Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

Total Access Communication / Equity Bottom-Up

<p><strong>We expect DTAC to report 3Q21 recurring net profits of Bt1.4bn (-1.3%YoY, +3.6%QoQ), with the QoQ rise arising from decreased marketing costs.</strong></p><p>• Expect flat QoQ 3Q21 revenue at Bt20bn, (+5.0%YoY, +0.1%QoQ), due to stunted mobile subscriber base growth (+3.8%YoY,+0.8%QoQ) from weaker consumer spending</p><p>• Expect 4Q21 to report lowest net profit, which has consistently been the case for the past 3 years from seasonal increase in handset device sales, which have historically been loss-making (3yr handset-device gross margin: -125%)</p><div>• Expect the recent price surge to eventually drop back to pre-rumor prices at around Bt32.00 until telecom companies announce their involvement in the 3500 MHz spectrum auctions</div><div>
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</div><p><strong>We maintain SELL rating and target price of Bt32.70, derived from DCF, implying 18.2xPE’22E, which 24% below the Thai telecoms sector 23.9xPE’22E. DTAC’s large discount is justified considering the company has been losing market share over the past few years, owns a smaller spectrum portfolio relative to its competitors, and has an uncertain outlook in the 5G era.</strong></p>

We expect DTAC to report 3Q21 recurring net profits of Bt1.4bn (-1.3%YoY, +3.6%QoQ), with the QoQ rise arising from decreased marketing costs.• Expect flat QoQ 3Q21 revenue at Bt20bn, (+5.0%YoY, +0.1%QoQ), due to stunted mobile subscriber base growth (+3.8%YoY,+0.8%QoQ) from weaker consumer spending• Expect 4Q21 to report lowest net profit, which has consistently been the case for the past 3 years from seasonal increase in handset device sales, which have historically been loss-making (3yr handset-device gross margin: -125%)• Expect the recent price surge to eventually drop back to pre-rumor prices at around Bt32.00 until telecom companies announce their involvement in the 3500 MHz spectrum auctions
 
We maintain SELL rating and target price of Bt32.70, derived from DCF, implying 18.2xPE’22E, which 24% below the Thai telecoms sector 23.9xPE’22E. DTAC’s large discount is justified considering the company has been losing market share over the past few years, owns a smaller spectrum portfolio relative to its competitors, and has an uncertain outlook in the 5G era.

DTAC: Expect 3Q21 Earnings to Rise Slightly QoQ

<p><strong>We initiate coverage of DTAC with a SELL rating, based on a target price of Bt32.70, derived from a DCF valuation (WACC of 7.9%, terminal growth of 2%). Our valuation implies a 16.8xPE’22E, which is 29% discount from Thailand Telecom sector at 23.5x.</strong></p><p><strong>The story:</strong></p><p>• Declining competitive position and profitability</p><div>• Failing to keep pace with 5G momentum</div><div></div><div>• Declining trend in the next 3-years earnings</div><div></div><div>• Low valuations justified</div><p></p><p><strong>Risks:</strong></p><p>• Intense competition in a saturated telecommunications industry</p><div>• New mega competitor after TOT and CAT merger</div><div></div><div>• Changes in NBTC’s board and regulatory policies</div>

We initiate coverage of DTAC with a SELL rating, based on a target price of Bt32.70, derived from a DCF valuation (WACC of 7.9%, terminal growth of 2%). Our valuation implies a 16.8xPE’22E, which is 29% discount from Thailand Telecom sector at 23.5x.The story:• Declining competitive position and profitability• Failing to keep pace with 5G momentum• Declining trend in the next 3-years earnings• Low valuations justifiedRisks:• Intense competition in a saturated telecommunications industry• New mega competitor after TOT and CAT merger• Changes in NBTC’s board and regulatory policies

Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

<ul><li>DTAC's earnings again beat the market's forecast in 2Q21 on one-time cost initiatives, while core profit grew QoQ for the second consecutive quarter.</li><li>With its ability to monetize network investment alongside well-managed costs, we leave our full-year earnings estimates unchanged.</li><li>Our Buy rating is maintained on its undemanding valuation (trading at 2021E EV/EBITDA of 4x, close to the LT average -1 S.D.) plus the dividend yield of 6% as the cushion for downside.</li></ul>

DTAC's earnings again beat the market's forecast in 2Q21 on one-time cost initiatives, while core profit grew QoQ for the second consecutive quarter.With its ability to monetize network investment alongside well-managed costs, we leave our full-year earnings estimates unchanged.Our Buy rating is maintained on its undemanding valuation (trading at 2021E EV/EBITDA of 4x, close to the LT average -1 S.D.) plus the dividend yield of 6% as the cushion for downside.

<ul><li>DTAC's core profit in 1Q21 beat the market's expectation on superior cost optimization.</li><li>This led the company to revise up its 2021 service revenue growth and EBITDA guidance, which remains in line with our projections.</li><li>Our Buy rating is maintained on its undemanding valuation (trading at 2021E EV/EBITDA of 4x vs. regional peers' average of 6x) and around a 6% dividend yield.</li></ul>

DTAC's core profit in 1Q21 beat the market's expectation on superior cost optimization.This led the company to revise up its 2021 service revenue growth and EBITDA guidance, which remains in line with our projections.Our Buy rating is maintained on its undemanding valuation (trading at 2021E EV/EBITDA of 4x vs. regional peers' average of 6x) and around a 6% dividend yield.

<ul><li>DTAC's net profit in 4Q20 came in far below the estimates on one-off items.</li><li>However, its superior cost control kept core profit and EBITDA nearly flat YoY amid the declining trend of revenue.</li><li>Our Buy rating is based on its sustained EBITDA and undemanding valuation, with an attractive dividend yield of 6.5%.</li></ul>

DTAC's net profit in 4Q20 came in far below the estimates on one-off items.However, its superior cost control kept core profit and EBITDA nearly flat YoY amid the declining trend of revenue.Our Buy rating is based on its sustained EBITDA and undemanding valuation, with an attractive dividend yield of 6.5%.

DTAC: 2020 NP Below View but Yield Remains Attractive - Buy (2021E TP: Bt39.80)

Thailand

Total Access Communication Public Company Limited, commonly known as DTAC, is a leading mobile telecommunications operator in Thailand. It provides a range of services including 5G, 4G, 3G, and 2G mobile phone services, mobile internet, voice, SMS/MMS, and other connectivity services, along with selling mobile handsets and starter kits. The company is headquartered in Bangkok, Thailand, and was founded on August 31, 1989.

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Total Access Communication (DTAC TB)

DTAC: Expect 3Q21 Earnings to Rise Slightly QoQ

e expect DTAC to report 3Q21 recurring net profits of Bt1.4bn (-1.3%YoY, +3.6%QoQ), with the QoQ rise arising from decreased marketing costs

Pi Securities PCL, Thailand

DTAC: No Growth with Uncertain Prospects

We initiate coverage of DTAC with a SELL rating, based on a target price of Bt32.70, derived from a DCF valuation (WACC of 7.9%, terminal growth of...

Pi Securities PCL, Thailand

Positive Earnings Surprise in 2Q21

DTAC's earnings again beat the market's forecast in 2Q21 on one-time cost initiatives, while core profit grew QoQ for the second consecutive...

Krungthai XSpring

Cost Control Stabilized Bottom Line

DTAC's core profit in 1Q21 beat the market's expectation on superior cost optimization. This led the company to revise up its 2021 service revenue...

Krungthai XSpring

DTAC: 2020 NP Below View but Yield Remains Attractive - Buy (2021E TP: Bt39.80)

DTAC's net profit in 4Q20 came in far below the estimates on one-off items. However, its superior cost control kept core profit and EBITDA nearly...

Krungthai XSpring

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