Asian Pay TV Tr   

Asian Pay Tv Tr

Can't agree at all. One of the successful investor from Penang disclose his successful of making billion from stock market is 2 trend.

Trend on price movement and trend on financial result. Price and result seldom run at zigzag style, it normally up, stagnant and flat then turn down, then stagnant and flat then turn up.

A company continue to report bad result, we should not buy it till it convincingly start picking up since this is not so easy for a company to look for turn around within 1-2 quarter. Last quarter result is worse than last last quarter, which imply situation is not improved, coming result may not be good one, highly likely a same one or worse one.

jeremyow      ( Date: 26-Dec-2016 23:21) Posted: The current selling could be partly due to forward looking expection of their cash flows to be impacted by the continued higher capex next year and their dividends payout next year may likely be lower. But how much lower we leave it to the Trust to present to their unitholders after end of this full year' s financial results? That is why it is important to see their 4Q results and full year 2016 results and also the full year performance briefing by the Trust and their outlook for next year. Any predictions made now is just too premature to be conclusive as a business is fluid in nature subjected to constant changes in its operating environment and not limited to only the numbers on its financial statements.     jeremyow      ( Date: 26-Dec-2016 23:09) Posted: The below is taken from Asian Pay TV Trust' s FY2015 annual report presentation. Let' s see clues to how this management of the Trust is like. Firstly, they recognised that they need to focus on driving growth in cash flows and they have certain strategies in place to work towards that. Next, they recognised that the total revenue for full year 2016 has different factors affecting it and they also came out clean with it to their unitholders. No beating about the bush here. They also expected overall EBITDA for full year 2016 to be marginally lower than 2015. This is what I call honest reporting. Let us watch out on their upcoming full year 2016 EBITDA to see whether the management had in last year a good gauge or not on estimating their forward EBITDA for this year 2016. They are currently experiencing higher capital expenditure on network expansion and their Premium digital cable TV. All these higher capex should end by 2017 as what they reported. So we expect next year' s cash flows to continue to be tight for them. This higher capex which will definitely impact their cash flows to a certain extent is more or less expected here. No need to overthink too much here. Sure will impact cash flows. They distribution guidance of 6.5 to 7.0 cents is still fulfilled assuming the 4Q reported dividends payout is as what they expected at 1.625 cents which makes full year 2016 distribution per unit at 6.5 cents. This is in line with what they has already guided end of last year 2015. So, they make good their promise or rather they make an effort to do so.  I am not trying to talk up the Trust but to present certain findings for a more objective look at their current situation. From their presentation end of last year, at least I can size up some clues that this management could be an honest one in the way they come clean with their unitholders (no unexpected surprises from management for their unitholders) and they make an effort to fulfill what they have guided in their distribution for this year 2016. In conclusion, I leave it to the reader to form your own independent opinions.

 

Again, better refer to last quarter result and coming quarter result before committing. None of the trusty management will be responsible with what they said in the report, so far none of the management from RMT, Swiber and penny stocks which were liquidated were sent to jailed.

This is quite weird to trust someone you don't know but based on a report which 100% have to be positive and not to create panic to market.

As a value investors we should do our due diligence and be sensitive on the result and ensure the sustainability of the company. Now sgx want every investors to be responsible with their own decision rather than the top management of the company who earn million to be responsible to the minor shareholders.

First thing need to do is stop believing these report and words from management, since we are responsible with our decision, so every decision made shall be from own due diligent rather rely on them.

jeremyow      ( Date: 26-Dec-2016 23:09) Posted: The below is taken from Asian Pay TV Trust' s FY2015 annual report presentation. Let' s see clues to how this management of the Trust is like. Firstly, they recognised that they need to focus on driving growth in cash flows and they have certain strategies in place to work towards that. Next, they recognised that the total revenue for full year 2016 has different factors affecting it and they also came out clean with it to their unitholders. No beating about the bush here. They also expected overall EBITDA for full year 2016 to be marginally lower than 2015. This is what I call honest reporting. Let us watch out on their upcoming full year 2016 EBITDA to see whether the management had in last year a good gauge or not on estimating their forward EBITDA for this year 2016. They are currently experiencing higher capital expenditure on network expansion and their Premium digital cable TV. All these higher capex should end by 2017 as what they reported. So we expect next year' s cash flows to continue to be tight for them. This higher capex which will definitely impact their cash flows to a certain extent is more or less expected here. No need to overthink too much here. Sure will impact cash flows. They distribution guidance of 6.5 to 7.0 cents is still fulfilled assuming the 4Q reported dividends payout is as what they expected at 1.625 cents which makes full year 2016 distribution per unit at 6.5 cents. This is in line with what they has already guided end of last year 2015. So, they make good their promise or rather they make an effort to do so.  I am not trying to talk up the Trust but to present certain findings for a more objective look at their current situation. From their presentation end of last year, at least I can size up some clues that this management could be an honest one in the way they come clean with their unitholders (no unexpected surprises from management for their unitholders) and they make an effort to fulfill what they have guided in their distribution for this year 2016. In conclusion, I leave it to the reader to form your own independent opinions.   jeremyow      ( Date: 26-Dec-2016 22:53) Posted: Stable TBC business positioned to be more robust in the future &ndash The focus in 2016 remains on driving growth in cash flows through up-selling and cross-selling of services across TBC&rsquo s subscriber base and progressing the network and operational expansion in greater Taichung region &ndash Total revenue for the full year 2016 is anticipated to be influenced by a number of factors including the continued weakness in Taiwanese economy, marginally lower Basic cable TV rates and the non-recurrence of revenue generated in 2015 &ndash Overall EBITDA for the full year 2016 is expected to be marginally lower than 2015 &ndash Accelerated capital expenditure driven by Premium digital cable TV &ndash APTT distribution of 2.25 cents per unit will be paid on 24 March 2016 &ndash APTT distribution guidance of 6.5 to 7.0 cents per unit for the full year ending 31 December 2016, subject to no material changes in planning assumptions including for asset performance and refinancing

 

The current selling could be partly due to forward looking expection of their cash flows to be impacted by the continued higher capex next year and their dividends payout next year may likely be lower. But how much lower we leave it to the Trust to present to their unitholders after end of this full year' s financial results? That is why it is important to see their 4Q results and full year 2016 results and also the full year performance briefing by the Trust and their outlook for next year. Any predictions made now is just too premature to be conclusive as a business is fluid in nature subjected to constant changes in its operating environment and not limited to only the numbers on its financial statements.    

jeremyow      ( Date: 26-Dec-2016 23:09) Posted: The below is taken from Asian Pay TV Trust' s FY2015 annual report presentation. Let' s see clues to how this management of the Trust is like. Firstly, they recognised that they need to focus on driving growth in cash flows and they have certain strategies in place to work towards that. Next, they recognised that the total revenue for full year 2016 has different factors affecting it and they also came out clean with it to their unitholders. No beating about the bush here. They also expected overall EBITDA for full year 2016 to be marginally lower than 2015. This is what I call honest reporting. Let us watch out on their upcoming full year 2016 EBITDA to see whether the management had in last year a good gauge or not on estimating their forward EBITDA for this year 2016. They are currently experiencing higher capital expenditure on network expansion and their Premium digital cable TV. All these higher capex should end by 2017 as what they reported. So we expect next year' s cash flows to continue to be tight for them. This higher capex which will definitely impact their cash flows to a certain extent is more or less expected here. No need to overthink too much here. Sure will impact cash flows. They distribution guidance of 6.5 to 7.0 cents is still fulfilled assuming the 4Q reported dividends payout is as what they expected at 1.625 cents which makes full year 2016 distribution per unit at 6.5 cents. This is in line with what they has already guided end of last year 2015. So, they make good their promise or rather they make an effort to do so.  I am not trying to talk up the Trust but to present certain findings for a more objective look at their current situation. From their presentation end of last year, at least I can size up some clues that this management could be an honest one in the way they come clean with their unitholders (no unexpected surprises from management for their unitholders) and they make an effort to fulfill what they have guided in their distribution for this year 2016. In conclusion, I leave it to the reader to form your own independent opinions.   jeremyow      ( Date: 26-Dec-2016 22:53) Posted: Stable TBC business positioned to be more robust in the future &ndash The focus in 2016 remains on driving growth in cash flows through up-selling and cross-selling of services across TBC&rsquo s subscriber base and progressing the network and operational expansion in greater Taichung region &ndash Total revenue for the full year 2016 is anticipated to be influenced by a number of factors including the continued weakness in Taiwanese economy, marginally lower Basic cable TV rates and the non-recurrence of revenue generated in 2015 &ndash Overall EBITDA for the full year 2016 is expected to be marginally lower than 2015 &ndash Accelerated capital expenditure driven by Premium digital cable TV &ndash APTT distribution of 2.25 cents per unit will be paid on 24 March 2016 &ndash APTT distribution guidance of 6.5 to 7.0 cents per unit for the full year ending 31 December 2016, subject to no material changes in planning assumptions including for asset performance and refinancing

 

The below is taken from Asian Pay TV Trust' s FY2015 annual report presentation. Let' s see clues to how this management of the Trust is like. Firstly, they recognised that they need to focus on driving growth in cash flows and they have certain strategies in place to work towards that.

Next, they recognised that the total revenue for full year 2016 has different factors affecting it and they also came out clean with it to their unitholders. No beating about the bush here. They also expected overall EBITDA for full year 2016 to be marginally lower than 2015. This is what I call honest reporting. Let us watch out on their upcoming full year 2016 EBITDA to see whether the management had in last year a good gauge or not on estimating their forward EBITDA for this year 2016.

They are currently experiencing higher capital expenditure on network expansion and their Premium digital cable TV. All these higher capex should end by 2017 as what they reported. So we expect next year' s cash flows to continue to be tight for them. This higher capex which will definitely impact their cash flows to a certain extent is more or less expected here. No need to overthink too much here. Sure will impact cash flows.

They distribution guidance of 6.5 to 7.0 cents is still fulfilled assuming the 4Q reported dividends payout is as what they expected at 1.625 cents which makes full year 2016 distribution per unit at 6.5 cents. This is in line with what they has already guided end of last year 2015. So, they make good their promise or rather they make an effort to do so. 

I am not trying to talk up the Trust but to present certain findings for a more objective look at their current situation. From their presentation end of last year, at least I can size up some clues that this management could be an honest one in the way they come clean with their unitholders (no unexpected surprises from management for their unitholders) and they make an effort to fulfill what they have guided in their distribution for this year 2016. In conclusion, I leave it to the reader to form your own independent opinions.  

jeremyow      ( Date: 26-Dec-2016 22:53) Posted: Stable TBC business positioned to be more robust in the future &ndash The focus in 2016 remains on driving growth in cash flows through up-selling and cross-selling of services across TBC&rsquo s subscriber base and progressing the network and operational expansion in greater Taichung region &ndash Total revenue for the full year 2016 is anticipated to be influenced by a number of factors including the continued weakness in Taiwanese economy, marginally lower Basic cable TV rates and the non-recurrence of revenue generated in 2015 &ndash Overall EBITDA for the full year 2016 is expected to be marginally lower than 2015 &ndash Accelerated capital expenditure driven by Premium digital cable TV &ndash APTT distribution of 2.25 cents per unit will be paid on 24 March 2016 &ndash APTT distribution guidance of 6.5 to 7.0 cents per unit for the full year ending 31 December 2016, subject to no material changes in planning assumptions including for asset performance and refinancing

 

Stable TBC business positioned to be more robust in the future

&ndash The focus in 2016 remains on driving growth in cash flows through up-selling and cross-selling of services across TBC&rsquo s subscriber base and progressing the network and operational expansion in greater Taichung region

&ndash Total revenue for the full year 2016 is anticipated to be influenced by a number of factors including the continued weakness in Taiwanese economy, marginally lower Basic cable TV rates and the non-recurrence of revenue generated in 2015

&ndash Overall EBITDA for the full year 2016 is expected to be marginally lower than 2015

&ndash Accelerated capital expenditure driven by Premium digital cable TV

&ndash APTT distribution of 2.25 cents per unit will be paid on 24 March 2016

&ndash APTT distribution guidance of 6.5 to 7.0 cents per unit for the full year ending 31 December 2016, subject to no material changes in planning assumptions including for asset performance and refinancing

 

Yes. One possible way though not fully conclusive is to look out for any buying and selling of shares by SSHs. If SSHs especially SSHs who are insiders of the company (board of directors, CEO etc.) are selling their shares right now, it may indicate something negative or wrong about the company that is going to happen going forward though it is not always fully conclusive. If no SSHs are selling, at least the cause for concern is not being heightened at the moment. Keep monitoring the developments in business and financial performance before carrying out any actions. The developments in 4Q and full year 2016 results will continue to paint their story going forward. As far as I can see, there is no immediate major problems with this Trust since refinancing is already done. The concern now is the sustainability of their dividends payout next year which will depend on their business and cash flow performance next year. 

Merc85      ( Date: 26-Dec-2016 21:58) Posted: All the SSH is holding their share and not selling for the last 9 months.   churnw      ( Date: 26-Dec-2016 21:40) Posted: I have check their financial report ... Temasek have 7 % holding unless this is not the temasek we know...

 

I always adopt a neutral stance when observing a company until the signs surrounding it are more conclusive no matter whether I have or do not have vested interest. Let the actual developments of the business and financial performance going forward speak for themselves. If one is not too sure at the moment, then just hold back from making any investment decisions in the buying or selling of the shares of a company until things are clearer concerning a company. For APTT, the upcoming 4Q and full year 2016 release of financial results and briefing early next year could give further clue to where it is heading next year 2017.      

churnw      ( Date: 26-Dec-2016 21:03) Posted: A lot of people will try to give negative comment .... Don't know got any agenda ... Is it part of the Shortist who short it down ..

 

Let see what happen tomorrow ...
Hope can push up the price to catch the Shortist ....

 

Yup, from TA perspective, the downward momentum is still stong. 

Shortist call. 

JesseTyler      ( Date: 26-Dec-2016 21:41) Posted: I agree. Watch out for tomorrow.  spore1      ( Date: 26-Dec-2016 15:10) Posted: Don't ignore the warning sign. Could see further melting dw

 

All the SSH is holding their share and not selling for the last 9 months.

 

churnw      ( Date: 26-Dec-2016 21:40) Posted: I have check their financial report ... Temasek have 7 % holding unless this is not the temasek we know...

 

I agree. Watch out for tomorrow. 

spore1      ( Date: 26-Dec-2016 15:10) Posted: Don't ignore the warning sign. Could see further melting dw

 

I have check their financial report ...
Temasek have 7 % holding unless this is not the temasek we know...

 

http://www.sharejunction.com/sharejunction/listMessage.htm?topicId=16667& searchString=& msgbdName=RickmersMaritime& topicTitle=RickmersM turn-around story

U all better dun believe this " danger" guy

 

danger      ( Date: 23-Dec-2016 21:14) Posted: Holder Shares % Held Temasek Holdings Pte Ltd. (Investment Management) AS OF 10 MAR 2016 114.61m 7.98% CI Investments, Inc. AS OF 31 DEC 2015 41.12m 2.86% Prusik Investment Management LLP AS OF 29 JUL 2016 37.53m 2.61% Value Partners Ltd. AS OF 30 JUN 2016 34.33m 2.39% First Eagle Investment Management LLC AS OF 31 OCT 2016 33.86m 2.36% Invesco Asset Management Singapore Ltd. AS OF 29 JUL 2016 28.84m 2.01% The Vanguard Group, Inc. AS OF 30 NOV 2016 25.25m 1.76% Norges Bank Investment Management AS OF 31 DEC 2015 12.35m 0.86% Eastspring Investments (Singapore) Ltd. AS OF 30 JUN 2016 11.20m 0.78% Waverton Investment Management Ltd. AS OF 30 JUN 2016 8.81m 0.61

 

A lot of people will try to give negative comment ....

Don't know got any agenda ...
Is it part of the Shortist who short it down ..

 

It is better to wait and see 'if' happen before committing further. There had been so many empty promises in sgx companies which sink investors to hell.

There are always 2 'if' (possible) for a company prospect, but present tense is more to focus on, present tense is very obvious, cash dropping, overpaid dividend increase debt and increase finance cost, interest rate will be hiked in 2017 globally, 14mio per quarter can be increased easily to cut down margin.

People who vested like to see and hope for positive prospect and neglect the actual situation.

there can be thousand of promise from trusty management but look into facts a overpaid dividend company overpaid cash which is more than what they earned, when system is outdated, a cost is required to upgrade the system can only go for borrowing, borrowing increase finance cost but at the same time, it is hard to increase subscription rate from the customers. This is general problem faced by trust.

I seriously doubt about monopoly since it should not happen in Taiwan which is mature economic.

Again, it is better continue to monitor the result in coming quarter before committing further. Look into last quarter result cash flow, They borrow 137mio and repay 124mio but cash drop from 52mio to 48mio, this has been giving a very strong signal the sustainable of 1.62 cents dividend which need 23mio to pay, to stop reducing cash flow with last quarter performance, the cash can be paid for 2017 is 23-137-124+48-52= 6mio or 0.42 cents only.

This is the major reason to cause this sell down since the dividend policy has to be revised after end of 2016, fund managers just dump the share before a new dividend payout to be announced 3 months later.

So this is negative on this quarter result and we won't know if next quarter will be better or worse. But my opinion is it will go worse with higher interest rate in 2017, and Taiwan economic shall be worsen under pressure from China.

Good luck for all dreamers.

wirado      ( Date: 26-Dec-2016 16:46) Posted: Hi, The capex 19 mil is funded by borrowing. Which I agreed with you it will increase the cost of borrowing in the future. But the network expansion will generate addition cashflow. About the tax, if understand correctly, the amount is not determined yet. It consist of current income tax 1.3mil, defered 4 mil, and witholding 1.9mil. In common, trust business has special tax treatment compare to other form of business, just Like REIT. nngeeh      ( Date: 26-Dec-2016 14:53) Posted: Hi Bro, Thanks for the explanation below. If you calculate purely using operating cash flow of $42M (or $28M after interest), you are ignoring the capex expenditure of $19M ... which consist of real outflow cash. AAPT mentioned that they will spend are $50-55M per year in 2016 & 2017. You can' t ignore capex expenditure. If I use the $28M which will need to pay for $23M div and $19M capex..they r running short of $14M. There are also few million cost (like settlement fee, exchange loss, etc) here and there   .... which explain why the cash reduce by $4M and loan increased by $13M. I think we will really need to wait until the upgrade has been completed for them to have real positive free cash flow (operating cash flow - capex expenditure). Another thing which I couldn' t really understand is tax. In Q3, the tax is $8M which is addressed in calculation of net profit... but this $8M cost is ignored in operation cash flow ... probably because it can be deferred and not immediate cash outflow. However ...this $8M will eventually need to be paid in future.

 

Hi, The capex 19 mil is funded by borrowing. Which I agreed with you it will increase the cost of borrowing in the future. But the network expansion will generate addition cashflow. About the tax, if understand correctly, the amount is not determined yet. It consist of current income tax 1.3mil, defered 4 mil, and witholding 1.9mil. In common, trust business has special tax treatment compare to other form of business, just Like REIT.

nngeeh      ( Date: 26-Dec-2016 14:53) Posted: Hi Bro, Thanks for the explanation below. If you calculate purely using operating cash flow of $42M (or $28M after interest), you are ignoring the capex expenditure of $19M ... which consist of real outflow cash. AAPT mentioned that they will spend are $50-55M per year in 2016 & 2017. You can' t ignore capex expenditure. If I use the $28M which will need to pay for $23M div and $19M capex..they r running short of $14M. There are also few million cost (like settlement fee, exchange loss, etc) here and there   .... which explain why the cash reduce by $4M and loan increased by $13M. I think we will really need to wait until the upgrade has been completed for them to have real positive free cash flow (operating cash flow - capex expenditure). Another thing which I couldn' t really understand is tax. In Q3, the tax is $8M which is addressed in calculation of net profit... but this $8M cost is ignored in operation cash flow ... probably because it can be deferred and not immediate cash outflow. However ...this $8M will eventually need to be paid in future. wirado      ( Date: 26-Dec-2016 10:05) Posted: I think this should help to clear things out. APTV Business is providing pay-TV and broadband business in Taiwan. APTT&rsquo s seed asset, Taiwan Broadband Communications Group (TBC). It owns the cable network that passes over 1.1 million homes in five franchise areas across Taiwan. Through this network TBC delivers Basic cable TV, Premium digital cable TV and high-speed Broadband services to these homes. Based on 3rd quarter, APTV has 761,000 Basic Cable TV, 178,000 Premium digital cable TV, 201,000 Broadband service. This business is different with other business where you don' t lose a majority of your customer in quickly or no demand. The business is much of monopoly. There is only one provider within the franchise area and you have to buy cable TV license which provides a high barrier to entry and this shown on Balance sheet as an intangible asset. (From Financial statement notes, the value of the cable TV licences and goodwill is allocated to the Group&rsquo s CGU which is principally engaged in the Basiccable TV, Premium digital cable TV and Broadband services in Taiwan.) I asked the management on the subscription locked in period and renewal rate to ensure stable cash flow from customers: Our basic cable TV subscribers are pre-paid, meaning they must pay in advance before receiving our service. We have been the sole provider of cable TV services in our areas for well over 10 years, and we carry all of the popular channels (including all of the top 20 rated channels in Taiwan) in our basic package for an all inclusive rate currently an average price of approximately NT$538 per month, so very affordable. Because of this, our customers tend to continue their subscription service with us rather than switch to an alternate provider of TV content I asked about the termination rate: Currently our basic cable TV churn rate is less than 1% (less than 1% of our customers choose to leave and use a different provider of TV), and it has been at this level for many years. This is a reflection of the high customer satisfaction levels across our subscriber base. Pay-TV business is much of stable as it is a monopoly and customers can' t choose to use other providers. In the quarters to come, it should be stable cash-flow. Now if we look at the Q3 revenue (You can reference back from Q3 announcement).  total revenue only down 2.8% compare to last quarter. However, in NT$, it is only 1% down. There is a negative foreign exchange. The lower revenue is due to the lower advertisement and lower channel leasing. I don' t see much of set back if we get lower revenue from advertisement. This is just additional income from the main business. Lower revenue of 2.8% doesn' t translate to a significant drop in dividend from 2 cents to 1.625 cents. To find out more, we shall dive through Cashflow statement on how the cash is moved. On Q3 Cashflow, APTV has 10mil profit but we have made an adjustment to non-cash portions. We got total of 42 mil from operating activities. Interest to be paid is 14Mil. We left with 28 mil. On last year, APTV used to distribute 100% of this. If you divided this 28 mil to issue shares, we get 2 cents dividend. I believe management do the right thing to reduce the dividend to 1.625 cents (total of 23Mil from issued shares). By doing this, they have free cash-flow of 5mil. Now on borrowing portion. I believe Bank or Financial institution has done their research before even commit to lend such huge amount to APTV. The business model provides a stable cashflow to pay the interest. For this reason, APTV has funding certainty, better terms and pricing. From Q3, APTV has secured the facility and no major refinancing till 2019.

 

Yes. Based on the latest Q3 and 9M financial results, the Trust is currently slightly negative in their overall net cashflows. I believe we have already discussed quite sufficiently on its cashflows issue and question their ability to sustain their amount of dividends payout going forward. I think the only thing meaningful to look foward now is their future developments in their businesses and cashflows. It is their next quarter and next year' s financial results which will matter whether they can continue to sustain their current dividends payout. At least the management has already gave their commitment to keep up the current dividend payout for this last 4Q which will be same as previous three quarters.

Wirado has already gave more insights into the businesses of APTT and I do agree that there is certain good level of stability in their cash generation ability from their monopoly and high barriers to entry. The recent sucessful refinancing of their debts is a testimony to their stable cash generating ability. The financial institutions and banks are not that stupid to provide refinancing if their businesses are questionable.

The only thing being of concern is whether they can improve their cashflows going forward. There maybe a chance of their amount of dividends payout to decrease next year unless they can increase their free cash flows to cover their dividends without relying further on increasing their borrowings to pay their dividends. We shall see their upcoming last 4Q and also next year' s business and financial performance.          

nngeeh      ( Date: 26-Dec-2016 14:53) Posted: Hi Bro, Thanks for the explanation below. If you calculate purely using operating cash flow of $42M (or $28M after interest), you are ignoring the capex expenditure of $19M ... which consist of real outflow cash. AAPT mentioned that they will spend are $50-55M per year in 2016 & 2017. You can' t ignore capex expenditure. If I use the $28M which will need to pay for $23M div and $19M capex..they r running short of $14M. There are also few million cost (like settlement fee, exchange loss, etc) here and there   .... which explain why the cash reduce by $4M and loan increased by $13M. I think we will really need to wait until the upgrade has been completed for them to have real positive free cash flow (operating cash flow - capex expenditure). Another thing which I couldn' t really understand is tax. In Q3, the tax is $8M which is addressed in calculation of net profit... but this $8M cost is ignored in operation cash flow ... probably because it can be deferred and not immediate cash outflow. However ...this $8M will eventually need to be paid in future. wirado      ( Date: 26-Dec-2016 10:05) Posted: I think this should help to clear things out. APTV Business is providing pay-TV and broadband business in Taiwan. APTT&rsquo s seed asset, Taiwan Broadband Communications Group (TBC). It owns the cable network that passes over 1.1 million homes in five franchise areas across Taiwan. Through this network TBC delivers Basic cable TV, Premium digital cable TV and high-speed Broadband services to these homes. Based on 3rd quarter, APTV has 761,000 Basic Cable TV, 178,000 Premium digital cable TV, 201,000 Broadband service. This business is different with other business where you don' t lose a majority of your customer in quickly or no demand. The business is much of monopoly. There is only one provider within the franchise area and you have to buy cable TV license which provides a high barrier to entry and this shown on Balance sheet as an intangible asset. (From Financial statement notes, the value of the cable TV licences and goodwill is allocated to the Group&rsquo s CGU which is principally engaged in the Basiccable TV, Premium digital cable TV and Broadband services in Taiwan.) I asked the management on the subscription locked in period and renewal rate to ensure stable cash flow from customers: Our basic cable TV subscribers are pre-paid, meaning they must pay in advance before receiving our service. We have been the sole provider of cable TV services in our areas for well over 10 years, and we carry all of the popular channels (including all of the top 20 rated channels in Taiwan) in our basic package for an all inclusive rate currently an average price of approximately NT$538 per month, so very affordable. Because of this, our customers tend to continue their subscription service with us rather than switch to an alternate provider of TV content I asked about the termination rate: Currently our basic cable TV churn rate is less than 1% (less than 1% of our customers choose to leave and use a different provider of TV), and it has been at this level for many years. This is a reflection of the high customer satisfaction levels across our subscriber base. Pay-TV business is much of stable as it is a monopoly and customers can' t choose to use other providers. In the quarters to come, it should be stable cash-flow. Now if we look at the Q3 revenue (You can reference back from Q3 announcement).  total revenue only down 2.8% compare to last quarter. However, in NT$, it is only 1% down. There is a negative foreign exchange. The lower revenue is due to the lower advertisement and lower channel leasing. I don' t see much of set back if we get lower revenue from advertisement. This is just additional income from the main business. Lower revenue of 2.8% doesn' t translate to a significant drop in dividend from 2 cents to 1.625 cents. To find out more, we shall dive through Cashflow statement on how the cash is moved. On Q3 Cashflow, APTV has 10mil profit but we have made an adjustment to non-cash portions. We got total of 42 mil from operating activities. Interest to be paid is 14Mil. We left with 28 mil. On last year, APTV used to distribute 100% of this. If you divided this 28 mil to issue shares, we get 2 cents dividend. I believe management do the right thing to reduce the dividend to 1.625 cents (total of 23Mil from issued shares). By doing this, they have free cash-flow of 5mil. Now on borrowing portion. I believe Bank or Financial institution has done their research before even commit to lend such huge amount to APTV. The business model provides a stable cashflow to pay the interest. For this reason, APTV has funding certainty, better terms and pricing. From Q3, APTV has secured the facility and no major refinancing till 2019.

 

Don't ignore the warning sign. Could see further melting dw

 

Hi Bro, Thanks for the explanation below.

If you calculate purely using operating cash flow of $42M (or $28M after interest), you are ignoring the capex expenditure of $19M ... which consist of real outflow cash. AAPT mentioned that they will spend are $50-55M per year in 2016 & 2017. You can' t ignore capex expenditure.

If I use the $28M which will need to pay for $23M div and $19M capex..they r running short of $14M. There are also few million cost (like settlement fee, exchange loss, etc) here and there   .... which explain why the cash reduce by $4M and loan increased by $13M.

I think we will really need to wait until the upgrade has been completed for them to have real positive free cash flow (operating cash flow - capex expenditure).

Another thing which I couldn' t really understand is tax. In Q3, the tax is $8M which is addressed in calculation of net profit... but this $8M cost is ignored in operation cash flow ... probably because it can be deferred and not immediate cash outflow. However ...this $8M will eventually need to be paid in future.

wirado      ( Date: 26-Dec-2016 10:05) Posted: I think this should help to clear things out. APTV Business is providing pay-TV and broadband business in Taiwan. APTT&rsquo s seed asset, Taiwan Broadband Communications Group (TBC). It owns the cable network that passes over 1.1 million homes in five franchise areas across Taiwan. Through this network TBC delivers Basic cable TV, Premium digital cable TV and high-speed Broadband services to these homes. Based on 3rd quarter, APTV has 761,000 Basic Cable TV, 178,000 Premium digital cable TV, 201,000 Broadband service. This business is different with other business where you don' t lose a majority of your customer in quickly or no demand. The business is much of monopoly. There is only one provider within the franchise area and you have to buy cable TV license which provides a high barrier to entry and this shown on Balance sheet as an intangible asset. (From Financial statement notes, the value of the cable TV licences and goodwill is allocated to the Group&rsquo s CGU which is principally engaged in the Basiccable TV, Premium digital cable TV and Broadband services in Taiwan.) I asked the management on the subscription locked in period and renewal rate to ensure stable cash flow from customers: Our basic cable TV subscribers are pre-paid, meaning they must pay in advance before receiving our service. We have been the sole provider of cable TV services in our areas for well over 10 years, and we carry all of the popular channels (including all of the top 20 rated channels in Taiwan) in our basic package for an all inclusive rate currently an average price of approximately NT$538 per month, so very affordable. Because of this, our customers tend to continue their subscription service with us rather than switch to an alternate provider of TV content I asked about the termination rate: Currently our basic cable TV churn rate is less than 1% (less than 1% of our customers choose to leave and use a different provider of TV), and it has been at this level for many years. This is a reflection of the high customer satisfaction levels across our subscriber base. Pay-TV business is much of stable as it is a monopoly and customers can' t choose to use other providers. In the quarters to come, it should be stable cash-flow. Now if we look at the Q3 revenue (You can reference back from Q3 announcement).  total revenue only down 2.8% compare to last quarter. However, in NT$, it is only 1% down. There is a negative foreign exchange. The lower revenue is due to the lower advertisement and lower channel leasing. I don' t see much of set back if we get lower revenue from advertisement. This is just additional income from the main business. Lower revenue of 2.8% doesn' t translate to a significant drop in dividend from 2 cents to 1.625 cents. To find out more, we shall dive through Cashflow statement on how the cash is moved. On Q3 Cashflow, APTV has 10mil profit but we have made an adjustment to non-cash portions. We got total of 42 mil from operating activities. Interest to be paid is 14Mil. We left with 28 mil. On last year, APTV used to distribute 100% of this. If you divided this 28 mil to issue shares, we get 2 cents dividend. I believe management do the right thing to reduce the dividend to 1.625 cents (total of 23Mil from issued shares). By doing this, they have free cash-flow of 5mil. Now on borrowing portion. I believe Bank or Financial institution has done their research before even commit to lend such huge amount to APTV. The business model provides a stable cashflow to pay the interest. For this reason, APTV has funding certainty, better terms and pricing. From Q3, APTV has secured the facility and no major refinancing till 2019.

 

Wirado - very good write up
Thanks