Krungsri Securities has made an analysis on True Corporation Public Company Limited (TRUE), upgrading its recommendation from Neutral to Outperform along with the target price from ฿6.10/share to ฿6.8/share (+41.1%), a top pick in the sector.
Krungsri expects to gain 1Q19F service revenue momentum back to normal. TRUE’s share price fell 10% on Friday after they reported disappointing 4Q18 results. Management clarified this was due to accounting adjustments and smaller handset subsidies, which negatively affected service revenue.
TRUE’s service revenue growth momentum should return to normal in 1Q19. The explanation seemed unclear, but Krungsri continues to see good positive net adds in the quarter at approximately 460,000 for mobile business. This supports management’s view that the weak 4Q18 revenue should be temporary.
Despite weak 4Q18 results, management continues to give optimistic guidance for FY19. TRUE targets mid-to-high single-digit growth in group service revenue, positive core profit, and THB 40 billion cash CAPEX, in line with our assumptions.
TRUE also announced a dividend payment at ฿0.09/share. This is three times higher than what TRUE paid last year, possibly because management is still confident in business prospects and expectation of extended payment for 900MHz.
Regarding the deal with CAT, Krungsri had previously expected TRUE would pay THB 3.7 billion p.a. to CAT, similar to DTAC. However, it turned out that the price was much lower at THB 523 million. Hence, Krungsri revised FY19-21F assumptions and now expect TRUE to report a net profit for FY19F of ฿1.2 billion.
The 10% drop on Friday should have priced-in continued weak results in 1Q19, suggesting limited downside. Note that 52-week low share price is ฿4.5/share (6.6% below the current level).
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วันที่ March 4, 2019, 12:54