Other reasons Don’t watch a lot of TV Just watch broadcast TVusing over the air signals

Don’t find the TV channels on PayTV

compelling

Don’t like the user interface

Source: Credit Suisse Future of Video Survey, 2011

27 November 2012


Piracy

Astro faces ongoing risk from content piracy as well as third party attempts to hack its

encryption technology.

Currency

Astro is exposed to foreign currency risk as it incurs significant costs in USD, e.g., for set

top boxes, international content and transponder lease payments. If the ringgit depreciates,

the cost of equipment and content for Astro will rise. Management has indicated that a

10% depreciation of the ringgit could cause a RM30mn increase in costs for Astro.

Competition

Astro is currently the largest pay TV operator in Malaysia. Local newspapers have

reported that Asian Broadcasting Network (ABN) has plans to offer a digital cable pay TV

service in Malaysia. ABN plans to launch 100 channels by end-2012 and to have 1.2 mn

premises covered. ABN has indicated that it could spend RM2 bn over the next five years.

It targets having 500,000 subscribers in the first year. The company had previously

indicated 2Q12 as a potential launch date in some key cities. We believe a key hurdle for

any potential cable TV operator in Malaysia would be the cost of laying cable as there is

no ready cable infrastructure in the ground.

27 November 2012


Appendix I: Key financials Figure 56: Profit and loss

YE 31Jan 2010 2011 2012 2013E 2014E 2015E

(RM mn)

Revenue 3242.3 3664.1 3888.8 4317.5 4701.9 5065.7

Cost of sales -1934.0 -2000.4 -2236.6 -2769.5 -3069.4 -3237.5

Gross profit 1308.4 1663.7 1652.2 1548.0 1632.5 1828.2

Other operating

income 22.9 27.4 27.2 28.0 28.5 29.1

Marketing and

distribution -282.7 -316.0 -323.0 -431.8 -470.2 -506.6

Administrative -244.5 -308.2 -366.1 -388.6 -446.7 -481.2

EBITDA 986.2 1369.8 1414.7 1366.3 1467.8 1730.1

EBITDA growth (%) 38.9 3.3 -3.4 7.4 17.9

EBITDA margin 30.4 37.4 36.4 31.6 31.2 34.2

Dep and Amortisation -182.1 -302.8 -424.3 -610.7 -723.6 -860.6

EBIT 804.1 1066.9 990.4 755.6 744.2 869.5

Finance income 69.1 119.4 68.7 86.2 86.1 72.8

Finance cost -70.9 -93.7 -194.7 -251.5 -247.7 -256.5

Share of post tax

results from

investments -1.0 -2.2 -0.1 -0.1 -0.1 -0.1

PBT 801.3 1090.5 864.3 590.3 582.5 685.8

Tax expense -187.4 -263.0 -234.7 -165.3 -163.1 -192.0

Profit after tax 613.9 827.5 629.6 425.0 419.4 493.8

Minorities 0.2 -4.0 -5.5 -4.3 -4.0 -4.0

Net profit 614.1 823.5 624.1 420.7 415.4 489.8


Figure 57: Cash flow summary

YE 31 Jan (RM mn) 2012 2013E 2014E 2015E

PBT 864.3 590.3 582.5 685.8

add:

Dep and Amortisation 424.3 610.7 723.6 860.6

Net finance cost 126.0 165.3 161.6 183.6

Others 318.7 0.0 0.0 0.0

WC changes -212.5 336.7 362.0 241.1

Taxation -164.2 -165.3 -163.1 -192.0

Operating cash flow 1022.4 1537.7 1666.7 1779.1

Purchase of PPE -476.7 -452.0 -725.5 -745.9

Cash flow from Investing -1984.5 -365.8 -639.4 -673.0

Cash flow from financing 1261.9 -43.1 -1178.2 -1167.4

Net (decrease)/increase in

cash 299.8 1128.8 -150.9 -61.3

Cash at beginning of year 678.5 478.2 1607.0 1456.1

Cash at year end 478.2 1607.0 1456.1 1394.7


27 November 2012


Figure 58: Balance sheet

YE 31 Jan (RM mn) 2012 2013E 2014E 2015E

Property, plant and

equipment 1654.2 1943.5 2219.9 2809.3

Other non-current assets 3453.6 1953.6 1953.6 1953.6

Non-current assets 5107.8 3897.1 4173.5 4762.9

Inventories 13.3 22.8 25.2 26.6

Receivables and

prepayments 798.2 847.6 923.1 994.5

Other current assets 116.3 116.3 116.3 116.3

Cash & equivalents 478.2 1607.0 1456.1 1394.7

Current Assets 1406.0 2593.7 2520.7 2532.2

Payables 1580.7 1699.3 1489.2 1753.1

ST borrowings 43.5 43.5 43.5 43.5

Other current liabilities 152.7 152.7 152.7 152.7

Current Liabilities 1776.9 1895.5 1685.4 1949.3

Payables 323.0 600.0 1250.0 1300.0

LT borrowings 3666.4 3168.4 2824.0 2996.8

Other LT liabilities 256.0 256.0 256.0 256.0

Non-current Liabilities 4245.5 4024.4 4330.1 4552.9

Shareholder funds 482.9 558.0 661.9 772.1

TOTAL EQUITY 491.4 570.9 678.7 792.9


Figure 59: Underlying assumptions

Key assumptions 2010 2011 2012 2013E 2014E 2015E

YE Pay TV subs (000) 2930.0 2931.0 3067.0 3257.0 3423.9 3560.7

Subscriber growth (%) 0.0 4.6 6.2 5.1 4.0

Net adds (000) 284.0 1.0 136.0 190.0 166.9 136.9

MAT Churn (%) 11.0 10.0 7.0 9.0 9.0 9.0

Total JOI subs (excl NJOI) 2930.0 2931.0 3220.0 3415.0 3586.9 3728.7

Astro household

penetration (%) 44.4 45.9 48.1 49.8 51.0

Total Malaysia households 6220.0 6605.0 6675.0 6775.1 6876.8 6979.9

Astro penetration of TV

households 45.7 47.4 49.3 51.1 52.3

Adex/TV revenues 4.9 6.7 7.0 6.9 6.8 6.7

Adex growth 56.6 8.5 10.0 8.0 7.5

Residential ARPU (RM) 82.0 85.0 89.0 95.0 99.0 103.0

ARPU growth (%) 3.7 4.7 6.7 4.2 4.0

Cost assumptions

Content as % TV revenues 34.6 32.0 32.0 34.5 34.0 34.0

Marketing/distribution as %

of revenues 8.7 8.6 8.3 10.0 10.0 10.0

Admin as % of revenues 7.5 8.4 9.4 9.0 9.5 9.5


27 November 2012


Appendix II: Astro channel packaging Figure 60: Astro—basic TV channels

Entertainment Music Movies Sports Educational News

TV1* Tvi Astro Vellithirai Astro Arena Astro Tutor TV SPM Bernama TV

TV2* Astro HITZ TV ESPNews Astro Tutor TV UPSR* CCTV News

TV3* Astro Tutor TV PMR CCTV4

NTV 7* Nat Geo Wild

TV9* Astro TVIQ

8TV* Astro Awani

Astro Ria Astro Ceria

Astro Prima

Astro Oasis

Zee Variasi

Arab Radio & TV Variety (ART)

TV AlHijrah

Astro Vaanavil

Makkal TV

Astro AEC

iView

Jia Yu

TNB Classic

KBS World

TVB Classic

Astro Xiao Tai Yang*

Asian Food Channel

AXN

TLC

DIVA Universal

i130

* FTA channels.


Figure 61: Astro—radio channels

Astro radio's commercial stations Direct-to-user (DTU) radio stations

ERA India Beat

Sinar FM Golden Oldies

THR.fm Raaga Jazz

THR.fm Gegar Opus

MY FM Rock

Hitz.fm 103

Mix FM Osai

Lite FM Bayu

XFM(3) Kenyalang

Nasional FM

Sabah V FM

Wai FM


27 November 2012


Appendix III: Management team Dato’ Rohana Binti Tan Sri Datuk Haji Rozhan, Chief Executive Officer

Rohana has been the CEO of Astro and its wholly-owned subsidiary, MBNS, since 2006.

Prior to being appointed as CEO, she was the group CFO of Astro All Asia Networks

(AAAN) and was instrumental in AAAN’s listing on the KLSE in 2003. She currently sits on

the boards of Media Innovations, Astro Overseas Limited and Malaysia Airlines.

Rohana holds a Bachelor of Arts (Honours) degree in Accounting and Economics from the

University of Kent and has completed the Advanced Management Programme at Harvard

Business School. She is a member of the Chartered Institute of Management Accountants

and the Malaysian Institute of Accountants.

Ahmad Fuaad Bin Mohd Kenali, Chief Financial Officer

Ahmad Fuaad joined Astro in August 2010 as the CFO. He has 18 years of experience in

accounting, assurance and finance. Prior to joining Astro, he was a partner at Ernst &

Young, Malaysia and served as the executive director finance in Petaling Garden Bhd.

He is a fellow of the Association of Chartered Certified Accountants, a member of the

Malaysian Institute of Accountants and a member of the Malaysian Institute of Certified

Public Accountants.

Henry Tan Poh Hock, Chief Operating Officer.

Henry is the COO and joined the group in May 2008. He is responsible for content,

marketing, branding and airtime sales. He has 24 years of experience in the media

industry and served as the CEO of GroupM, Malaysia and Singapore, a media investment

management company. Prior to that he was CEO of Mindshare Malaysia.

He holds a double degree in marketing and communications from Chisholm (now known

as Monash University), Australia.

Brian Wendell Lenz, Chief Innovation Officer

Brian joined the group in December 2011 as Chief Innovation Officer and is responsible for

the strategy, product and business development and technology infrastructure. He has 18

years of experience in product, technology, strategy and business development roles and

has spent the last nine years in pay TV and media. Prior to joining Astro, Brian worked at

BSkyB , Virgin Media, LEK Consulting and had a consultant position with Walt Disney on

broadband content strategy.

He holds a degree in industrial and operations engineering and an English literature

degree from the University of Michigan. He attended the London Business School and

received a Master’s in Business Administration with distinction.

Liew Swee Lin, Chief Commercial Officer

Swee Lin is the Chief Commercial Officer and joined the group in November 2010. She is

responsible for driving the customer franchise and top line growth to strengthen Astro’s

market position. She also oversees product management, sales, marketing, customer

management, service, operations and supply chain management.

Swee Lin has 22 years of management experience in the media and financial services

sectors and has worked at Alliance Financial Group, Standard Chartered Malaysia and

Ogilvy. She holds a Master of Science (MSc) in international marketing from University of

Strathclyde, UK, and is an accredited Certified Financial Planner (CFP, US).

27 November 2012


Appendix IV: Board of directors Tun Dato’ Seri Zaki Bin Tun Azmi, Independent Non-Executive Chairman

Tun Dato’ Seri Zaki Bin Tun Azmi had his early education in Malaysia before obtaining a

Barrister-at-Law qualification from the Lincoln’s Inn in 1969. He joined the Malaysian

judicial and legal services as a magistrate in 1970 and later transferred to the Attorney

General’s Chambers where he held several positions for 15 years before going into private

legal practice in 1985. While in practice, he was a director as well as chairman or member

of audit committees of the board of directors of several public listed companies including

Petroliam Nasional Berhad, Malaysia Airport Holdings Berhad and SP Setia Berhad.

He left legal practice in 2007 when he was appointed a Judge of the Federal Court of

Malaysia and shortly thereafter, he was appointed President of Court of Appeal of

Malaysia, the second highest judicial office. On 18 October 2008, he was appointed the

12th Chief Justice of Malaysia. He became the first chairman of the Judicial Appointment

Commission on 16 February 2009 until his retirement as Chief Justice in September 2011.

During his tenure as the Chief Justice of Malaysia, he reduced substantially the backlog of

cases pending at the Malaysian courts and also introduced technological and managerial

systems that enabled cases at the High Courts to be disposed of within nine months to

one year from the date of filing and within six months from the date of filing at the Sessions

Courts and Magistrates’ Courts.

Currently, he is the Chancellor of MAHSA University College and the Multimedia

University.

Augustus Ralph Marshall, Non-Independent Executive Deputy Chairman

Augustus Ralph Marshall has more than 30 years of experience in financial and general

management. He was admitted as a member of the Institute of Chartered Accountants in

England and Wales (“ICAEW”) in 1975. He started his career as an audit senior with Ernst

& Young in 1976 before joining Inchcape Malaysia Holdings Berhad in 1979 and in 1982,

was promoted to group finance director. In 1988, he joined UTSB where he currently

serves as an executive director.

He has been with the group since 1994 as a director of MBNS and was its Chief Executive

Officer from 1995 to 2006. He was later appointed a director of AAAN in July 2003 upon its

incorporation and became its deputy chairman and group chief executive officer in August

and September 2003, respectively prior to AAAN’s listing on the then Kuala Lumpur Stock

Exchange. Since the delisting of AAAN in June 2010, he was appointed Group Chief

Executive Officer of AHSB. He is also the Executive Deputy Chairman of ASTRO

Overseas Limited (“AOL”), a position he has held since April 2011.

He is currently an executive director of Tanjong Public Limited Company, Maxis (listed on

the Main Market), Maxis Communications Berhad (the holding company of Maxis) and

Johnston Press plc (listed on the London Stock Exchange plc), in which UTSB has

significant interests. In addition, he is also a director in an independent non-executive

capacity and the Chairman of the audit committee of KLCC Property Holdings Berhad

(“KLCCP”) (listed on the Main Market) and a non-executive director of MGB.

Chin Kwai Yoong, Independent Non-Executive Director.

After his tertiary education in Malaysia, Chin Kwai Yoong completed his articleship with

Middletons, a firm of chartered accountants in London and was admitted as a member of

the ICAEW in 1974.

He joined Price Waterhouse, London, as an audit assistant in 1974 and remained with the

firm until 1976. Subsequently, he took up a position as an audit senior with Price

Waterhouse, Kuala Lumpur, and was promoted to partner in 1982, a position he held until

his retirement in 2003. During his tenure as a partner, he was an executive director in

charge of the consumer and industrial products and services group. He also served as a

director of the audit and business advisory services division and the management

consulting services division.

27 November 2012


He has extensive experience in the audits of major companies in the banking, oil and gas

and automobile industries as well as in the heavy equipment, manufacturing, construction

and property development industries. He was also involved in corporate advisory services

covering investigations, mergers and acquisitions and share valuations.

He sits on the Board of Directors of Deleum Berhad and Genting Berhad (both listed on

the Main Market) and was also appointed as a director of BankNegara Malaysia in 2010.

Dato’ Mohamed Khadar Bin Merican, Independent Non-Executive Director.

Dato’ Mohamed Khadar Bin Merican has more than 30 years of experience in financial

and general management.

He began his career in 1983 when he joined Hanafiah Raslan & Mohamed, the then

member firm of Touch Ross International, as an auditor and consultant. In 1986, he joined

Kompleks Kewangan Malaysia Bhd, as the senior manager of financial planning, until

1988 when he joined Perbadanan Nasional Bhd, where his last position was as the senior

vice president of corporate services. In 1996, as a result of a reorganisation, he joined

Pernas International Holdings Bhd, a company listed on the Main Market, as the president

and chief operating officer. He resigned in 2003 to start his own financial consulting

business, which he manages currently.

He is a member of the ICAEW since 1983, and is also a chartered accountant of the

Malaysian Institute of Accountants. His other directorships in public companies include

RHB Capital Berhad (listed on the Main Market) and RHB Investment Bank Berhad where

he is the independent non-executive chairman of both companies, as well as AirAsia

Berhad (listed on the Main Market).

Bernard Anthony Cragg, Non-Independent Non-Executive Director.

Bernard Anthony Cragg is a chartered accountant by profession and was with Price

Waterhouse from 1976 to 1985. He graduated with a degree in mathematics from

Liverpool University, UK in 1976. He began his career with Price Waterhouse as a trainee

chartered accountant where he qualified and stayed until 1985 after which he joined

Carlton Communications plc (listed on the London Stock Exchange plc) initially as its

group financial controller. He held various senior management positions in Carlton

Communication plc including company secretary and group finance director. He has

previously served as the chairman of Datamonitor plc and i-Mate plc (both listed on the

London Stock Exchange plc) as well as a director of Arcadia Group plc and Bristol & West

Plc, a part of the Bank of Ireland (UK) Financial Services. Currently, he is also a director of

Workspace Group plc, Mothercare plc and Progressive Digital Media Group plc, all of

which are listed on the London Stock Exchange plc.

Lim Ghee Keong, Alternate Director to Augustus Ralph Marshall.

Lim Ghee Keong has more than 20 years of experience in treasury and credit

management. He has been with the UTSB Group since 1995 where he is currently the

Chief Financial Officer of UTSB. Prior to joining UTSB Group, he was attached to the

former Ban Hin Lee Bank in Malaysia from 1993 to 1995, initially as a senior credit officer

and later promoted to the position of branch head of credit. Between 1989 and 1993, he

was attached to General Electric Capital Corporation in the US where his last position was

as a credit analyst.

His other directorships include Bumi Armada Berhad, an offshore oil and gas service

provider (listed on Main Market) and Paxys Inc., a business process outsourcing company

listed on the (Philippines Stock Exchange). He is also a director of Yu Cai Foundation, a

charitable organisation and Bond Pricing Agency Malaysia Sdn Bhd, a bond pricing

agency registered with the SC.

He holds a Bachelor of Business Administration degree, majoring in finance, from the

University of Hawaii at Manoa, US, which he obtained in 1989.

Dato’ Rohana Binti Tan Sri Datuk Haji Rozhan also serves as an Executive Director

27 November 2012


Companies Mentioned (Price as of 23 Nov 12)

Astro Malaysia Holdings Bhd (ASTR.KL, RM2.66, OUTPERFORM, TP RM3.50) British Sky Broadcasting (BSY.L, 778p, NEUTRAL, TP 610.00p) DISH Network Corp. (DISH, $35.75, OUTPERFORM, TP $38.00) Dish TV India (DSTV.BO, Rs73.40, OUTPERFORM, TP Rs82.00) Hyundai HCN (126560.KS, W4710, NOT RATED) KT Skylife (053210.KS, W32,900, NEUTRAL [V], TP W32,500) LG Dacom (015940.KS, W17800, NOT RATED) Maxis Berhad (MXSC.KL, RM6.45, OUTPERFORM, TP RM8.00) Naspers (NPNJn.J, R539.85, OUTPERFORM, TP R500.00) PCCW (0008.HK, HK$3.19, OUTPERFORM, TP HK$3.63) PT MNC SKY Vision Tbk (MSKY.JK, Rp2175, NOT RATED) SK Broadband Co Ltd. (033630.KQ, W4,805, NEUTRAL, TP W3,200) Sky Network Television (SKT.NZ, NZ$5.07, NOT RATED) StarHub Ltd. (STAR.SI, S$3.63, NEUTRAL, TP S$3.60) TalkTalk (TALK.L, 211p, OUTPERFORM, TP 200.00p) Telekom Malaysia (TLMM.KL, RM5.37, UNDERPERFORM, TP RM3.94) The Directv Group, Inc. (DTV, $49.49, NEUTRAL, TP $58.00) Time dotCom Bhd (TCOM.KL, RM3.46, NOT RATED) i-Cable Communications (1097.HK, HK$.38) Singapore Telecom (STEL.SI, S$3.14, OUTPERFORM, TP S$3.58) M1 Ltd. (MONE.SI, S$2.68, OUTPERFORM, TP S$3.00) SK Broadband Co Ltd. (033630.KQ, W4,805, NEUTRAL, TP W3,200) Time Warner Cable (TWC, $93.55, OUTPERFORM, TP $92.00) Charter Communications (CHTR, $70.00, OUTPERFORM, TP $90.00) Cablevision (CVC, $13.98, NOT RATED) Virgin Media, Inc. (VMED, $34.01, OUTPERFORM, TP $38.00) BT Group (BT.L, 226.70p, OUTPERFORM, TP 300.00p) Telstra Corp. (TLS.AX, A$4.22, NEUTRAL, TP A$4.00) BAT Malaysia (BATO.KL, RM57.96, OUTPERFORM, TP RM72.00) Carlsberg Brewery (CAB MK, RM12.62, NOT RATED) Nestle (Malaysia) (NESZ MK, RM58.96, NOT RATED) Aeon Co (M) Bhd (AEON MK, RM11.90, NOT RATED) KLCC Property Holdings (KLCC MK, RM5.73, NOT RATED) SP Setia (SETI.KL, RM3.40, NEUTRAL, TP RM3.60) Malaysia Airports (MAHB.KL, RM5.48, OUTPERFORM, TP RM7.10) RHB Capital Berhad (RHBC.KL, RM7.40, RESTRICTED) Bumi Armada (BUAB.KL, RM3.88, NEUTRAL, TP RM3.30) Guinness Anchor Berhad (GUIN.KL, RM16.60, NOT RATED) Netflix, Inc. (NFLX, $82.95, OUTPERFORM [V], TP $80.00)

Disclosure Appendix Important Global Disclosures

I, Foong Wai Loke, certify that (1) the views expressed in this report accurately reflect my personal views about all of the subject companies and securities and (2) no part of my compensation was, is or will be directly or indirectly related to the specific recommendations or views expressed in this report.

See the Companies Mentioned section for full company names.

27 November 2012


3-Year Price, Target Price and Rating Change History Chart for ASTR.KL

ASTR.KL Closing

Price

Target

Price

Initiation/

Date (RM) (RM) Rating Assumption

0

0.5

1

1.5

2

2.5

3

Closing Price Target Price Initiation/Assumption Rating

RM

O=Outperform; N=Neutral; U=Underperform; R=Restricted; NR=Not Rated; NC=Not Covered

3-Year Price, Target Price and Rating Change History Chart for 053210.KS

053210.KS Closing

Price

Target

Price

Initiation/

Date (W) (W) Rating Assumption

22-Aug-11 24950 34400 O X

9-Dec-11 27450 32500

3-Oct-12 30500 N

34400

32500

22-Aug-11

O

N

17400

19400

21400

23400

25400

27400

29400

31400

33400


W


3-Year Price, Target Price and Rating Change History Chart for 033630.KQ

033630.KQ Closing

Price

Target

Price

Initiation/

Date (W) (W) Rating Assumption

10-May-10 5970 5200 U

2-May-11 4390 4800 N

3-Nov-11 3800 4200

8-May-12 3350 3750

1-Aug-12 2990 3200

5200

4800

4200

3750

3200

U

N

2805

3305

3805

4305

4805

5305

5805

6305


W


The analyst(s) responsible for preparing this research report received compensation that is based upon various factors including Credit Suisse's total revenues, a portion of which are generated by Credit Suisse's investment banking activities.

As of October, 2 2012 Analysts’ stock rating are defined as follows: Outperform (O): The stock’s total return is expected to outperform the relevant benchmark* by at least 10-15% or more, (depending on perceived risk) over the next 12 months. Neutral (N): The stock’s total return is expected to be in line with the relevant benchmark* (range of ±10-15%) over the next 12 months. Underperform (U): The stock’s total return is expected to underperform the relevant benchmark* by 10-15% or more over the next 12 months.

27 November 2012


*Relevant benchmark by region: As of 2nd October 2012, U.S. and Canadian as well as European ratings are based on a stock’s total return relative to the analyst's coverage universe which consists of all companies covered by the analyst within the relevant sector, with Outperforms representing the most attractive, Neutrals the less attractive, and Underperforms the least attractive investment opportunities. For Latin American, Japanese, and non-Japan Asia stocks, ratings are based on a stock’s total return relative to the average total return of the relevant country or regional benchmark; Australia, New Zealand are, and prior to 2nd October 2012 U.S. and Canadian ratings were based on (1) a stock’s absolute total return potential to its current share price and (2) the relative attractiveness of a stock’s total return potential within an analyst’s coverage universe. For Australian and New Zealand stocks, 12-month rolling yield is incorporated in the absolute total return calculation and a 15% and a 7.5% threshold replace the 10-15% level in the Outperform and Underperform stock rating definitions, respectively. The 15% and 7.5% thresholds replace the +10-15% and -10-15% levels in the Neutral stock rating definition, respectively. Restricted (R): In certain circumstances, Credit Suisse policy and/or applicable law and regulations preclude certain types of communications, including an investment recommendation, during the course of Credit Suisse's engagement in an investment banking transaction and in certain other circumstances.

Volatility Indicator [V]: A stock is defined as volatile if the stock price has moved up or down by 20% or more in a month in at least 8 of the past 24 months or the analyst expects significant volatility going forward.

Analysts’ sector weightings are distinct from analysts’ stock ratings and are based on the analyst’s expectations for the fundamentals and/or valuation of the sector* relative to the group’s historic fundamentals and/or valuation: Overweight: The analyst’s expectation for the sector’s fundamentals and/or valuation is favorable over the next 12 months. Market Weight: The analyst’s expectation for the sector’s fundamentals and/or valuation is neutral over the next 12 months. Underweight: The analyst’s expectation for the sector’s fundamentals and/or valuation is cautious over the next 12 months. *An analyst’s coverage sector consists of all companies covered by the analyst within the relevant sector. An analyst may cover multiple sectors.

Credit Suisse’s distribution of stock ratings (and banking clients) is: Global Ratings Distribution

Outperform/Buy* 42% (54% banking clients) Neutral/Hold* 40% (48% banking clients) Underperform/Sell* 15% (42% banking clients) Restricted 3%

*For purposes of the NYSE and NASD ratings distribution disclosure requirements, our stock ratings of Outperform, Neutral, and Underperform most closely correspond to Buy, Hold, and Sell, respectively; however, the meanings are not the same, as our stock ratings are determined on a relative basis. (Please refer to definitions above.) An investor's decision to buy or sell a security should be based on investment objectives, current holdings, and other individual factors.

Credit Suisse’s policy is to update research reports as it deems appropriate, based on developments with the subject company, the sector or the market that may have a material impact on the research views or opinions stated herein.

Credit Suisse's policy is only to publish investment research that is impartial, independent, clear, fair and not misleading. For more detail please refer to Credit Suisse's Policies for Managing Conflicts of Interest in connection with Investment Research: http://www.csfb.com/research-and-analytics/disclaimer/managing_conflicts_disclaimer.html

Credit Suisse does not provide any tax advice. Any statement herein regarding any US federal tax is not intended or written to be used, and cannot be used, by any taxpayer for the purposes of avoiding any penalties.

See the Companies Mentioned section for full company names. Price Target: (12 months) for (ASTR.KL) Method: We value Astro using discounted cashflow as we believe this methodology captures its true underlying cashflows. We believe PE valuations are not suitable as Astro's earnings are prone to large and fluctuating depreciation and amortization. We utilize a WACC of 8.4%, a beta of 0.9 and a mid-point discount-to-DCF of 15%to arrive at a target price of RM3.50. Risks: Key risk factors for Astro include Content cost, satellite transponder capacity, new competition, piracy and foreign currency. If content cost is greater than the 32-35% range guided by management, there could be potential downside to earnings. If ARPU growth is above our forecast of 4-6% for FY14-16E, there is potential upside to our forecasts. Price Target: (12 months) for (053210.KS) Method: Our target price of W32,500 is based on our DCF(Discounted Cash Flow) analysis with WACC(Weighted Average Cost of Capital) of 10.5% and implied 2020E EBITDA multiple of 4.5x. Risks: Potential risks to our target price of W32,500 are 1) potential regulation by KCC(Korea Communications Commission) imposing guidelines or limits to the marketing activities for the Pay TV operators, 2) market saturation for Pay TV, 3) Potential rise in the program usage fee from the contents providers. Price Target: (12 months) for (033630.KQ) Method: Our target price of W3,200 is based on 13E PBR of 0.8x from our previous target PBR of 1.0x. Given uncertainty over long-term earnings growth and 2013E ROE of 6.5%, we believe the company should trade at below its book value. For 2013, the market (KOSPI) trades at PBR of 1.06x with ROE of 16.0%. Risks: The following are risks to our W3,200 target price on SK Broadband: 1) the competitive environment in the broadband sector is still very fierce, with KT and LGT retaining its aggressive marketing strategy, which may force Hanaro to increase its marketing costs and even enter into a price war to hold off competition and 2) Slower than expected growth of its IPTV service.

Please refer to the firm's disclosure website at www.credit-suisse.com/researchdisclosures for the definitions of abbreviations typically used in the target price method and risk sections.

27 November 2012


See the Companies Mentioned section for full company names. The subject company (ASTR.KL, 053210.KS, 033630.KQ) currently is, or was during the 12-month period preceding the date of distribution of this report, a client of Credit Suisse. Credit Suisse provided investment banking services to the subject company (ASTR.KL, 053210.KS, 033630.KQ) within the past 12 months. Credit Suisse has managed or co-managed a public offering of securities for the subject company (ASTR.KL, 033630.KQ) within the past 12 months. Credit Suisse has received investment banking related compensation from the subject company (ASTR.KL, 053210.KS, 033630.KQ) within the past 12 months. Credit Suisse expects to receive or intends to seek investment banking related compensation from the subject company (ASTR.KL, 053210.KS, 033630.KQ) within the next 3 months.

Important Regional Disclosures

Singapore recipients should contact a Singapore financial adviser for any matters arising from this research report.

The analyst(s) involved in the preparation of this report have not visited the material operations of the subject company (ASTR.KL, 053210.KS, 033630.KQ) within the past 12 months.

Restrictions on certain Canadian securities are indicated by the following abbreviations: NVS--Non-Voting shares; RVS--Restricted Voting Shares; SVS--Subordinate Voting Shares. Individuals receiving this report from a Canadian investment dealer that is not affiliated with Credit Suisse should be advised that this report may not contain regulatory disclosures the non-affiliated Canadian investment dealer would be required to make if this were its own report. For Credit Suisse Securities (Canada), Inc.'s policies and procedures regarding the dissemination of equity research, please visit http://www.csfb.com/legal_terms/canada_research_policy.shtml.

Credit Suisse Securities (Europe) Limited acts as broker to TALK.L.

The following disclosed European company/ies have estimates that comply with IFRS: BSY.L, TALK.L, TLMM.KL.

As of the date of this report, Credit Suisse acts as a market maker or liquidity provider in the equities securities that are the subject of this report.

Principal is not guaranteed in the case of equities because equity prices are variable.

Commission is the commission rate or the amount agreed with a customer when setting up an account or at anytime after that. Taiwanese Disclosures: This research report is for reference only. Investors should carefully consider their own investment risk. Investment results are the responsibility of the individual investor. Reports may not be reprinted without permission of CS. Reports written by Taiwan-based analysts on non-Taiwan listed companies are not considered recommendations to buy or sell securities under Taiwan Stock Exchange Operational Regulations Governing Securities Firms Recommending Trades in Securities to Customers.

To the extent this is a report authored in whole or in part by a non-U.S. analyst and is made available in the U.S., the following are important disclosures regarding any non-U.S. analyst contributors: The non-U.S. research analysts listed below (if any) are not registered/qualified as research analysts with FINRA. The non-U.S. research analysts listed below may not be associated persons of CSSU and therefore may not be subject to the NASD Rule 2711 and NYSE Rule 472 restrictions on communications with a subject company, public appearances and trading securities held by a research analyst account. • Foong Wai Loke, non-U.S. analyst, is a research analyst employed by Credit Suisse Securities (Malaysia) Sdn Bhd..

For Credit Suisse disclosure information on other companies mentioned in this report, please visit the website at www.credit-suisse.com/researchdisclosures or call +1 (877) 291-2683. Disclaimers continue on next page.

27 November 2012

Asia Pacific

Equity Research

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Investment principal on bonds can be eroded depending on sale price or market price. In addition, there are bonds on which investment principal can be eroded due to changes in redemption amounts. Care is required when investing in such instruments. When you purchase non-listed Japanese fixed income securities (Japanese government bonds, Japanese municipal bonds, Japanese government guaranteed bonds, Japanese corporate bonds) from CS as a seller, you will be requested to pay the purchase price only.

Astro Malaysia Holdings Bhd - Credit Suisse

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