TRUE Scores Highest ESG Rank among Thai Telco as Maybank Rates “BUY” at Bt5

Maybank Securities (Thailand) (MST) ranks TRUE the highest in ESG rating among the telecommunication sector, giving a “BUY” recommendation with a target price at THB5.00 per share.

MST stated that based on Maybank’s scoring system, it gave TRUE an ESG rating of 68, the highest among the Thai telcos. FY19-21 data showed a strong trend of “E” and “S” aspects, and its long-term goals (i.e. carbon neutrality by 2030) suggest that TRUE should become “greener” in the future. TRUE has a number of lawsuits from the concession era (pre-2015), and the biggest lawsuit by far is the dispute related to ADSL revenue sharing (THB76.2b claim); hence, lawsuits represent a key risk to TRUE’s financial health. MST reiterated BUY and a post-merger TP of THB5.0.

Meanwhile, ADVANC scored 57 in MST-based ESG, above the average of 50. FY19-21 data show strong trends in environmental and governance aspects. Controversies can hurt share price performance as evidenced in a lawsuit outcome in Jan 2020 and recent data leaks in 2018 and 2022. Reiterate BUY with a slightly lower TP of THB245 (from THB247) as MST raised WACC from 7.52% to 7.57% (new risk-free rate of 3.0% and market risk premium of 7.4%).

Lastly, MST gave DTAC an ESG score of 50, below TRUE’s 68 and ADVANC’s 57. DTAC’s lukewarm score is a result of weak “E”, strong “S” and decent “G” data during FY19-21. On a positive note, DTAC seems to have the lowest litigation risk among the three telecom operators, and the company has not experienced any leaks of customer data in recent years. Reiterate BUY and post-merger TP of THB51.10.