Advanced Info Service

Price Target : Bt156.00 (Prev: Bt140.00)

·         3Q11 net profit of Bt6.2bn (+26% YoY, flat QoQ) beat our and consensus estimates by 5%, driven by prepaid voice and data

·         Earnings will be soft in 4Q11F due to (i) lower traffic because of floods, and (ii) extra non-cash expense related to deferred tax assets

·         Core earnings expected to grow 17% in 2012 driven by data; catalysts would be 3G license award (+19% NPV enhancement)

·         Attractive 5.5% dividend yield for FY11F and 7.6% for FY12F; reiterate Buy call with DCF-based TP raised to Bt156

Expect lower usage in 4Q11 because of floods. ADVANC’s assets sustained only minimal damage from the floods. And cellular usage has remained resilient so far, but we believe traffic will drop after the floods recede as mid-to-low income earners are likely to spend most of their available monies on home repairs first.

ADVANC less affected than peers. The floods have inundated most of the central plain and Bangkok, but a larger proportion of ADVANC’s revenue comes from upcountry compared to DTAC and TrueMove.

Reiterate BUY. ADVANC remains one of the most attractive dividend plays in the Thai market. It currently offers compelling dividend yields of 5.5% for FY11F and 7.6% for FY12F. Reiterate BUY for its defensive qualities, attractive dividend yields, and 16% upside to our revised DCF-based target price of Bt156.