Shin Corporation

Shin Corporation Plc (INTUCH)

4Q13 profit strong thanks to ADVANC and THCOM
INTUCH's FY2013 net profit was reported at B14.6bn, growing 5.7%yoy (close
to our projection). 4Q13 net profit was B3.5bn, growing 2.7%qoq, thanks to
subsidiaries:

- ADVANC (INTUCH holding 40.45% stake, booked as share of profit) –
Share of profit from ADVANC increased by 4.2%qoq. ADVANC's profit grew
as cost of service (excluding IC) decreased by 8.4%qoq. The number of
ADVANC's subscribers migrated from 2G network (25% income sharing) to
new 3G network (5.25% income sharing) increased from 10.4 million in
3Q13 to 16.4 million (40% of total subscribers), so overall regulatory cost
dropped by 11.6%qoq.

- THCOM (INTUCH holding 41.14% stake, booked in consolidated financial
statement) – THCOM's 4Q56 normalized profit grew by 25%qoq, as
income from iPSTAR in China (24% of iPSTAR's total capacity) has been
booked since November 2013.
- FY2014 profit to depend on subsidiaries
INTUCH's FY2014 profit is likely to grow further thanks to the following
supporting factors:

Share of profit from ADVANC is projected to increase by 10%yoy. Income
from data service has been growing, and cost of service is likely to decline
as the number of subscribers migrated to 3G network at end-2014 is
projected to reach 30 million (73% of total subscribers).

-THCOM's profit is projected to leap. Income from iPSTAR in China would
be booked for a full year, and income from the new satellite (Thaicom 6)
with 66% usage rate (40% exceeding the breakeven point) would be
recognized from February on. THCOM has previously rented other satellite
during the delay, but the profit was negated by high rental cost.
Overall, INTUCH's FY2014 is projected to grow by 10%yoy to B16bn.
- FY2014 dividend yield over 6.5%. "BUY"
As ADVANC and THCOM's fair values are B270 and B50, respectively, we derive
INTUCH's fair value (NAV) at B109, implying 43% upside with over 6.5%p.a
dividend yield. We recommend "BUY". 2H13 dividend is announced at
B2.16/share, or 2.8% dividend yield (B0.26 better than our expectation). XD
date is 1 April 2014