ADVANC reported core profit of Bt8.5bn, down 1.7% QoQ, but up 18.8% YoY, lining up with INVX and consensus. It announced a 1H24 dividend of Bt4.87/sh (85% payout), implying 2% yield. We attended a post results conference call where the tone was slightly positive, guiding to strong business momentum in July. Investors may be disappointed that it did not revise up guidance despite the strong 1H24, but management prefers to be conservative. Maintain OUTPERFORM with end-2024 DCF-based TP Bt260 (6% WACC and 2% LTG)
2Q24 in line. ADVANC reported a 2Q24 net profit at Bt8.6bn, growing 1.5% QoQ and 19.5% YoY. It recorded FX gain of Bt73mn, giving a core profit of Bt8.5bn, down 1.7% QoQ but up 18.8% YoY, lining up with INVX and consensus. Revenue from the mobile business, accounting for 60% of total revenue, was Bt30.8bn, up 1.4% QoQ on more tourism revenue and 4.3% YoY from package restructuring. Blended ARPU for the quarter was Bt224, stable QoQ but up 5.1% YoY. FBB revenue (14% of total revenue), was Bt7.3bn, rising 2.3% QoQ and 155% YoY. The QoQ increase was due to new package pricing and a focus on customers with higher ARPU; the YoY growth reflected the merger with TTTBB. The highlight of this quarter's costs was SG&A, which increased 11.6% QoQ to Bt6.6bn due to higher staff costs necessitated by the strong 1H24. 1H24 core profit accounted for 54% of our full-year forecast. ADVANC announced a 1H24 dividend of Bt4.87/sh (85% payout), with XD on Aug 19.
Slightly positive tone. ADVANC held a conference call yesterday. It focused on the reason it did not adjust financial guidance despite the good 1H24 figures: ADVANC achieved 18% growth in core service revenue in 1H24 vs its 2024 target of 13-15% and 21% EBITDA growth in 1H24 vs a targeted 14-16%. It feels that current economic uncertainties and geopolitical risks make it reasonable to leave guidance unchanged. It believes targets may be beat or at least reach the upper band of guidance. Management also noted that momentum in July continues good. As for the possible license auction, it says it will consider every opportunity.
Maintain our 2024F forecast. We expect 3Q24F earnings to grow QoQ and YoY, supported by the launch of a new iPhone, rising tourism-related revenue and ongoing improvement in ARPU. We therefore keep our 2024F core profit at Bt31.6bn, up 10.9% YoY. Our assumptions are based on 14.2% growth in core service revenue and 13.3% in EBITDA.
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. This would negatively impact its service revenue.
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