On Thursday, Citi revised its stance on Intouch Holdings PCL (INTUCH:TB), downgrading the stock from Buy to Neutral, while also reducing the price target to THB73.80 from the previous THB82.70. The adjustment follows a reassessment of Intouch's earnings forecasts for the years 2024-25E, which have been decreased by 2-6%. This change is in line with Citi's recent earnings forecast and price target modification for Advanced Info Service PCL (AIS), after AIS reported its fourth-quarter results of 2023.
The analyst from Citi noted that Intouch Holdings' profitability, cash flow, and net asset value (NAV) are closely linked to AIS, as Intouch's financial health is significantly dependent on the performance of AIS. According to the analyst's view, Intouch Holdings is not traded based on its earnings but is rather seen as a derivative based on the value of AIS, its key asset.
The current net asset value discount for Intouch Holdings is estimated at approximately 12%, which the analyst believes is not as attractive compared to its historical average NAV discount of 20%. This perceived lack of compelling value has led to the downgrade of Intouch Holdings' stock.
Citi's analyst prefers AIS, the operating asset, over Intouch Holdings, the holding company that has control over AIS. This preference is based on the direct link between Intouch Holdings' financial outcomes and the valuation of AIS, suggesting that investors may find more value in the company that operates the assets rather than the holding company itself.
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