Our TRADING BUY stands in anticipation of the NBTC’s auction of satellite orbital slot licenses expected in 1Q23. Although THCOM’s Bt9.92/share tender offer price offered by GULF to INTUCH shareholders (which is close to THCOM’s BV of Bt9.94/share at end-3Q22) represents a negative sentiment to THCOM’s share price (as it was 13% lower than the yesterday’s close price), we believe that it has not yet factored in the future incremental value from the new satellite orbital slot license.
Net profit missed but core profit beat our estimate
THCOM posted a Bt121m net profit for 3Q22, down 17% YoY and 61% QoQ. Excluding extra items in 3Q22—1) Bt314m FX gain, 2) Bt259m loss on impairment of Thaicom 8 satellite and 3) Bt7m loss on impairment of bad debts and doubtful bad debts—it posted a Bt74m 3Q22 core profit, a YoY turnaround from Bt42m 3Q21 core loss and up 15% QoQ. Net profit missed our estimate by 52% due to the one-time Thaicom 8 impairment loss, but core profit beat ours by 46% thanks to higher sales and GM and shallower equity loss from LTC than modeled. Sales beat our model by 2% led by deeper-than-estimated THB depreciation against USD. GM of 51.9% was higher than our 50% estimate, thanks to better cost controls. Equity loss from LTC was 27% shallower than our model.