Samart Corporation

Samart Corporation Plc (SAMART)

Core profit in line with estimate
 
SAMART posted a Bt354m net profit for 1Q13, up by 12% YoY and 47% QoQ. Excluding extra items—a Bt42m FX gain and a Bt6m gain from asset sales—core earnings would be Bt306m, up by 22% YoY and 3% QoQ. Net profit exceeded our model by 9%, due to larger extra gains than assumed. Core profit was in line with our estimate. Revenues and gross profit beat our model by 4% and 5%, respectively.
Result highlights
The strong 4Q12 core earnings were driven by SIM’s Bt166m core profit, up by 806% YoY and 41% QoQ, thanks to a surge in smartphone sales volume, a higher average sales price and fatter GM. SIM’s blended average sales price was Bt2,555 (up by 95% YoY and 15% QoQ). Its GM was 25.1%, against 17.1% in 1Q12 and 21.6% in 4Q12 (see details in our SIM report).  
SAMTEL posted core earnings of Bt146m, down 36% YoY, due to a restated tax item in 1Q12—the result of an accounting adjustment for deferred tax. However, earnings before tax (EBT) jumped 97% YoY, led by better OPEX control. Revenue rose by only 4% YoY and 2% QoQ on lower revenue recognition from the TOT 3G Phase 1 project (see details in our SAMTEL report).
The bottom-lines of all SAMART’s other businesses (except Samart Engineering) reported YoY rises. CATS’ earnings jumped 79% YoY in 1Q13, thanks to a 16% YoY rise in the number of flights and an FX gain. Kampot Power Plant (KPP) posted a 42% YoY profit jump on higher revenue and an FX gain. One-to-One Contacts reported a Bt27m net profit (up 6% YoY), while Samart Engineering saw a net loss of Bt2m in 1Q13. The Vision & Security unit posted a Bt1m net loss.
Outlook
We forecast a 2Q13 net profit of Bt370m, up by 59% YoY and 5% QoQ, led by earnings jumps at SIM (up by 775% YoY and 20% QoQ) and SAMTEL (up by 31% YoY and 15% QoQ). SIM’s 2Q13 drivers will be a forecast 84% QoQ jump in smart phone sales volume, a further rise in GM to 28-30%, a 10% QoQ increase in mean sales price and 20% greater QoQ content revenue. SAMTEL’s 2Q13 driver will be recognition of Bt1.7bn in revenue from installing 1,070 new cell sites for TOT during the quarter.
What’s changed?
We maintain our FY13 net profit forecast unchanged.
Recommendation
Our BUY rating stands, premised on strong FY13 earnings jumps for SIM and SAMTEL and scope for upside to our bottom-line forecast from One-to-One Contacts and Samart U-Trans.