KGI Securities (KGI) reiterates an “Outperform” rating on Intouch Holdings Public Company Limited (INTUCH) with a target price at ฿65.00/share backed by attractive dividend yields of 2.4% for 2H20 and 4.1% for 2021 and upside from THCOM.
KGI expects INTUCH to report a 4Q20 net profit of Bt2.73bn (+3% QoQ, +45% YoY). Growth QoQ is expected to come from increased share of profit from its mobile business Advanced Info Service Public Company Limited (ADVANC). Earnings should jump YoY due to the low base in 4Q19 when the company realized impairment loss from its satellite business Thaicom Public Company Limited (THCOM). While maintaining the earnings forecasts at Bt10.9bn in 2020 and Bt10.2bn in 2021.
The target price of Bt65.00 is a 22% discount from NAV based on our target prices for ADVANC and THCOM at Bt219 and Bt4.94, respectively.
4Q20 net profit should grow both QoQ and YoY, KGI expects a 4Q20 net profit of Bt2.73bn (+3% QoQ, +45% YoY) possibly due to less loss contribution from its satellite business THCOM, which is expected to contribute a loss of Bt92mn compared to a contributed loss of Bt813mn in 4Q19 due to impairment for satellites.
Growth QoQ is expected to come from increased share of profit from its domestic mobile business ADVANC of Bt2.84bn (+9% QoQ), which is expected to be driven by extra items (reversal of expenses for AIS point redemption and tax benefit from new CAPEX).
If 4Q20 earnings are in line with the KGI forecast, a full-year forecast for 2020 would have an upside of 1% – 2%. Therefore, the Analyst maintains its net profit forecasts at Bt10.9bn in 2020 and Bt10.3bn in 2021. For 2021, INTUCHs net profit would be pressured by an expected lower share of profit QoQ from ADVANC due to the new wave of local COVID-19 infections in 1Q21 that would pressure revenue growth while costs from new licenses is expected to flow in from February 2021 onward.
Meanwhile, THCOMs minimal revenue from new businesses (internet for marine, drone for agriculture, etc.) is expected this year. However, there is upside from THCOMs new projects in the longer term particularly the partnership with CAT Telecom (CAT) to provide satellite services for a foreign partner.
Based on INTUCHs dividend policy of passing all received dividends from its subsidiaries through to shareholders, KGI estimates dividends of Bt1.17 for 2H20 and Bt2.39 for 2021, offering attractive yields of 2.4% for 2H20 and 4.1% for 2021.
However, INTUCH could be risked from lower than expected share of profit from ADVANC.