Our TRADING BUY rating stands based on its service revenue and earnings recovery in 2H21 (despite the third wave of COVID-19 in 2Q21) and its cheapest valuation against peers.
Net profit missed our model; but core profit beat ours slightly
DTAC posted a Bt822m net profit for 1Q21, down 45% YoY but up 193% QoQ. Note that there were three extra expenses worth Bt681m (net-of-tax) in 4Q20. Excluding extra items in 1Q21—Bt2m in FX loss and Bt229m in loss on the fair value hedge—core profit for the quarter was Bt1.05bn, down 24% YoY but up 9% QoQ. Net profit missed our expectations by 18%, due to the extra expense item of loss on fair value hedge (which we had not previously factored in). However, core profit beat our estimate by 6% thanks mainly to lower SG&A expense than modeled (related to general administrative expenses from greater cost efficiency management). We saw a slight QoQ service revenue recovery and a jump in its prepaid net additions. EBITDA and after-tax profit beat our model by 7% and 6%, respectively.