Samart I-Mobile
E-auction of Tablets-for-students procurement in April
Samart I-Mobile Plc (SIM)
Investment thesis
We believe there is scope for upside to our 1Q13 SIM earnings forecast, due to stronger 1Q13 handset sales than assumed. The firm also expects to win a chunk of the Tablets-for-students procurement contract in April-May 2013, which we have already factored into our model. Our BUY rating stands, premised on an FY13 earnings jump.
More robust 1Q13 handset sales than assumed
We talked with IR yesterday, who told us that the firm will report 1Q13 handset sales volume and an average sales price in excess of our previous assumptions. As such, we now assume that SIM will sell 910K units of handsets in 1Q13 (we had previously modeled for 800-850K), half of which (455K) will be smart phones (against 340K units in 4Q12 and just 1,838 units in 1Q12).
The ratio of smart phones to feature phones will be posted at about 50% for 1Q13, up from 36% in 4Q12. IR guides that the ratio rose from 44% of total handset sales volume in Jan to 52% in Feb and estimates 55% for March. Based on the guidance, we now forecast a 1Q13 net profit of Bt180m, up by 634% YoY and 117% QoQ.
Tablets-for-students procurement
Yesterday, a source at the Ministry of Education said that the ministry will discuss the Terms of Reference (TOR) for the 1.8m-unit Tablets-for-students procurement project with the Comptroller General’s Department of the Ministry of Finance on March 28. The tender is expected before May 2013. This project is worth Bt3.8bn—850K units for Grade 1 students (a Bt2,720 median price), 850K units for Grade 7 students and 54K for teachers (a Bt2,920 median price).
Based on the timeline guidance, we expect the TOR to be published during April 3-5. Applicants will submit technical proposals on April 17, 2013. The ministry will announce the qualifying applicants on April 19, 2013. The E-auction is expected to start on April 25; procurement contracts should be signed on May 9-10, 2013. SIM is confident of winning a 400K-unit chunk of the procurement. We have already factored this deal into our FY13 model (revenue to be recognized in 2H13).
