Price (Bt) 18.60
Target (Bt) 21.75
Set Index 533.92
Strong 1Q09 net profit of Bt1.75bn
1Q09 NP in line with forecast
SHIN’s1Q09 net profit fell slightly (by 3%) from same period of last year
to Bt1,747mn. This was
due to: 1) soft earnings contributions from ADVANC on the back of a weak economy and tourism arrivals, 2) a
Bt110mn forex loss from THCOM’s US$ debt and baht depreciation against the US$ and 3) depreciation expenses
rising 18% yoy due to the long-term value of its mobile business assets reduced under THCOM in Cambodia.
Earnings, however, improved strongly from the Bt342mn net loss in the previous quarter as: 1)
ADVANC booked a non-recurring and non-cash goodwill impairment of Bt3.55bn in 4Q08, 2) ADVANC’s marketing
expenses were seasonally high in 4Q09 and 3) THCOM’s bad debt provision rose unusually after stiffer
accounting standards implemented during the global financial crisis.
2009 normalised profit to slip 4% to Bt5.86bn
We still expect full-year normalised profit to slip by 4% from last year to Bt5.86bn or
Bt1.83/share on ADVANC’s normalised profit, forecast to fall 12% due to the weak economy and rising network
amortisation expenses, but there will be no huge goodwill impairment as in 4Q08. Furthermore, we expect
THCOM’s normalised loss to improve by 68% from last year on the growing utlisation rate of iPSTAR and the
telephony business in Laos and Cambodia.
SPECULATIVE BUY on dividend, firm cash flow
Despite trading liquidity risks with only a 3.76% free float rate, SHIN shares remain attractive
based on: 1) firm cash inflows from ADVANC and its policy to pay an annual dividend of no less then
Bt6.3/share and 2) SHIN’s attractive dividend yield of 12.9%. The stock is currently trading at 40% below
its NAV. We thus maintain our SPECULATIVE BUY rating based on a sum-of-the-parts fair value of Bt21.75
Earnings summary (Bt,mn)
2006 2007 2008 2009F 2010F
Sales (Btmn) 14,039 10,359 8,918 10,119 12,403
EBITDA (Btmn) 1,830 -910 1,651 2,211 2,976
Normalised Profit 4,828 1,575 6,079 5,855 7,319
Net Profit 3,410 960 5,649 5,744 7,319
Normalised EPS (Bt) 1.56 0.49 1.9 1.83 2.29
EPS (Bt) 1.1 0.3 1.77 1.79 2.29
PER (x) 16.9 61.9 10.5 10.4 8.1
EV/EBITDA (x) 42.5 -69.3 39.4 28.8 20.5
CF/share (Bt) 1.1 -0.9 0.5 0.8 1
BV per shr (Bt) 13.6 12.5 11.6 11 10.9
Price/BV (x) 1.4 1.5 1.6 1.7 1.7
DPS (Bt) 2.3 0.3 2.4 2.4 2.4
Dividend yield (%) 12.40% 1.60% 12.90% 12.90% 12.90%
Gearing 0.5 0.1 0.1 0.1 0
ROA (%) 4.10% 1.30% 8.70% 9.20% 12.00%
ROE (%) 8.00% 2.30% 14.70% 15.90% 20.90%
Source: Company reports and KELIVE Research estimates
By Kim Eng Securities (Thailand) Company Limited on May 18, 2009
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