Five analysts maintain a “BUY” rating on Advanced Info Service Public Company Limited (ADVANC) after the company reported better-than-expected earnings in 2Q21, with an interim dividend payment of up to 3.45 baht.
In 2Q21, ADVANC reported net profit of 7,041 million baht, increasing 0.6% YoY and 6.0% QoQ from one-time items in other income (below EBITDA) of approximately 500 million baht. Excluding the one-time expense, normalized net profit was 6,639 billion baht decreased 5.2% YoY from higher spectrum amortization but remained flat QoQ.
Meanwhile, the total revenue for the period was 42,757 million baht, increasing 1.2% YoY on the back of higher handset sales, but decreasing -6.8% QoQ following the ongoing effect of the COVID-19 pandemic and market competition.
KGI Securities (KGI) said that ADVANC’s result was in line with its forecast, but beat the consensus by 5% and a 1H21 net profit was 13.7 billion baht, accounting for 52% of its full-year forecast. Despite posting a better-than-expected 2Q net profit, KGI foresees obstacles ahead in ADVANC’s 3Q21 from i) toning down of spending including on mobile usage as the COVID-19 outbreak has worsened since late June 2021, ii) low season for mobile industry, and iii) more intense competition. A recovery is expected in 4Q21 backed by seasonality and anticipated improvement in the COVID-19 situation.
As the 1H21 net profit accounted for 52% of KGI’s full-year forecast and an expected slowdown in profit in 3Q21, KGI is maintaining its forecasts at 26.2 billion baht (64% YoY) in 2021 and Bt27.0bn (+3% YoY) in 2022. ADVANC cut its revenue target for 2021 from low single-digit growth to stable or a slight decrease and trimmed its EBITDA target from low single-digit growth to remain flat. Note that KGI’s forecast of EBITDA growth of 60.7% for 2021 is still in line with the company’s guidance.
As a result, KGI maintains a rating of Outperform on ADVANC with a target price of 222 baht backed by i) more resilient profit than peers and ii) attractive dividend yield for 1H21.
Asia Wealth Securities (AWS) expects ADVANC in 2H21 to recover slightly from 1H21 on cost control and Internet business which is continually growing, supported by the Work From Home measure. Recommend “Buy” with a target price of 221 baht as the share price is laggard. SET 2021 YTD is up 6.3%, but ADVANC’s share price remains stable, expects 2H21 earnings to recover and limited downside risk.
Krungsri Securities (KSS), also, stated that ADVANC’s earnings were in line with its estimation. Revenue edged down but good cost control continued to support earnings. 1H21 profit is 52% of KSS’s full-year forecast. KSS will keep its full-year earnings at 25.9 billion baht (-5.5% YoY) as it expects similar earnings in 2H21. ADVANC’s Management toned down guidance but that does not affect its forecast because KSS has been conservative since this year.
|Phillip Securities Thailand||BUY||224 Baht|
|KGI Securities||BUY||222 Baht|
|Asia Wealth Securities||BUY||221 Baht|
|Krungsri Securities||BUY||210 Baht|
|KTBST Securities||BUY||205 Baht|