CGS International Securities (Thailand) has raised the target price for Advanced Info Service Public Company Limited (SET: ADVANC) and reaffirmed the company as its top pick in the telecommunication sector after the report of 20% profit growth in the second quarter.
ADVANC disclosed its operating performance for Q2 2024 yesterday, revealing total revenue of 51,332 million baht and a net profit of 8,577 million baht, rising 15% and 19%, respectively. This achievement is driven by its solid net additions of mobile and broadband subscribers.
The company reported solid net addition of mobile subscribers of 644k in 2Q24 (up from net addition of 408K in 1Q24). Its mobile blended ARPU increased 5.2% YoY and 0.1% QoQ in 2Q24, driven by prepaid ARPU growth of 11.4% YoY and 1.5% QoQ. 2Q24 broadband service revenue growth was solid at 155% YoY and 2.3% QoQ, while its broadband ARPU growth was healthy at 21% YoY and 1% QoQ.
Following the financial results, CGSI revised its 2024-26 EPS estimate by 3.4-6.9% by cutting SG&A expenses by 7.9-9.2%. Moreover, the firm raised ADVANC’s EBITDA growth to 12.2%/6.5%/5.6% in FY24F/FY25F/FY26F (from its previous EBITDA growth estimates of 7.8%/2.8%/3.1%).
Additionally, CGSI raised its target price for ADVANC from THB259 to THB272 per share. The higher target price is driven by its upward revisions to FY24F-26F net profit forecasts. Re-rating catalysts: higher dividend payout ratio in FY24F-26F, positive earnings surprise in 2H24F, and strong net additions of mobile and broadband subscribers.
CGSI added that ADVANC remains its top pick for the Thai telecom sector, on the back of its high quality of earnings profile and falling gearing ratio in FY24F-26F.
