Samart Corporation

SAMART Plc

Core profit slightly above our estimate
SAMART posted a Bt357m net profit for 2Q13, up by 60% YoY and 1% QoQ. Excluding extra items—a Bt60m FX loss and a Bt1m gain from asset sales—core earnings would be Bt416m, up by 99% YoY and 36% QoQ. Net profit was in line with estimate, but core profit exceeded our model by 6%, thanks to higher GM than assumed. Revenues and gross profit beat our projection by 4% and 7%, respectively.
Result highlights
The robust 2Q13 core earnings were led by SIM’s Bt284m core profit, up by 1,356% YoY and 71% QoQ, thanks to a surge in smartphone sales volume, a higher average sales price and fatter GM. SIM’s blended average sales price was Bt2,446 (up 87% YoY but down 4% QoQ). Its GM was 27.6%, against 18.5% in 2Q12 and 25.1% in 1Q13. (see details in our SIM report). Note that we have adjusted our SIM 2Q13 core profit number up slightly to Bt284m (from Bt282m).
SAMTEL posted 2Q13 core earnings of Bt202m, up by 43% YoY and 39% QoQ, led by greater revenue, well-controlled SG&A and lower tax expenses as a result of an adjustment for deferred tax. Revenue rose by 38% YoY and 10% QoQ, underpinned by strong recurring income despite slow site installation progress at the TOT 3G Phase 1 project (see details in our SAMTEL report).
The bottom-lines of all SAMART’s other businesses (except Samart Engineering [SE] and Kampot Power Plant [KPP]) reported YoY rises. CATS’ earnings jumped 42% YoY in 1Q13, thanks to a 22% YoY rise in the number of flights. KPP posted a 46% YoY profit dive on an FX loss. One-to-One Contacts reported a Bt20m net profit (up 388% YoY) on better OPEX control. SE posted a 2Q13 net loss of Bt5m.
Outlook
We forecast a 3Q13 net profit of Bt380m, up by 34% YoY and 6% QoQ, led by earnings rises at SIM (up by 665% YoY and 5% QoQ) and SAMTEL (up by 18% YoY and 59% QoQ). SIM’s 3Q13 drivers are a 5-9% QoQ rise in smart phone sales volume, GM expansion to 30%, a 10% QoQ rise in mean sales price and higher QoQ content revenue. SAMTEL’s 3Q13 drivers will be revenue recognition of Bt850m from the TOT’s 3G Phase 1 project, Bt1.6bn from existing projects and Bt1bn from new contracts that are expected to be signed in 3Q13.
What’s changed?
We maintain our FY13 net profit forecast unchanged.
Recommendation
Our BUY rating stands, premised on a strong FY13 earnings jump.