Samart Telcoms
In line with our model
Samart Telcoms Plc (SAMTEL)
In line with our estimate
SAMTEL posted net earnings of Bt224m for 3Q13, up by 2% YoY and 28% QoQ. Excluding extra items—an Bt18m FX loss and a Bt3m gain on sales of securities—core profit would be Bt239m, up by 63% YoY and 18% QoQ. Net and core earnings were in line with our model.
Result highlights
The solid core profit growth was led by greater revenue, well-controlled SG&A and lower tax expenses. Revenue jumped by 41% YoY and 13% QoQ to Bt2.6bn—Bt1.3bn from projects signed before YE12, Bt597m from contracts signed in 1H13 and Bt684m from contracts signed in 3Q13. SG&A expenses were flattish YoY and QoQ. GM was 18.6%, against 20.8% in 3Q12 and 19.3% in 2Q13.
The Bt1.3bn in revenue in 3Q13 came from five projects—TOT’s 3G Phase 1 (Bt451m), PEA’s ERP (Bt160m), TOT’s SchoolNet Extension (Bt114m), AOT’s CUTE Outsource (Bt107m) and PEA’s AMR Phase 2 (Bt59m). SAMTEL recognized Bt451m in revenue from the TOT’s 3G Phase 1 project in 3Q13, up 17% QoQ, for 180 sites installed (5,000 in total at end-Sept).
The five key new contracts signed in 3Q13 were the Department of Land’s E-title Deeds (Bt1.08bn in total; none in 3Q13), PEA’s Incremental SAP license (Bt420m in total; Bt25m in 3Q13), AOT’s AIMS Network Migration (Bt380m in total, Bt107m in 3Q13), Ministry of Interior’s Network Satellite (Bt187m in total, Bt85m in 3Q13) and PEA’s DCR System (Bt106m in total; Bt68m in 3Q13).
Outlook
We forecast Bt3bn in revenue for 4Q13, up by 50% YoY and 18% QoQ, led by the 10 projects listed above (Bt2bn in 4Q13) and new contracts worth Bt3.2bn (exclusive of the APPS project) expected to be signed in 4Q13 (Bt1bn in 4Q13). With regard to TOT’s 3G Phase 1 project, SAMTEL will realize the remaining Bt819m for 300 new sites in 4Q13. It has already signed two new contracts in 4Q13—AOT’s CUTE Phuket Phase 2 (Bt760m in total; Bt15m in 4Q13) and PEA’s BPM System (Bt335m in total; Bt135m in 4Q13)—and expects to ink four more worth Bt3.7bn by YE13 (including the Bt3bn APPS project). We forecast a Bt250m net profit for 4Q13, up by 78% YoY and 12% QoQ.
What’s changed?
Our net profit forecasts decline by 7% to Bt910m for FY13 and by 6% to Bt1.08bn for FY14, due to slightly diminished expectations for revenue in 4Q13-FY14, in light of the unfavorable political climate.
Recommendation
Our BUY rating stands, premised on a solid YE13 project backlog.
