Gulf Energy Development Public Company Limited (SET: GULF), a Thai listed power company that runs by billionaire Sarath Ratanavadi, has announced a plan to merge with Intouch Holdings Public Company Limited (SET: INTUCH) that owns Thailand’s leading telecommunication provider, Advanced Info Service Public Company Limited (SET: ADVANC).
‘GULF’ and ‘INTUCH’ Announce Amalgamation for Business Restructure to Hold 40% in ADVANC
Following the announcement, analysts are commenting on the merger.
CGS International Securities (Thailand) (CGSI) stated that it believes the change in ADVANC’s major shareholders will not have an impact on ADVANC’s business strategy and financial performance in 2024-26F given that proportion of each major shareholders would remain unchanged. ADVANC will have the new merged company as major shareholders instead of the current major shareholding structure with 40.44% owned by INTUCH and 23.31% owned by SINGTEL.
In addition, CGSI maintains its Add rating on ADVANC with a target price of THB259 per share.
Innovest X Securities (INVX) viewed the merger as a positive factor to GULF and INTUCH, which would give NewCo’s management flexibility from being a direct shareholder. The merger will lower shareholding in Singtel, while increasing ownership in GULF, as in the NewCo. INVX believes it is highly likely that other shareholders of ADVANC and THCOM will decline the conditional voluntary tender offer that is lower than the current trading price in the market. Thus, it is expected that ADVANC and THCOM will not be delisted from the market.
In the short term, based on the swap ratio, INVX sees 4.6% upside to GULF, and 6% downside to INTUCH. Still, the firm sees a positive long-term outlook from the restructure.
Kasikorn Securities (KS) stated that this development is positive for INTUCH, expecting share price to react positively from the special DPS of THB4.50 per share. The firm reiterated its Outperform call on INTUCH with a target price of THB84.37 per share.
Bualuang Securities (BLS) expected the amalgamation to generate positive market sentiment toward both stocks, given the stronger EPS projection with a double-digit forecast earnings CAGR. The merger will also strengthen the GULF and Singtel partnership.
BLS estimated the total market cap of NewCo at Bt635bn, comprising: 1) Bt370bn from GULF (the market cap of GULF excluding the market cap of its indirect stake in ADVANC through its current 47.37% holding in INTUCH) and 2) Bt265bn from INTUCH’s direct 40.44% stake in ADVANC. The estimated market cap implies a market price for a NewCo share of Bt42.50. Based on the estimated NewCo stock price and the announced conversion ratio, BLS expected GULF’s stock price to move closer toward Bt43.75, while INTUCH’s price should move closer toward Bt72 per share.
