Maybank upgrades Singtel’s AIS to buy, raises price target on further profit growth expectations

Maybank Securities upgraded Singtel’s Thai associate Advanced Info Service (AIS) to “buy” from “hold”, due to a strong outlook and healthy yields.

Its optimism is on the back of expectations for core profit growth of 11 per cent for FY2025, and 4 to 5 per cent dividend yields in FY2025 and FY2026.

Maybank also raised its price target to 307 baht from 301 baht, after raising earnings before interest, taxes, depreciation and amortisation (Ebitda) forecasts by 2 per cent from FY2025.

AIS’ share price was 304 baht at Feb 13’s market close. Its Singapore Exchange-listed Singapore depositary receipts were at S$1.20.

The brokerage also pointed out AIS’ “record-high” core profit for the fourth quarter was 10 billion baht (S$397.7 million), exceeding its forecast by 14 per cent. Net profit for the final quarter was 9.3 billion baht.

“The profit beat our forecast thanks to strong core service revenue and lower-than-expected admin expense,” it added.

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Revenue was 1 per cent higher than forecast and admin expenses were 16 per cent lower than predicted, said Maybank.

Its revenue growth forecast for FY2025 is at 4 per cent. It added that the growth should be supported by increases in mobile, fixed broadband and enterprise revenues. AIS’ target is revenue growth of 3 to 5 per cent.

“Mobile revenue growth should stem from rising data usage and beyond-data packages, like premium streaming subscriptions bundled with unlimited data, resulting in 2 per cent ARPU (average revenue per user) growth,” said the brokerage.

It also forecasts fixed broadband revenue growth to come from 5 per cent ARPU growth and 5 per cent subscriber growth.

Maybank also expects the core profit growth of AIS to outperform Ebitda growth due to flat depreciation and amortisation expenses, and a 9 per cent drop in interest expenses.

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