On 15 Nov SGX opening, Asian Pay TV Trust (APTT) shares price dropped as much as 50% from $0.315 to $0.169. This is not a good sign for investors. Checking out what causes the drastic fall in the share price turns out to be a cut in annual dividends distribution. The cut is from 6.5 cents per unit to 1.20 cents per unit for 2019 and 2020.
With the current price of 16 cents, the dividend yield has dropped to 7.5% per annum. It is anticipated that the distribution will continue to be paid quarterly. The new distribution level will be implemented from Q4 2018; Q4 2018 distribution will be prorated to 0.30 cents per unit.
As Taiwan is moving towards Digital and with analogue TV broadcasting has been switched off, the demand for cable TV services will be decreasing year after year. Good news is Premium digital cable TV RGUs increased to c.194,000 but ARPU was lowered due to promotions and bundled deals.
With the cut in dividends and debt management program, let’s hope the company is able to perform better in 2020.
The current gearing ratio is expected to be approximately 8 times net debt to EBITDA by 31 December 2018, however, It should be lower in 2019 with the new dividends and debt management program.
Looking at the company plan of restructuring their debts and a yield of 7%, It will be interesting to be part of my portfolio.