Overview of Advanced Info Service (ADVANC)

Advanced Info Service (ADVANC) stands tall as Thailand’s largest telecommunication company. It provides a comprehensive range of services, including mobile network service, fixed broadband (FBB), and digital services under the spectrum licenses granted by the National Broadcasting and Telecommunications Commission (NBTC). With a market capitalization of Bt636.48 billion (approximately US\$18.24 billion), ADVANC is a market leader in the communication services sector.

Stock Performance and Recommendation

ADVANC’s stock is currently priced at Bt285.00, with a revised target price of Bt330.00, reflecting an upside potential of 15.8%. UOB Kay Hian maintains its “BUY” recommendation, citing strong earnings growth and favorable market conditions. The company’s 52-week high and low stand at Bt299.00 and Bt193.00, respectively, showcasing its strong market performance over the year.

4Q24 Financial Highlights and Expectations

ADVANC is expected to deliver an impressive 4Q24 performance, with a projected core profit of Bt8.9 billion, marking a year-on-year (yoy) growth of 26% and a quarter-on-quarter (qoq) increase of 5%. Revenue for the quarter is estimated at Bt55.8 billion (+9% yoy, +7% qoq). The growth is largely driven by the FBB business (+50% yoy), enterprise segment (+18% yoy), and mobile segment (+5% yoy).

Key Revenue Drivers

Mobile Segment: The mobile business is projected to grow by 5% yoy and 2% qoq, supported by an increase in average revenue per user (ARPU) and a seasonal boost from peak tourism, which drives higher roaming revenue.

Fixed Broadband (FBB): The FBB segment is expected to witness robust growth of 50% yoy in 4Q24, driven by sustained ARPU growth and the successful performance of Triple T Broadband (3BB). Promotions such as the 599 and HOME FibreLAN Plus plans, bundled with platforms like Netflix, HBO, and AIS Play, are expected to contribute significantly to this growth.

SIM and Devices: Revenue from SIM and devices is anticipated to grow 35% qoq due to the seasonal boost in sales of the iPhone 16 and other popular brands. The gross profit margin for device sales remains strong due to optimization efforts.

EBITDA Margin Growth

ADVANC’s EBITDA margin is projected at 54.2% for 4Q24, up from 46.7% in 4Q23. This improvement is attributed to better cost control, flat electricity costs, and benefits from the appreciation of the Thai baht. However, higher depreciation and amortization expenses due to accelerated 5G investments, along with increased marketing and staff costs, are expected to weigh on margins slightly in the coming quarters.

Future Growth Projections

ADVANC’s management has set ambitious targets for 2024, aiming for core service revenue growth of 13-15% and EBITDA growth of 14-16%. However, UOB Kay Hian forecasts even higher growth, with core service revenue expected to rise by 17% and EBITDA by 21% by the end of 2024.

Looking ahead to 2025, earnings growth is estimated at 11% yoy, driven by increasing revenue, operational efficiencies, strategic spectrum acquisitions, and consistent dividend payouts.

Valuation and Recommendation

The valuation for ADVANC is based on an EV/EBITDA multiple of 9.1x. UOB Kay Hian maintains its “BUY” recommendation with a revised target price of Bt330.00, up from the previous target of Bt310.00. The stock remains attractive due to its strong earnings growth, high dividend yield of 3.2%, and potential cost reductions from upcoming spectrum auctions.

Share Price Catalysts

• Softening competition in the telecommunications sector, leading to an ARPU uplift.
• Decreasing electricity expenses, which will help lower network operational costs.

Environmental, Social, and Governance (ESG) Initiatives

ADVANC has a strong ESG profile, with a “AAA” SET ESG Rating and a CG Report score of 5.

Environmental

The company is committed to climate action, aligning its environmental goals with Science-Based Targets to reduce greenhouse gas emissions.

Social

ADVANC emphasizes cultivating employees with new mindsets, skills, and capabilities to meet the demands of a future job market driven by big data and AI.

Governance

The company follows robust corporate governance practices, ensuring transparent and accountable operations while respecting shareholder rights.

Key Financial Metrics

Below are some notable financial highlights for ADVANC:

• 2024F revenue: Bt212.62 billion (+12.6% yoy)
• 2024F net profit: Bt33.55 billion (+16.8% yoy)
• 2024F EBITDA margin: 53.3%
• Dividend yield: 3.2%
• Debt-to-equity ratio: 250.4%