KKPS Raise ADVANC Target Price and Earnings on Expected Earnings Growth amid Mild Competition

With a strong profits projection for this year’s year, analysts are optimistic about Advanced Info Services (SET: ADVANC), retaining a “BUY” rating on the stock and setting a target price as high as THB253.

Given the company’s anticipated solid 2Q23 performance, Kiatnakin Phatra Securities upgraded its earnings forecast for ADVANC in 2023/24 by 4%/5%. The price target for ADVANC shares was also raised to THB253 from THB246, as milder price competition will not only benefit the company’s top line, but should also reduce marketing expenses.

ADVANC’s pre-exceptional earnings for 2Q23 are projected to be THB7.15 billion, up 9% YoY and 7% QoQ. If realized, this would be the third consecutive quarter of YoY earnings growth for ADVANC.

With easing competition, revenue from mobile service should grow at a low-single digit rate YoY and FBB revenue at a double-digit rate. 

KKPS also expects easing competition to allow ADVANC to materially reduce its marketing/SG&A expenses YoY in 2Q23.

Krungsri Securities has set a THB250 price target for ADVANC, anticipating that post-merger reductions in competition will increase ADVANC’s ARPU and profits. Pricing competition has eased in the mobile segment and it has retired most of its low-priced FBB packages. Full-year earnings are predicted at THB28.4 billion, up 9.6% over last year’s projections, while 2Q23 profits are likely to rise YoY and QoQ to THB7.29 billion (highest since 1Q20).

Daol Securities also reiterated a BUY rating on ADVANC with a target price of THB230 based on DCF, assuming WACC of 8.7% and a terminal growth rate of 2%. The brokerage firm expects 2Q23 core profit to grow 6% YoY, 5% QoQ to THB7.0 billion in light of stronger revenue amid lower marketing expense. Core service revenue potentially increased 2% YoY, QoQ to THB34.0 billion as both the mobile network and FBB businesses registered an increase in net addition, some benefits from which might be eclipsed by higher package price. Core operating cost likely rose 4% YoY, 2% QoQ as a result of higher electricity expense, but SG&A expenses might decrease 9% YoY, 7% QoQ given the lower marketing expense.