Date of Report: October 15, 2024
Broker: UOB Kay Hian
Company Overview
True Corporation (TRUE) was established from an amalgamation between True Corporation and Total Access Communication (DTAC) as a telecommunication services provider. It operates primarily in the communication services sector, with its shares traded under the ticker “TRUE TB.” As of the report date, the company has issued 34,552.1 million shares, with a market capitalization of Bt383,983.5 million (US$11,677.9 million).
Major Shareholders
- Telenor Thailand Investments: 26.3%
- Thai NVDR: 10.7%
- Charoen Pokphand Group: 8.8%
Recent Stock Performance
- 52-week high/low: Bt11.40/Bt5.00
- Price as of report date: Bt11.20
- Target Price: Bt13.00, indicating a potential upside of +16.1%
- Performance YTD: +121.8%
Financial Data Highlights
- FY24 NAV/Share: Bt2.41
- FY24 Net Debt/Share: Bt12.67
- EBITDA margin in 3Q24 expected at 47.6%, up from 42.9% in 3Q23.
3Q24 Financial Projections
Core Profit
TRUE’s core profit for 3Q24 is expected to soar by 295% year-on-year (yoy) and 19% quarter-on-quarter (qoq), driven by better cost control measures, resulting in an improved gross profit margin and lower selling, general, and administrative (SG&A) expenses relative to sales. The expected core profit for 3Q24 is Bt2.3 billion.
Revenue
- Mobile Revenue: Expected to remain flat at Bt32.0 billion both yoy and qoq due to a decline in prepaid subscribers caused by flooding and the rainy season. However, average revenue per user (ARPU) in the mobile segment continues to show positive trends due to reduced competition in the market.
- Fixed Broadband (FBB) Revenue: Projected to grow 5% yoy but remain flat qoq at Bt6.2 billion. ARPU for the FBB segment is expected to improve to around Bt530 per month in 3Q24, with potential to rise further to Bt599/month.
Operating Costs
TRUE is expected to benefit from synergies, which will reduce operating costs, including depreciation, network expenses, and headcount costs. This is forecasted to lead to an improvement in the EBITDA margin, rising to 47.6% in 3Q24 from 42.9% in 3Q23. SG&A-to-sales ratio is expected to drop to 15.4% (-4.9 ppt yoy).
Future Outlook
4Q24 Expectations
Core operations are expected to improve in 4Q24 due to seasonality, which will boost ARPU and mobile business revenue. Additionally, costs are expected to continue declining due to synergies. Fixed broadband revenue is expected to grow qoq, supported by better ARPU trends.
Earnings Projections (2024-2026)
- 2024F Net Profit: Bt8.1 billion
- 2025F Net Profit: Bt12.7 billion
- 2026F Net Profit: Bt16.2 billion
The company also expects a better credit rating by 2025, which could help lower interest expenses and further reduce costs through spectrum auctions.
ESG Initiatives
Environmental
TRUE is committed to achieving carbon neutrality (Scopes 1 and 2) by 2030 and reaching net zero by 2050. The company has also implemented measures to ensure that no electronic waste is sent to landfills.
Social
TRUE’s digital ecosystem supports nationwide connectivity, offering services ranging from edge computing in heavy industries to online learning for students.
Governance
The company emphasizes transparency, accountability, and ethical business practices, guiding employees to adhere strictly to disclosed policies.
