TRUE: When the Interest Conqures the Profit…!

Over the past few year, many investors have been showing an anticipation and disappointment over the stock of True Corporation Public Company Limited (TRUE).

Investors anticipated TRUE to have a better turnover as its mobile operators business has been continuing to increase a number of customer and already surpassed DTAC to place as second largest market share.  

In the same time, those investors also giving a concern as the interest expense always prevent TRUE profit growth. 

Moreover, the 2019 yearly financial performance appeared that the net profit was lower by 19.9% to 5,637 million baht compared to the net profit of 7,035 million baht in 2018 and the revenue was 140,943 million baht, decreased by 13.4% from total income of 162,773 million baht.

While TrueMove H’s service revenue up 6.7% to 77,740 million baht, which gained 1.4 million newly net adds to have a total subscriber base to 30.6 million or accounted for 33% of market share during other competitors like AIS and DTAC booked a market share of 45% and 22% accordingly.

TrueOnline’s earning was 36,668 million baht increased by 0.1%, together with broadband business, which rose by 0.7% to 25,904 million baht and TrueVisions’s revenue has dropped by 9.4% to 12,014 million baht.

Importantly, TRUE has recorded a profit from asset sale to the Digital Telecommunications Infrastructure Fund (DIF).

However, with the 2019 performance, it a bit disappointed that the perfit outlook turned to lower than it supposed to. The undeniable main factor to drag TRUE’s profit was the interest expense that jumped by 40.6% from 2018 to 7,489 million baht.

Normally, the interest expense should be weakened because TRUE has expanded its license 900MHz’s cost to 10 years 10 installments.

Now TRUE is facing a condition of interest overcome profit.

Furthermore, TRUE has to assume the expense of 5G license , that might force TRUE to increase its  loan. By the end of 2019, TRUE reported a deficit of 33,630 million baht. The outlook situation has yet that worse because the stock price has downgraded 13.09% which records as the lowest point within a month. 

Whether the scene will turn to positive or negative, a 78,524 minor shareholders will surely be harmed.