Our BUY rating stands, premised on its attractive valuation with a current 13% holding discount and its upside from ADVANC’s 5G ARPU uplift, its strong service revenue bounce in 2H22 and THCOM’s satellite orbital slot licensing auctions from the new NBTC in 2H22.
Slightly below our model
INTUCH posted a 1Q22 net profit of Bt2.55bn, down 4% YoY and 2% QoQ. Excluding extra items in 1Q22—1) Bt10m in THCOM’s proportionate FX loss, 2) Bt26m in THCOM’s proportionate reversal of impairment loss arising from debt collection of long-overdue account receivable, 3) Bt25m in ADVANC’s proportionate tax benefits from investment and 4) Bt17m in ADVANC’s proportionate net FX loss—its core profit was Bt2.53bn, down 4% YoY but up 1% QoQ. Its net and core profits were 6% and 5% below our model due to the lower core profits of ADVANC and THCOM. ADVANC’s core profit missed our forecasts by 6% thanks to lower service revenue than modeled while THCOM’s core profit was 47% short of our model (Bt11m versus Bt20m) led by lower sales and higher tax expense than estimated.