Thaicom

Happy New Year to THCOM! 2013 is its year! BUY

Thaicom Plc (THCOM)

Thaicom 6 to serve demand growth. THCOM will be launching its latest satellite -

Thaicom 6 - around mid-2013. Demand is surging for conventional satellite service,

propelled by the satellite TV industry. This has led to the booking of 36% of Thaicom 6

capacity already as of 3Q12 and bookings continue. With profit breakeven at 30%, this

means the new satellite will be in the black immediately upon launch.

iPSTAR: India and China signing on! Negotiations will be continuing from last year

and a new iPSTAR contract with a big conglomerate is expected in 1H13F. Based on

information from the company, this big client is interested in taking the remaining

capacity assigned to India of ~5Gbps or ~13% of iPSTAR's total capacity. Furthermore,

iPSTAR has been spotted by a listed company in China and this could potentially lead to

a big new contract as well. We expect iPSTAR utilization to rise from 25% in 3Q12 to

40% at end-2013, as targeted by the company.

Earnings growth outstanding: 150% in 2013F, 50% in 2014F. Of all ICT companies,

THCOM's earnings growth is poised to stand tallest in both 2013F (+150%) and 2014F

(+50%), thanks to: 1) iPSTAR growth, 2) growth of conventional satellite business,

especially after the launch of Thaicom 6 in mid-2013, to be followed by Thaicom 7 in

2014, on which regulatory cost will shrink to the 5.75% license fee from 20.5%

concession revenue sharing and 3) the end-2012 sale of Mfone, its mobile business in

Cambodia that has been generating losses of ~Bt130mn per quarter.

Maintain Buy and TP Bt29. 2013 is looking to be THCOM's year. We expect iPSTAR utilization to rise from 25% in 3Q12 to 40% at end-2013, as targeted by the company.

Earnings growth outstanding: 150% in 2013F, 50% in 2014F. Of all ICT companies,

THCOM's earnings growth is poised to stand tallest in both 2013F (+150%) and 2014F

(+50%), thanks to: 1) iPSTAR growth, 2) growth of conventional satellite business,

especially after the launch of Thaicom 6 in mid-2013, to be followed by Thaicom 7 in

2014, on which regulatory cost will shrink to the 5.75% license fee from 20.5%

concession revenue sharing and 3) the end-2012 sale of Mfone, its mobile business in

Cambodia that has been generating losses of ~Bt130mn per quarter.

Maintain Buy and TP Bt29. 2013 is looking to be THCOM's year. We expect to see

progress in its plan to list a subsidiary, Laos Telecom, on the Lao stock market this

year as well. The stock is currently trading at only 7.05x EV/EBITDA vs. its ten-year

average of 8.4x. We maintain Buy and 2013 TP of Bt29 consisting of Bt27 per share for

satellite and telephony (based on DCF, 9.8% WACC and 1% terminal growth) and Bt2

per share for its 42% in CSL (with TP of Bt9).