Bualuang Securities Core profit beat our estimateThaicom Plc (THCOM)
4Q12 core profit exceeded our estimate
THCOM reported a Bt124m net profit for 4Q12 (against a Bt315m net loss for 4Q11 and a Bt107m net loss for 3Q12). Stripping out FX and extra items—a Bt252m Mfone loss provision in 3Q12 and a Bt360m deferred tax provision in 4Q11—core profit would be Bt127m, up by 50% YoY and 41% QoQ. Net profit was 6% above our model. Core earnings exceeded our estimate by 22%—GM was 34%; our assumption was 29%.
THCOM surprised us by announcing its first dividend since 2003 for FY12 operations of Bt0.40/share (a 253% payout ratio). Sales were in line with our model. There was no loss provision for Mfone in 4Q12. But there were insignificant expenses related to Mfone's bankruptcy process, which were booked to SG&A expenses in 4Q12.
The core profit jump was led by higher revenue for Thaicom 5 and IPSTAR, better OPEX control and a decline in interest expenses (the firm repaid a Bt3.3bn debenture with cash on Nov 6, 2012). The top-line rose by 5% YoY and 2% QoQ. Gross profit (GP) increased by 25% YoY and 11% QoQ. THCOM's share (50percent stake) of the FY12 Mfone net loss was Bt508m, 9% deeper in the red.
Thaicom 5's revenue inched up 4% YoY in 4Q12 with the addition of 38 new TV channels last year (465 channels at YE12). IPSTAR income rose 10% YoY, led by the usage ramp-up of the Australian govt's NBN project and the full capacity utilization of clients in Japan. Telephone revenue dropped 13% YoY, led by Mfone. All three business units—Thaicom 5, IPSTAR and telephone—reported GP rises. The improved 4Q12 telephone GP was due to cost reductions.
THCOM will continue to consolidate Mfone's recurring loss in its 1Q13 income statement, pending the Phnom Pehn Court ruling on the Mfone bankruptcy. There may be modest legal costs associated with the bankruptcy in 1Q13. The contract signing with Synertone on March 31, 2013 and with an Indian telco in 2Q13 will bring new Chinese and Indian revenues by 4Q13. The launch of Thaicom 6 (mid 2013) will make for EBIT for Thaicom 6's at launch, while the launch of Thaicom 7 (1Q14) will bring scope for upside to our FY14 revenue forecast and target price. We now assume a DPS of Bt0.85 for FY13, based on an 80% payout ratio, a yield of 3.5%.
We maintain our FY13 net profit forecast unchanged.
Our BUY rating stands, premised on a big earnings jump in FY13.