Shin Corporation

Shin Corporation Plc (INTUCH)
What’s new? On Jan 18, Cedar Holdings Co Ltd, a nominee for Temasek Holdings (Pte) Ltd, sold 200m shares (6.2% of the paid-up shares outstanding) in Shin Corporation Plc (INTUCH) in a series of transactions (no big lot sales) at prices ranging Bt40.10-41.60 apiece. According to INTUCH’s filing to the SET, about 75% of the shares were sold to Thai investors and the remainder converted to NVDRs. As a result of the sale, Cedar Holdings’ stake dropped from 44.62% to 37.99. Another Temasek nominee, Aspen Holdings Co Ltd, holds 41.62% of INTUCH. As such, Temasek’s headline holding declines to 79.61% from 86.24%. 
Analysis: Presumably, the rationale is to boost INTUCH’s trading liquidity (the sale follows Temasek’s mid August 2011 sell-off of 8% of the firm for Bt36 apiece). Note that the SET’s minimum free float requirement is 15% (though it isn’t very rigorously enforced) and all stocks must have free floats of at least 20% to be included in the SET50 and SET100 indices.
We view the sale as positive for INTUCH, as it will enable it to join the SET50 and SET100 indices. Note that many fund managers’ internal compliance rules severely restrict (or prohibit altogether) the holding of shares outside of the SET50 and SET100. The stock’s entry into the SET50 (at the next review in June) should make it more attractive to investors of all types.
We forecast 16% core profit expansion for INTUCH this year, driven by 14% core earnings growth for ADVANC and a THCOM bottom-line jump of 873% (from a very low FY11 base). ADVANC’s FY12 growth will be led by data and handset sales revenue, THCOM’s by the divestment of Mfone, direct IPSTAR sales in China, a full year of IPSTAR income recognition from MEASAT of Malaysia and NBN of Australia and additional sales to Japan.  
Action: Our BUY rating stands. Our YE12 target price is Bt60—NAV extrapolated from ADVANC’s and THCOM’s respective DCF valuations (including a 3G license for ADVANC) and a 10% discount because INTUCH is a holding company. There is 27% upside to our target price.
Yesterday’s stock prices for ADVANC (Bt153.50) and THCOM (Bt11.80) imply INTUCH’s market price-based NAV at Bt54 (including a 10% holding company discount).