Kasikorn Securities (KS) stated that it expects that in an Annual General Meeting of Shareholders on April 4, participants will approve the merger of Total Access Communication Public Company Limited (SET: DTAC) and True Corporation Public Company Limited (SET: TRUE), which will create a 5 billion baht per year accounting profit for the new company due to lower D&A expense.
On Friday, DTAC and TRUE published their Independent Financial Advisor’s opinion report on the amalgamation, which was positive to the company. Though there were no details of possible synergy from the merger as of now, KS expected DTAC and TRUE to provide a hint of potential synergy value at their AGM next month.
With this regard, KS maintained Neutral view on the sector, saying that the telecom sector may face some headwinds, i.e., stiff competition, a delay of tourist arrivals and cost-push inflation, which could hinder an earnings recovery in 2022.
KS stated that under such an unfavorable economic backdrop, its top sector picks still hinge on special events such as the merger, which would effectively cap share price downside, given the setting of the voluntary tender offer. Moreover, there could also be potential upside to share prices from soon-to-be-released synergy value from the merger.
Among stocks in the sector, DTAC remains top pick of KS with an Outperform rating and a target price at Bt57.52 per share, including potential synergy value. The analyst stated that DTAC is currently trading at a cheaper EV/EBITDA multiple than ADVANC and TRUE. The securities company stated that it believes DTAC’s EV/EBITDA multiple deserves to be rerated to align with that of TRUE based on the latest progress regarding the merger.
