Samart Corporation

Samart Corporation Plc (SAMART)

As the 3G-2.1 GHz hype fades, SAMART will shine with good news in
2013F starting from big ICT projects from AOT and TOT, then its entry
into utility projects, the setup of a joint venture to be network provider
for digital TV and the listing of its call center subsidiary. These moves
should narrow its NAV discount from 20% now. BUY.

Bids for big ICT projects in 1Q and 2Q13. We expect 70%-held SAMTEL to involve
itself in at least two big ICT projects to be opened for bidding in 1H13: 1) AOT’s
Advanced Passenger Processing Service system (APPS) with an estimated total value of
Bt5.4bn in 1Q13 and 2) TOT’s 3G network roll out phase II + LTE project with total value
>Bt20bn in 2Q13. Its solid past experience with both AOT and TOT places SAMTEL in an
ideal position to win both of these projects. These are in our assumptions.

Entering the utilities arena. After depending heavily on ICT projects, SAMART is
expanding into utility projects from 2013. In a deal scheduled to wind up by yearend,
SAMART is acquiring 80% in TEDA Co., Ltd., which designs and builds high voltage
substations, transmission & distribution lines as well as offering mechanical & electrical
installation services. This is a door that will give SAMART entry into utility projects, a
market that is still growing and likely to be more stable than ICT projects. Based on
Thailand’s Power Development Plan 2012-2030, the country will add ~3,000 MW power
capacity per annum during 2013-2015F vs. 1,871 MW added in 2012F.

To enter digital TV business as network provider. Expecting the NBTC to issue
digital TV licenses in 2013, SAMART plans to offer its services as a network provider,
setting up a joint venture with an existing broadcaster to invest in the multiplexer
system. Since regulations and timeline are still unclear at this time, we left this as an
upside to our forecast.

To list call center in 3Q13F, unlocking value. Its call center business is growing very
well, with revenue doubling YoY in 2011 and is this year expected to grow 12% to
Bt750mn. Major clients are Thai Air Asia, the Social Security Office, TOT, PEA and Royal
Thai Police. The company is also negotiating with a number of potential clients both in
Thailand (Thanachart Bank, Ministry of Commerce) and in neighboring countries,
getting in on the trend for outsourcing. SAMART plans to list this subsidiary ~3Q13F.
This could be just the beginning of the unlocking of the value of its unlisted
subsidiaries.

Buy with TP of Bt14. We value SAMART stock at Bt14 based on SOTP consisting of: 1)
SAMTEL TP of Bt21 and 2) an 11% discount to its +1SD five-year historical average to
accommodate its concrete plans to expand into new areas. Looking at upcoming flows
of new projects and business expansion including a 2012-2013F generous dividend yield
of 4.7-5.1%, we reiterate Buy.