INTUCH – 4QFY17 profit at Bt1,755mn, down 32% y-y February 7, 2018

  • 4QFY17 profit lower than expected: INTUCH reported a lower‐than‐forecast profit of Bt1,755mn in 4QFY17, down 32% y‐y and 41% q‐q. The profit drop was largely due to impairment losses of Bt3,309mn in satellite business operated by its 41.14%‐owned THCOM. In this period, wireless telecommunications business run by its 40.45%‐owned ADVANC, however, saw a healthy profit growth driven by strong revenues from mobile phone and internet (AIS Fibre) services.
  • FY17 profit down 34.9% y‐y: FY17 profit came in at Bt10,673mn, down 34.9% y‐y, as INTUCH recognized (i) a 3% y‐y drop in share of profit from ADVANC to Bt12,126mn due to higher depreciation and amortization charges although service revenue and EBITDA growth were higher than our estimates, and (ii) a Bt1,090mn loss fromTHCOMdragged by huge impairment losses and the negative impact of contract cancellations by two major broadband customers.
  • ‘BUY’ rating with Bt66/share target price: We still like INTUCH as it has offered good constant dividends and ADVANC’s contributions should be a key driver of its profit growth going forward. INTUCH announced to pay out a 2HFY17 dividend of Bt1.27/share (Full‐year dividend of Bt2.52/share and a 4% dividend yield) and a special dividend of Bt0.19/share for Jan 1‐31 following its sales of shares in CSL. The stock will go XD on Apr 9, 2018 with payment date on Apr 27, 2018.

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