4Q24: Going from strength to strength
ADVANC reported 4Q24 net profit of Bt9.3bn, up 32.2% YoY and 5.4% QoQ. This is 6.6% above INVX and 4.1% above consensus, driven by higher-than-expected mobile revenue and handset margin. We therefore revise up our 2025F by 12.9% to Bt38.5bn (+10.5% YoY). We expect the outperformance YTD to continue due to: 1) decent dividend yield, 2) strong 1Q25F earnings and 3) possible earnings upside from the upcoming license auction. We maintain OUTPERFORM with a new DCF-based end-2025 TP of Bt330 from Bt300 after raising earnings (6% WACC and 2% LTG). Our TP does not factor in upside from the license auction.
4Q24: Going from strength to strength
ADVANC reported 4Q24 net profit of Bt9.3bn, up 32.2% YoY and 5.4% QoQ. This is 6.6% above INVX and 4.1% above consensus, driven by higher-than-expected mobile revenue and handset margin. We therefore revise up our 2025F by 12.9% to Bt38.5bn (+10.5% YoY). We expect the outperformance YTD to continue due to: 1) decent dividend yield, 2) strong 1Q25F earnings and 3) possible earnings upside from the upcoming license auction. We maintain OUTPERFORM with a new DCF-based end-2025 TP of Bt330 from Bt300 after raising earnings (6% WACC and 2% LTG). Our TP does not factor in upside from the license auction.
Catalyst #1: 4Q24 earnings beat expectations. 4Q24 net profit was Bt9.3bn, up 32.2% YoY and 5.4% QoQ and beating INVX by 6.6% and consensus by 4.1%. The surprises lay in stronger-than-expected mobile revenue and handset margin. Mobile revenue (55.9% of total revenue) was Bt31.7bn, growing 5.5% YoY and 2.5% QoQ, driven by recovery in the tourist segment, both inbound and outbound. In the quarter, ADVANC achieved blended ARPU of Bt228, up 2% YoY and 2.3% QoQ. For net adds, the company reported a net loss of 521.1k, but this was due to tourist SIM re-definition. FBB revenue (13.4% of total revenue) was Bt7.6bn, up 51% YoY from the contribution of TTTBB and 2.2% QoQ from subscriber base and ARPU expansion. ADVANC reported ARPU of Bt509, up 3.9% YoY and 0.9% QoQ. This brought 2024 core profit to Bt34.8bn, up 22.4% from 2023 and 10.4% above our full-year forecast. ADVANC also announced a 2H24 DPS of Bt5.74 (95% payout and 2.1% yield), XD on Feb 20.
Catalyst #2: Encouraging 2025 guidance; raise our forecast. ADVANC released its 2025 financial guidance in which it targets core service revenue and EBITDA growth of 3-5% and capex of Bt26-27bn. This does not factor in the spectrum auction and assumes the 2100MHz agreement with NT remains until year-end. We had forecast 2.7% core service revenue growth with EBITDA of 2.5%. In view of the 4Q24 beat, we raise our 2025F by 12.9% to Bt38.5bn (+10.5% YoY) after raising our core service revenue growth assumption to 3.5% from 2.7%. We also lifted our handset margin assumption to 5% from 1% to reflect the strong 2024 handset margin of 5.6%. We now expect 2025F core service revenue growth of 3.5% with EBITDA growing 3%.
Catalyst #3: Strong earnings to continue in 1Q25F. We expect ADVANC to report YoY and QoQ growth in 1Q25, with YoY growth fueled by ongoing recovery in tourism and QoQ growth from lower marketing expenses as 4Q is normally high season for marketing spending.
Action & recommendation. ADVANC share price has already outperformed the SET by 6% YTD and we believe this will continue for the next three months. Backing this is: 1) decent yield at 2.1% for a holding period of less than one month, 2) stronger earnings in 1Q25F and 3) continued expectation of earnings upside after the spectrum auction, possibly in 2Q25, which is not in our forecast.
Risks and concerns. Weak economic recovery would hamper ARPU uplift in the mobile and FBB businesses. Key ESG risk for the company is in the arena of cybersecurity and data privacy for subscribers.
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