Asian Pay Television Trust (SGX:S7OU): Does The Earnings Decline Make It An Underperformer?

When Asian Pay Television Trust (SGX:S7OU) announced its most recent earnings (31 December 2017), I did two things: looked at its past earnings track record, then look at what is happening in the industry. Understanding how Asian Pay Television Trust performed requires a benchmark rather than trying to assess a standalone number at one point in time. Below is a quick commentary on how I see S7OU has performed. Check out our latest analysis for Asian Pay Television Trust

How Well Did S7OU Perform?

I like to use data from the most recent 12 months, which either annualizes the most recent 6-month earnings update, or in some cases, the most recent annual report is already the latest available financial data. This technique enables me to examine many different companies on a more comparable basis, using the most relevant data points. For Asian Pay Television Trust, its most recent trailing-twelve-month earnings is S$36.45M, which compared to the previous year’s figure, has sunken by a large -38.91%. Since these figures are fairly short-term, I’ve computed an annualized five-year value for S7OU’s net income, which stands at S$54.96M This doesn’t look much better, as earnings seem to have gradually been diminishing over time.

SGX:S7OU Income Statement May 17th 18
SGX:S7OU Income Statement May 17th 18
Why is this? Well, let’s look at what’s going on with margins and if the whole industry is feeling the heat. Over the past couple of years, revenue growth has failed to keep up which indicates that Asian Pay Television Trust’s bottom line has been propelled by unsustainable cost-reductions. Scanning growth from a sector-level, the SG media industry has been growing its average earnings by double-digit 18.77% over the prior twelve months, and a more subdued 8.90% over the previous five years. This means that whatever uplift the industry is enjoying, Asian Pay Television Trust has not been able to reap as much as its industry peers.

What does this mean?

Though Asian Pay Television Trust’s past data is helpful, it is only one aspect of my investment thesis. In some cases, companies that endure a drawn out period of reduction in earnings are going through some sort of reinvestment phase in order to keep up with the recent industry disruption and expansion. I recommend you continue to research Asian Pay Television Trust to get a better picture of the stock by looking at:

  1. Future Outlook: What are well-informed industry analysts predicting for S7OU’s future growth? Take a look at our free research report of analyst consensus for S7OU’s outlook.
  2. Financial Health: Is S7OU’s operations financially sustainable? Balance sheets can be hard to analyze, which is why we’ve done it for you. Check out our financial health checks here.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
NB: Figures in this article are calculated using data from the trailing twelve months from 31 December 2017. This may not be consistent with full year annual report figures.