Shares of Intouch May Be Heading To Test The 57 Baht Level Despite Mixed Financial Results

Witawat (Ed) Wijaranakula, Ph.D.
Tue Apr 4, 2017

Intouch Holdings PCL (SET:INTUCH), formerly Shin Corporation PCL, is a Thailand-based company engaged in investments in satellite, internet, telecommunications, media, IT and digital content. The company owns a 40.45% stake in Advanced Info Services PLC (SET:ADVANC), a 41.14% stake in Thaicom PLC (SET:THCOM), which owns a 42.07% stake in CS Loxinfo PCL (SET:CSL), the leading internet, computer and telecommunication service provider (ICT service provider) in Thailand. 

In 2012, Intouch founded InVent, a corporate venture capital (CVC) company, focusing its investments in technology companies in late-seed or expansion stages in Thailand and Southeast Asia. In August 2016, Singapore Telecommunications Ltd. (Singtel) said it was buying 21% of Intouch Holdings for S$1.59 billion (US$1.16 billion). Singtel already owns a 23.3% stake in ADVANC, meaning Singtel’s direct and indirect stake in ADVANC has increased to 31.8%. 

Intouch said on February 6 that its fourth-quarter 2016 revenues were 2.65 billion baht, down 20.88% during the same period the previous year, missing the 2.85 billion baht consensus estimate of the 2 analysts following the company, according to Thomson Reuters. Intouch posted fourth-quarter 2016 diluted earnings per share of 0.79 baht, exceeding the 0.73 baht consensus estimate of 3 analysts. For the full year 2016, the company earned 5.11 baht per share on revenues of 11.65 billion baht, exceeding the 4.35 baht per share consensus estimate of 16 analysts, but missing the 12.6 billion baht consensus estimate for full-year 2016 revenues.

Advanced Info Service (AIS), the top holding of Intouch, reported on February 3 its fourth-quarter 2016 revenues of 41.32 billion baht, up 3.9% year-over-year. The company posted fourth-quarter 2016 EBITDA of 15.06 billion baht, down 12% year-over-year. For the full year 2016, the revenues declined 2% to 152.15 billion baht, compared to 155.21 billion baht in 2015, while the EBITDA plunged 14% to 60.74 billion baht. 

Despite the decline in both full-year 2016 revenues and EBITDA for AIS, the results still beat consensus estimates of 26 analysts polled by Thomson Reuters. The company blamed the lower profits on payments to a Thai state-owned telecommunications company, TOT PCL, for the use of spectrum, towers, and equipment and higher marketing expenses for handset subsidies. 

Intouch reported a dividend of 4.60 baht a share in 2016, which represents a 0.65% decrease from 2015. According to Thomson Reuters, the 17 analysts covering the company expect dividends of 3.20 baht a share for the upcoming fiscal year, representing a decrease of 30.48%. 

Shares of Intouch Holdings have been moving in a symmetrical triangle chart pattern since late 2015. The stock is now bumping into the trendline resistance and may be heading to test the 57 baht level. The stock could pull back to the 48.50 baht level if the breakout fails. As of March 31, 2017, the consensus forecast amongst 20 investment analysts polled by Thompson Reuters advises investors that the company will Outperform the market, with the median 12-month price target of 61.30 baht per share.

Disclosure: No position in INTUCH, or any other companies mentioned, and no recommendations.


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