Equity Analysis /
Thailand

True Corp PCL: Amalgamation progress to catalyze a share price rally

  • Mild service revenue recovery expected in 1Q22

  • TRUE-DTAC amalgamation progress—key share price catalyst

  • Synergy value of Bt0.97/share now factored in target price

Prasit Sujiravorakul
Prasit Sujiravorakul

Equity Research Analyst

Bualuang Securities
4 April 2022

We remain bullish on TRUE, as the TRUE-DTAC amalgamation progress will spur its share price in 2022. We advise that investors hold its shares and swap them into the MergeCo shares led by the impressive long-term synergies which will be quantified after the MergeCo is established in 2H22. Our TRADING BUY stands, based on a shallower 2022 core loss, the amalgamation progress and its synergy values. Our YE23 target price of Bt7/share includes DCF-based synergy values estimated at Bt0.97/share of TRUE. 

Mild service revenue recovery expected in 1Q22

Despite the surge in Omicron’s spread, the cost inflation caused by the spike in oil prices and related costs which might impact consumer spending power in 1Q22 and the sustained intense mobile competition, we still expect True Move-H’s service revenue to recover mildly YoY and QoQ in 1Q22 mainly driven by the full-quarter impact of Thailand’s reopening starting Nov 2021 through 2022. As long as there are no new lockdowns, we expect the service revenue to improve further and model a Bt19.95bn in True Move-H’s 1Q22 service revenue, up 0.1% YoY and 0.3% QoQ (against -0.2% YoY and 0.7% QoQ in 4Q21). Its service revenue is expected to post a bigger YoY rise in 2Q22 through 4Q22—up 0.6% YoY in 2Q22, up 1.7% YoY in 3Q22 and up 2.6% YoY in 4Q22.