KKPS Upgrades ‘DIF’ to ‘BUY’ on Attractive Yields and Huge Discounted P/E

The plummet in unit price of Digital Telecommunications Infrastructure Fund (SET: DIF) last week by 10% added downside to its weakened state as the fund is now underperforming the main Thai bourse SET Index by 13% in the past three months.


Kiatnakin Phatra Securities (KKPS) stated that there are no material changes in fundamental/risk of DIF. Dividend yield and yield gap (which approached 7%) are more than one standard deviation above mean, and this is while its P/E band is at one standard deviation below mean.

KKPS noted that DIF is trading at a discounted P/E while offering higher yield compared to global peers. The firm believed that the DTAC-TRUE merger would help mitigate counterparty risk.

KKPS maintained its earnings estimate, but with an attractive yield, it upgraded DIF’s rating from Neutral to Buy with an unchanged target price of THB12.9 per unit.

The brokerage firm added that in concern of DTAC not renewing its rental contract with DIF post amalgamation, the revenue from DTAC accounts only 3% of DIF’s total revenue and the firm had already factored in the potential from DTAC revenue loss in its forecast.