Samart Corporation

Samart Corporation Plc (SAMTEL)
2Q13A core profit was Bt357mn, impressive growth of 63% YoY and 36% QoQ mainly from the earnings turnaround of 58%-owned SIM (handset and content business) that overcame the YoY softening in SAMTEL (71% held). 2H13F outlook remains good with high demand for its i-Mobile smartphones (under SIM) and an expected improvement in SAMTEL’s performance (with Bt8bn project backlog value as of mid-2013). We look for some excitement in late 2013F: 1) auction of new digital TV channels (a plus for SAMART’s set-top box and equipment installation business), 2) a plan to list its call center business and 3) progress on big projects that were delayed from 1H13. With better things ahead and outstanding 2013F growth of 53%, we maintain Buy and a mid-2014 SOTP of Bt24 based on 1) SAMTEL’s TP of Bt21, 2) SIM’s consensus TP of Bt4.7 and 3) 2xBV of other businesses with no discount applied.
Highlights:
SIM starred: Its 2Q13A leapt Bt256mn from only Bt20mn a year ago, on popularity of its i-Mobile smartphone, for which price is higher and margin better: sales volume of this phone surged to 384K in 2Q13F from only 22K YoY. Average selling price rose to ~Bt2,400, doubling YoY, although total handset sales volume slid 7% YoY to ~1mn. Handset gross margin is expected to rise to 26% from 18% YoY.
SAMTEL’s 2Q13A slid 9% YoY on change in project mix; some delays to 2H13-1H14F.
It will pay a 1H13 interim DPS of Bt0.35 (1.7% yield at current share price), XD on Aug 26 and payment on Sep 12. We estimate 2013F dividend yield at 3.7%.