With an upbeat 1Q23 profits expectation and the upward momentum likely continuing throughout 2023 due to a potential upside from rent negotiation with JASIF and less competition in the mobile sector, analysts reiterated their “BUY” recommendation on Advanced Info Service (SET: ADVANC), with a target price as high as THB250.00 per share.
In a note published on Monday, Maybank Securities (Thailand) (MST) expected that ADVANC will see a strong quarterly earnings momentum this year and that rent negotiation with JASIF would provide significant upside to earnings in 2024. In 1Q23, core profit is expected to reach THB6.8 billion (+7% YoY, +1% QoQ), while increase in QoQ profits is anticipated to accelerate in 2Q23.
Completion of the TTTBB and JASIF acquisitions is expected by mid-2023 (subject to NBTC approval), and rent negotiation with JASIF implies 3.4% upside risk to 2024 core net profit growth of 4% YoY.
In 2023, it is anticipated that ADVANC will generate a total revenue of THB211 billion, an EBITDA of THB99 billion, and earnings of THB28 billion. Maybank has placed a THB240.00 price target on ADVANC.
Also, Krungsri Securities (KSS) has maintained its “BUY” rating on ADVANC with a target price of THB25.00. The brokerage anticipated a THB6.79 billion profit for ADVANC in 1Q32, up 7% YoY and 2% QoQ. Revenue growth from mobile and FBB units, as well as continued cost management efforts focused on optimizing the network and SG&A, should be attributed for the year-over-year and quarter-over-quarter gains.
Krungsri stated that the primary expectations for 1Q23 were for (i) service revenue ex IC to grow by 3.4% YoY but remain flat QoQ. A rise in the number of subscribers would fuel an increase in mobile and FBB units, driving YoY expansion. Krungsri forecast that (i) cost of services would climb 3% YoY but be flat QoQ; and (ii) average revenue per user (ARPU) for both businesses would stabilize QoQ as competition eased. Despite efforts to cut other costs, such as maintenance, network operating expenditures would rise because of rising electricity prices; (iii) handset business margins would hold steady at 1.2-1.3%, similar to 4Q22, despite falling revenue. Sales of the iPhone 14 slowed in 1Q23, which hurt the company’s overall handset sales, but the company can make up for it by selling other brands of handsets at higher profit margins.
ADVANC is scheduled to report 1Q23 results on 8 May.
