Jasmine International

Jasmine International Plc (JAS)

The recent upgrade in download speeds from 6Mbps to 10Mbps should strengthen Jasmine’s edge over TOT and could lead to market share expansion in FY13. WiFi sub growth looks promising, thanks to AIS’s free WiFi programme and greater odds of a 3G auction. We increase our estimates to reflect the recent speed upgrade and our more optimistic demand growth projections for WiFi. We also raise our DCF-based target price (10% WACC, 2% LTG). Given possible earnings surprises and its relatively low valuations, Jasmine is one of our top picks in the sector. Maintain Outperform.

Need for speed
We believe that Jasmine will snatch sub market share in fixed broadband (FBB) services from TOT. On 18 Sep, Jasmine raised the downloading speeds on all packages, lifting the minimum speed from 6Mbps to 10Mbps. TOT and True promptly followed suit. After checking with their call centre representatives, we discovered that about 0.4m-0.5m of TOT’s customers and 0.1m-0.2m of True’s customers are unlikely to be upgraded immediately owing to the limitation of both networks.

WiFi boost
We are more optimistic about Jasmine’s WiFi business given the micro price plans and improved
auto-login feature, which would match prepaid behaviour and enhance user experience. On top of
this, the government’s populist free WiFi programme would benefit Jasmine. AIS, Jasmine’s WiFi partner, joined this programme, allowing up to 30k people to hook up to Jasmine’s WiFi network starting in early-Sep.

Earnings revisions
We revise up our FY13-15 core net profit forecasts by 7-25% as we raise our FY13-15 net addition assumptions for FBB and WiFi. Our estimates are 19-34% above consensus as we believe that its recent FBB speed upgrade and micro WiFi package will stimulate net add momentum. 27% lift in target price At our new target price, which is 27% higher, the stock is relatively cheap at 10.17x FY13 P/E and 5.15x FY13 EV/EBITDA. Likely re-rating catalysts are earnings surprises from the FBB and WiFi businesses.Jasmine remains one of our top picks in the Thai telecoms sector.