Overview of True Corporation

True Corporation (TRUE TB) has emerged as a leading telecommunication services provider following an amalgamation between True Corporation and Total Access Communication (DTAC). The company is poised for robust growth, underpinned by improved operational efficiencies and a strong market presence in Thailand’s telecommunications industry. With a market capitalization of Bt404,259.6m (approximately US\$11,621.3m) and a GICS sector classification in Communication Services, TRUE remains a prominent player in the industry.

Key Investment Highlights

The report projects a significant surge in TRUE’s core profit for the fourth quarter of 2024 (4Q24), with expectations of a year-on-year (yoy) increase of 175% and a quarter-on-quarter (qoq) growth of 59%. This performance is attributed to higher revenues, efficient cost management, an enhanced gross profit margin, and a reduced selling, general, and administrative (SG&A)-to-sales ratio.

Mobile Revenue Growth

TRUE’s mobile business revenue is forecasted to reach Bt33.1b in 4Q24, reflecting slight yoy and qoq growth. This growth is driven by an increase in net subscribers resulting from seasonal factors. Additionally, reduced competition among telecommunication players is expected to boost the average revenue per user (ARPU).

Product Sales Performance

Revenue from product sales is anticipated to decline by 33% yoy to Bt4.2b but show a 4% qoq increase. This is largely supported by seasonal sales of the iPhone 16, which experienced a yoy drop in Thailand and globally. However, qoq growth in product sales is expected due to seasonal demand and promotions for various device brands.

Cost Efficiency and SG&A Savings

The SG&A-to-sales ratio is projected to drop, primarily due to a reduction in headcount following the amalgamation, which has yielded significant cost savings. Although marketing expenses may increase due to seasonal factors, these are expected to be offset by the streamlined workforce and operational efficiencies.

Financial Performance and Projections

TRUE’s financial outlook is optimistic, with a strong recovery anticipated in 2025. The following key metrics highlight the company’s financial trajectory:

Key Financial Metrics

• Net Turnover: Bt207,544m in 2024F, growing to Bt223,711m in 2025F.
• EBITDA: Bt100,963m in 2024F, projected to remain stable at Bt101,054m in 2025F.
• Operating Profit: Bt29,413m in 2024F, increasing to Bt33,463m in 2025F.
• Net Profit (Adjusted): Bt8,777m in 2024F, surging to Bt13,104m in 2025F.
• Debt-to-Equity Ratio: Expected to decrease from 517.5% in 2023 to 469.4% in 2025.

2024 Core Profit Outlook

TRUE’s core profit for 2024 is forecasted to reach Bt8.7b, marking a 96% yoy improvement. This turnaround is attributed to reduced competition, which is expected to enhance ARPU, as well as higher EBITDA margins driven by cost reductions and synergistic benefits from the merger.

2025 Growth Drivers

The earnings outlook for 2025 remains favorable, with an anticipated 11% yoy growth. Key drivers include revenue growth, enhanced operational efficiencies, strategic spectrum acquisitions, and consistent dividend payouts. Additionally, the replacement of Premier League broadcasting rights by Jasmine International (JAS) is expected to have a positive long-term impact on TRUE’s bottom line.

Valuation and Recommendation

UOB Kay Hian maintains a BUY recommendation for TRUE, with a target price of Bt14.50, representing a 23.9% upside from the current share price of Bt11.70. The valuation is based on an EV/EBITDA multiple of 9.1x, reflecting expectations of outstanding earnings growth in 4Q24 and 2025. Strategic factors, such as improved ARPU in mobile and fixed broadband (FBB) businesses, a potential credit rating upgrade in 2025, and cost reductions from spectrum auctions, further strengthen the investment case.

Environmental, Social, and Governance (ESG) Initiatives

TRUE demonstrates a strong commitment to ESG principles across environmental, social, and governance dimensions:

• Environmental: The company aims to achieve carbon neutrality by 2030 and net zero emissions by 2050. It also ensures no electronic waste is sent to landfills.
• Social: TRUE supports nationwide connectivity, empowering customers through innovative digital solutions that enable online learning and industrial advancements.
• Governance: Transparency, accountability, and ethical conduct are prioritized, with employees guided by fully disclosed policies.

Conclusion

True Corporation (TRUE TB) stands out as a compelling investment opportunity, backed by strong financial performance, cost efficiencies, and strategic initiatives. With a robust growth outlook for 2025, enhanced by reduced competition and operational synergies, TRUE is well-positioned for sustained success. Investors seeking exposure to Thailand’s telecommunications sector should consider TRUE as a long-term growth play.