True Corp

True Corp. Plc  

 

2Q15 net profit was Bt1.3bn, turning around from a net loss last year but down 20% QoQ. However, this included extra gains of ~Bt900mn (Bt1bn gain from transferring towers to TRUEIF and Bt290mn from reversal of depreciation on concession assets minus Bt445mn forex loss). Stripping out these extras shows a core profit of Bt400mn, up from a loss in 2Q14 but down by 27% QoQ. This was in line with our estimate but above the street’s estimates. Key to the turnaround was higher revenue and lower interest expense. While 2Q15 accounted for only 25% of our 2015F, we maintain our full-year forecast of Bt4.2bn, still bullish on stock with unchanged DCF-based target price of Bt17. We continue to expect TRUE to grab more revenue market share from DTAC and ADVANC, proved in the increase in TRUE’s revenue market share to 18.8% in 2Q15 (from 18.4% in 1Q15) at the expense of DTAC and ADVANC. 

1Q15 highlights:  

- TrueMove: Core profit was Bt165mn, turning around from a loss of Bt577mn in 

2Q14 and up 112.9% from 1Q15. Behind the YoY surge was lower interest expense and lower depreciation and amortization due to the completion of depreciation on 2G concession assets (down by Bt1bn from 2Q14). The QoQ improvement was underpinned by the recognition of deferred tax income of Bt565mn (vs. tax expense of Bt53mn in 1Q15). The key highlight was robust growth in service revenue both YoY (up 18%) and QoQ (up 2.5%), outdoing both ADVANC and DTAC. This gave it a gain in revenue market share as noted above.  

- TrueOnline: Core profit after stripping out the extra gain of Bt1bn was Bt635mn, up from Bt341mn in 2Q14 but stable from 1Q15. Behind this was higher revenue (up 6% YoY and 3% QoQ) with better cost control and lower interest expense.  

- TrueVisions: This continued in the red with a loss of Bt254mn. The loss was relatively stable from last year but worse than the loss seen in 1Q15 of Bt188mn.