Advanced Info Service

Buy; Bt153.50
Price Target : Bt178.00  (Prev: Bt156); ADVANC TB

Expect Bt6.9bn core profit for 4Q11F, up 11% YoY and 5% QoQ on minimal flood impact

2012 growth will beat peers’ because of milder flood impact and unchanged revenue-sharing rate

Expect core profit to grow 24% in 2012F, driven by strong data income and lower tax rate; catalyst would be 3G license award (20% NPV enhancement)

A compelling defensive quality play and offering attractive 7.2% yield for FY12F; reiterate Buy with revised DCF-based Bt178 TP

Ahead of the pack. First, ADVANC had been affected less by the floods than DTAC and TrueMove, because a large share of its subscriber base is in the North and Northeast, where flooding had been minimal, if any. Second, DTAC and TrueMove has had to pay higher revenue-sharing rate effective Sep 2011.

Strong core profit growth (+24%) in FY12F. Growth drivers include (i) strong voice usage, (ii) strong demand for data services, (iii) gradual drop in depreciation expenses, and (iv) lower corporate tax rate.

Reiterate BUY for defensive qualities. ADVANC is one of the most compelling defensive stocks in the Thai market. This is premised on its recurring revenue, the global slowdown having minimal impact, stronger purchasing power of its subscribers, and compelling 7.2% dividend yield (FY12F). The counter currently offers 23% total return (16% upside to our revised DCF-based target price of Bt178 plus 7.1% dividend yield).