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True Corp PCL: Challenging 2021 core profit target

  • Modest impact from the third wave of COVID-19 in 2Q21
  • Target of 5G users revised up to more than 2m by YE21
  • Cost optimization and cost-cutting initiatives on track

Although the firm’s 2021 operational targets—5% service revenue growth and a return to core profit—look hard to achieve, we expect its 2021 core loss to be shallower YoY led by its 2H21 mobile recovery from COVID-19, sustained strong fixed broadband and greater 5G monetization. Anyway, the third wave of COVID-19 will modestly impact its 2Q21 service revenue. We reiterate a TRADING BUY on TRUE, led by its shallower 2H21 core loss and its cheap valuation—EV/EBITDA of 7.9x against its long-mean of 8.7x.

Modest impact from the third wave of COVID-19 in 2Q21

Management said that the negative impact of the third wave of COVID-19 has been limited and its impact on its 2Q21 service revenue only modest because people are not panicked as during the first wave of the pandemic last Apr. It confirmed that a broadly positive trend of True Move-H’s strong service revenue momentum will continue through 2021 by not competing on pricing nor using the aggressive discount and huge handset subsidies. After factoring in the longer than estimated COVID-19 third wave impact, we forecast True Move-H’s 2Q21 service revenue at Bt19.8bn, down 1.8% YoY and 0.7% QoQ and 2Q21 Group’s service revenue at Bt26.6bn, down 0.4% YoY and 1.4% QoQ.


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