Total Access Communications

4Q11 net profit of Bt2,380m (-19% y-o-y, -23% q-o-q), in line with consensus and our estimates.

Bt1.38 final DPS announced. DTAC will go XD on 5 Apr, payment on 27 Apr

Expect net profit to drop 8.6% in FY12F. Strong data income and tax cut cannot overcome rising regulatory cost and higher interest expenses

Reiterate BUY, DCF-based TP of Bt88; Attractive 6.7% yield in FY12F (assuming 100% payout). Share price catalyst from 3G license auction

Comment on Results

Net profit grew 8.5% in full-year 2011, driven by (i) subscriber growth, (ii) strong data service income, (iii) reduced price competition, and (iv) effective cost cutting measures.

New management guidance for 2012F. DTAC estimates 4-5m net adds for the industry, implying 1.3-1.6m net adds at DTAC vs ours at 1.0m. Internal target for service income ex-IC growth is at “high single digit”, vs ours at 5.9%. Based on Bt8-9bn capex assumption, DTAC targets its free cash flow at Bt18-19bn in 2012F, in line with our forecast at Bt18.2bn.

Recommendation

Reiterate BUY. DTAC offers defensive qualities (i.e. minimal negative impact from the global economic slowdown and low earnings volatility), and also offers compelling 6.7% dividend yield for FY12F based on 100% payout. The stock offers 29% upside to our DCF-based target price of Bt88.00.