Total Access Communication – DTAC
Target price : Bt32
Recommendation : BUY
Closing Price (29 April 09) : Bt28
1Q09 profit was down 36.94% YoY, in line with expectations
- First quarter net profit recorded at Bt1,479.53m, which was in line with our figure of Bt1,438.04m.
- DTAC expects the NTC to issue 3G license next year.
- We forecast a net profit of Bt7,198.90m for this year.
- Our target price is at Bt32/share and we reiterate 'BUY' rating on the stock.
First quarter 2009 profit amounted to Bt1,479.53m, in line with our figure of Bt1,438.04m
Revenue for the first quarter dropped by 6.78% YoY but increased by 0.76% QoQ. Number of new subscribers totaled at only 263,151, down sharply from 468,718 subscribers QoQ and 884,194 seen YoY. Slowing economic condition has caused average MOU (Minutes of Used) to decline by 1.3% QoQ, 16.3% YoY to 307 minutes, while ARPU also retreated 0.6% QoQ, 18.9% YoY to Bt279/month. Revenue from IC was also weaker, falling to Bt3,266m from Bt3,958m YoY owing to aggressive on-net promotions from its rivals, ADVANC and TRUE. Likewise, revenue from IR (International Roaming) also declined.
Gross profit margin from services improved from 29.95% of sales in 4Q08 to 32.35% in this quarter. Although there was an increase in revenue sharing with CAT but the company also booked lower depreciation expenses, as well as IC charges. As revenue from IC declined by a greater percentage, there was a net IC payment of Bt272m against Bt240m QoQ. SG&A/sales ratio was fairly flat QoQ as although DTAC spent less on marketing charges, it incurred higher charges relating to staff and IT & depreciation. Meanwhile, interest payment fell along scheduled repayment and after netting tax expenses of Bt520.57m, the company recorded a net profit of Bt1,479.53m.
DTAC expects the NTC to issue 3G license next year.
According to DTAC, 3G license on 2.1G frequency should be issued next year. It is however pending for approval in order to process on 3G service on the 850MHz.
We forecast a net profit of Bt7,198.90m for this year.
DTAC forecasted number of subscribers at 8.8m in view that the penetration rate is moving close to 100%, while the economic outlook is bleak. It expected to achieve new subscribers of 1.1-1.2m this year. We project a revenue growth of only 1.8% YoY to Bt68,914.37m. Costs will continue to increase from higher depreciation on network expansion. A net payment is still expected for IC in view of aggressive on-net schemes from its rivals. The company will also incur office relocation expenses to be booked in 2Q. In sum, we project a net profit of Bt7,198.90m, down from Bt7,479m YoY (excluding extra income from the litigation case with DPC).
Our target price is at Bt32/share and we reiterate 'BUY' rating on the stock.
By Phillip Securities (Thailand) Plc. on Apr 30, 2009
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