Today I will take a look at Asian Pay Television Trust’s (SGX:S7OU) most recent earnings update (31 December 2017) and compare these latest figures against its performance over the past few years, as well as how the rest of the media industry performed. As an investor, I find it beneficial to assess S7OU’s trend over the short-to-medium term in order to gauge whether or not the company is able to meet its goals, and ultimately sustainably grow over time. View our latest analysis for Asian Pay Television Trust

Despite a decline, did S7OU underperform the long-term trend and the industry?

For the purpose of this commentary, I like to use the ‘latest twelve-month’ data, 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 allows me to examine different stocks on a similar basis, using the latest information. For Asian Pay Television Trust, its latest trailing-twelve-month earnings is S$36.45M, which, relative to the prior year’s level, has fallen by a non-trivial -38.91%. Since these values are fairly nearsighted, I have estimated an annualized five-year value for S7OU’s net income, which stands at S$54.96M This doesn’t seem to paint a better picture, as earnings seem to have gradually been falling over the longer term.

Why is this? Well, let’s look at what’s occurring with margins and whether the rest of the industry is experiencing the hit as well. In the past few years, revenue growth has not been able to catch up, which suggests that Asian Pay Television Trust’s bottom line has been driven by unmaintainable cost-reductions. Eyeballing growth from a sector-level, the SG media industry has been growing, albeit, at a unexciting single-digit rate of 4.30% in the previous year, and 8.22% over the past five years. This shows that any near-term headwind the industry is enduring, it’s hitting Asian Pay Television Trust harder than its peers.

What does this mean?

Though Asian Pay Television Trust’s past data is helpful, it is only one aspect of my investment thesis. Typically companies that face a prolonged period of decline in earnings are going through some sort of reinvestment phase Although, if the whole industry is struggling to grow over time, it may be a sign of a structural shift, which makes Asian Pay Television Trust and its peers a riskier investment. I recommend you continue to research Asian Pay Television Trust to get a more holistic view of the stock by looking at: