The Three Numbers That Entertain Astro Malaysia Holdings Berhad

Astro Malaysia Holdings (KLSE: ASTRO.KL; KLSE: 6399.KL) is Malaysia’s national broadcaster. It is Malaysia’s equivalent of Singapore’s Channel NewsAsia and the UK’s BBC.

Astro’s Return on Equity is significantly higher than the average for the 30 companies that make up the Kuala Lumpur Composite Index (KLSE: ^KLCI). At 70.7%, the company generated nearly 10 times more profit than the market average last year.

It means that Astro delivered MYR70.8 for every ringgit that investors have invested in the media outfit.

Astro’s Net Income Margin is not especially high. In fact, it is half that of the market. At 9.9%, it implies that the satellite broadcaster made MYR9.90 on every MYR100 of sales. By comparison, the Net Income Margin for Hong Kong’s TVB (SEHK: 511) was 29.9%.

Astro Holdings is quite efficient in the use of its assets. Over the last five years, the Asset Turnover has been about 0.77. Last year, it generated MYR0.76 on every ringgit of asset employed in the business.

But Astro does make use of borrowings – a lot of borrowings. It had Total Liabilities of MYR5.8 billion and Total Assets of MYR6.4 billion. That equates to a Leverage Ratio of 9.4, which is more than four times higher than the market average.

By flicking through the channels of Astro Malaysia Holdings, it is easy to see how it entertains shareholders. Its extraordinary Return on Equity of 70.7% is the product of a below-average Net Income Margin of 9.9%; an efficient Asset Turnover of 0.76 and a large spoonful of Leverage Ratio of 9.4.

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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 Director David Kuo doesn’t own shares in any companies mentioned.