Latest Earnings From Asian Pay Television Trust

Asian Pay Television Trust (SGX: S7OU), which is better known as APTT, is a business trust that is focused on the pay-TV business.

The trust’ portfolio currently consists of its seed asset, Taiwan Broadband Communications Group. Taiwan Broadband Communications, as its name suggests, does business predominantly in Taiwan. It has three business segments: basic cable TV, premium digital cable TV, and broadband services.

With the trust announcing its earnings for the quarter and year ended 31 December 2015 yesterday, let’s dig in and find out how it had performed.

Revenue and distribution

For the quarter, APTT saw its total revenue increase by 4.6% year-on-year from S$81.8 million to S$85.6 million. For the whole of 2015, total revenue had climbed by 4.2% from S$318.7 million to S$332.1 million.

All three segments had contributed to the revenue increase as you can see in the table below:

APTT segment revenue table
Source: APTT’s earnings release (click table for larger image)

The higher top-line had led to an increase in EBITDA (earnings before interest, taxes, depreciation and amortisation). In the reporting quarter, APTT’s EBITDA grew by 7.6% year-on-year to S$52.9 million. Meanwhile, EBITDA for the year had stepped up by 3.4% to S$201 million.

The trust’s distribution for the reporting quarter was at 2.25 Singapore cents per unit, bringing the total distribution for 2015 to 8.25 cents, meeting its previous guidance and staying unchanged from 2014. In the earnings release for the fourth-quarter of 2014, APTT had given guidance that it was going to dish out a distribution per unit of 8.25 cents for 2015.

Business highlights and the balance sheet

The revenue increases seen by the trust were mainly due to higher subscriber numbers for all three segments. This was partially offset by a decrease in the average revenue per user (ARPU) for the premium digital cable TV and broadband segments.

APTT segment subs and ARPU table
Source: APTT’s earnings release (click table for larger image)

Moving on to the balance sheet, the trust had a net gearing ratio of 46% at end-2015; at end-2014, APTT’s gearing ratio was a tad lower at 43.2%. In the reporting quarter, the REIT’s all-in interest rates stood at 4% per annum and the interest coverage ratio was greater than 4; these were unchanged from a year ago.

What’s next for the trust

In 2015, there was an amendment in the Cable Law in Taiwan, such that Taiwan Broadband Communications has to switch-off analogue broadcasting and digitise all of the firm’s franchise areas. This resulted in a big change in Taiwan Broadband Communications’ capital expenditure plans; there’d now be a “significantly higher concentration of capital expenditure in 2016 and 2017.” That said, APTT views the completion of digitization as a positive for Taiwan Broadband Commuications.

Basic cable TV rates in Taiwan are regulated. The 2016 Basic Cable TV rate review for the areas Taiwan Broadband Communications is in had been “challenging.” In the earnings release, APTT commented that regulators had “pursued a general reduction of basic cable TV rates” as a result of weak economic conditions in Taiwan.

The trust mentioned that its focus in 2016 will be on growing cash flows through up-selling and cross-selling of Taiwan Broadband Communications’ services across its subscribers and moving forward with its expansion plan into the greater Taichung region.

APTT also expects growth in subscriber numbers in 2016. But, the trust expects EBITDA to be marginally lower in the year. That’s the result of a number of factors including the aforementioned lower rates at the basic cable TV segment and higher operating expenses, among others.

In the earnings release, APTT had guided for a distribution per unit of between 6.5 and 7.0 cents for 2016. That’s a decline of between 21% and 15% when compared to the distribution seen in 2015.

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The information provided is for general information purposes only and is not intended to be personalised investment or financial advice. Motley Fool Singapore contributor Esjay does not own shares in any companies mentioned.