INTUCH’s holding discount of 21.1% (Aug 7) is still attractive given its proper level of 15%. Our BUY rating stands based on its 2H20 earnings recovery from eased lockdowns and its good dividend yield of 5%.
Core profit beat our model, slightly
INTUCH posted a 2Q20 net profit of Bt2.98bn, up 1% YoY and 9% QoQ. Excluding extra items in 2Q20—1) net FX gain from ADVANC and THCOM (Bt50m), 2) Bt296m in THCOM’s proportionate insurance compensation income, 3) Bt3m in THCOM’s proportionate loss on asset impairment and 4) Bt126m in ADVANC’s proportionate tax benefits—its core profit was Bt2.51bn, down 17% YoY and 8% QoQ.
If ADVANC’s 2Q20 income statement is adjusted to be on the pre-TFRS16 (lease) accounting basis, we would derive a INTUCH 2Q20 net profit of Bt3.07bn (up 4% YoY and 12% QoQ) and a core profit of Bt2.61bn (down 14% YoY and 4% QoQ). Note that we retroactively adjusted the quarterly core profit calculation for INTUCH by excluding FX item of both ADVANC and THCOM from INTUCH’s core profit. INTUCH’s net profit beat our model by 15%, thanks to ADVANC’s FX gain and THCOM’s insurance compensation income. Its core profit beat our model by 3% led by THCOM (higher GM and greater equity income from LTC than modeled). ADVANC’s core profit was in line with model.