APTT – Lim & Tan

• As highlighted as a possibility by us earlier, Temasek Holdings has finally emerged as a substantial shareholder in Asian Pay TV Trust (APTT) after having bought 54.612mln shares at 80 cents (via married deals), raising their stake to 108,959,812 shares or 7.58% of the company. (The transaction was done on 28 Feb’14.)
  
• The above is positive for APTT as since its listing in mid-2013, both Prudential and Morgan Stanley have been paring down their holdings in the company and these open market share sales have negatively impacted APTT’s share price, with the stock having declined consistently since its listing to hit an all time low of 71.5 cent in Dec’13 against its IPO price of 97 cents.
  
• Prudential had ceased to be a substantial shareholder on 27 Feb’14 when it sold 5,150,000 shares at 80 cents each, reducing their stake to 67,327,000 or 4.69%.
  
• While conjectural, the uncanny timing of Prudential’s sales and Temasek’s purchases lead us to guess that Temasek could have likely taken out a large part of Prudential’s remaining 67,327,000 shares, resulting in continued strength of APTT’s share price despite negative news of Prudential’s cessation being a substantial shareholder of APTT.
  
• Since our initial BUY report on APTT on 13 Jan’14, the stock has risen 6.4%, outperforming the Singapore market’s 1% decline and with its still attractive dividend yield of 10% coupled with share over-hang from Prudential likely removed by Temasek and “stamp of approval” from Temasek (now a substantial shareholder with 7.58% stake), we maintain our BUY recommendation. (APTT is currently trading cum-div of 4.13 cents, which goes ex-div on 19 Mar’13)