#Target Stocks – Krungsri Securities maintains a buy recommendation on INTUCH by increasing the target price to 98 baht from the original 94 baht due to rising profit estimates in line with ADVANC at the same time. Q4/2023 profit is expected to be strong at 3.12 billion baht (+14% yoy and 2% qoq) of ADVANC profit and there may be an upside in Q4/23 as the ITV reserve may be reversed. the other side in this issue has a positive impact on market conditions. More than having a real impact because it is a non-cash item, INTUCH is also close to paying a final dividend of 1.73 baht per share, which equates to a 2.3% rate of return from holding shares for just 1 and a half months.
INTUCH Research expects profit from core businesses to increase yoy and qoq to 3.12 billion baht in Q4/23. Profit from INTUCH’s main business is expected to increase to 3.12 billion baht (+14% yoy and +2% qoq) due to a higher share of profit from ADVANC, its main subsidiary. Profit from ADVANC’s core business in Q4/23 is expected to increase to 7.7 billion baht Q4/23 (+16% yoy and 1% qoq) due to higher revenue (due to ARPU increase) and lower costs (marketing costs and electricity costs)
In addition, INTUCH’s profits in Q4/66 or Q1/67 may further exceed the Supreme Administrative Court’s ruling in a dispute over the Office of the Permanent Secretary of the Prime Minister’s Office (PMO) canceling the ITV contract As a result of the ruling, ITV has no obligation to pay compensation to PMO. Previously, INTUCH (holding 52.92% of shares) in ITV ) set aside 1.5 billion baht in case it is necessary to pay compensation to the Office of the Provincial Administrative Organization Therefore, after i the judgment is issued, INTUCH can reverse the reserve in C4/66 or at the latest in C1/67, which the research department has not yet completed. Include this item in your estimate. However, this item is not cash, so it will not change INTUCH’s DPS.
A further 7% increase on the 2023-24 profit forecast from the forecasted increase in ADVANC profit. Because the profit estimate from the main business in Q4/20F will make INTUCH’s profit in FY66 at 11.7 billion baht, 4% higher than the research department’s full-year profit estimate, so INTUCH’s profit estimate in 2023-24 has been . adjusted upwards by another 7. % to reflect the Increased ADVANC profit estimate The key assumption that causes the research department to increase ADVANC’s profit estimate is to look positively at the ARPU trend of weakening competition It is expected that there will be a profit of INTUCH’s core business growing 14.6% yoy in 2023 and will Grow 8% CAGR during 2024-25 due to support from ADVANC.
Maintained BUY recommendation and increased target price to 98 baht from 94 baht. By increasing the target price to reflect the increase in ADVANC’s target price, INTUCH’s stock price over the past two months had outperformed ADVANC’s stock as the market eased concerns that it could be removed from the SET 50 .However, INTUCH stock still has a decline. 10% of ADVANC’s NAV, which will make INTUCH’s dividend yield 1% higher than ADVANC’s.
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