Total Access Communication (DTAC.BK/DTAC TB)*: 2Q12 earnings review: Below our estimate

The overall tone of DTAC’s conference last night was still positive. As anticipated, the firm
finally raised the dividend payout ratio to a minimum of 80% from 50%, but the positive
surprise is the dividend will be paid on a quarterly basis (from yearly basis previously). This
implies the firm is more confident about its long-term earnings outlook and strong cash flow.
As a result of this change in the dividend policy, the company announced an interim DPS of
Bt2.27 (or 92.4% payout ratio), implying a dividend yield of 2.85% for less than a two-week
holding period (XD date on August 1). Despite the weaker-than-expected 2Q12 earnings, we
see a recovery in earnings YoY (decline was 5.7% vs. -10.1% YoY in 1Q12). We still anticipate
stronger earnings growth momentum in 2H12 (up about 22% YoY) due to better cost
efficiency from the completion of the network swap (starting in June), the potential increase in
voice revenue from the launch of buffet packages and ongoing growth momentum from
non-voice revenue. We still maintain our earnings growth forecast of 8% YoY for this year. We
maintain a rating of Outperform on the counter with a target price of Bt100.00.