ALT Restructures Toward Digital Infrastructure, Brokers Turn Positive

Analyst
โดย Kaohoon·TH·Read original
Summary · why it matters

ALT is entering a major turning point, transitioning from a company whose revenue mainly depends on system installation and projects to a digital infrastructure provider with more recurring income, driven by fiber optic networks, international connectivity systems, submarine cables, and networks supporting data centers. This aligns with the views of KGI Securities and Beyond Securities (BYD), which have started covering ALT with positive recommendations. KGI has an "Outperform" rating with a target price of 3.00 baht, while BYD recommends "Buy" with a target price of 3.10 baht, compared to the share price of around 1.80–1.84 baht at the time of the analysis, implying an upside of roughly 63–69%. The key highlights both brokers focus on are two large digital infrastructure projects with a total investment value of approximately 1,594 million baht, which will connect domestic networks with international submarine cable systems and increase the potential to serve data center and hyperscaler customers in the future. The first project is the Bangkok–EEC fiber optic network, with a total distance of about 270 kilometers. KGI notes it has a 15-year long-term contract worth around 2 billion baht and expects revenue recognition to begin in the second half of 2027. The other project is TalayLink, a submarine cable and network system connecting to a coastal station in Satun Province. KGI states that TalayLink is a submarine cable project connecting Thailand and Australia, with Google as the main customer, to support the Google Cloud Region and future data center development, under a 15-year contract with a 5-year renewal option, valued at approximately 2.5 billion baht, with revenue recognition expected in 2028. The appeal of these two projects is not just the contract value but also the investment model with customers, where ALT can bill for investment based on construction progress, reducing the burden of large capital outlays and not having to bear all construction and financing costs alone. Once the networks are operational, the revenue will be more recurring than typical contracting work. KGI estimates that ALT's recurring income ratio will increase from about 45% in 2026 to 50–53% during 2027–2028. The increase in recurring income is important because the network business already has significant fixed costs; as more customers use the services, incremental revenue does not require proportional incremental costs, leading to higher asset utilization and potential margin expansion. KGI expects gross margin to rise from 18.4% in 2026 to 18.7–19.5% during 2027–2028, while BYD sees gross margin improving to around 19–20% during 2026–2028 as a result of business restructuring and better utilization of existing assets. Another factor clarifying the earnings picture is the reduction of losses from underperforming businesses. ALT has reduced its stake in Interlink Telecom from 100% to 40%, meaning it will no longer consolidate the full losses of that company starting from the second half of 2026, after this business generated losses of about 33 million baht per year during 2024–2025. Additionally, BYD sees opportunities in the Smart Grid business after ALT restructured its shareholding in EMAX to 39.87%, which helps reduce losses from the legacy business while also allowing EMAX to play a greater role in modern electrical system projects through the integration of smart meters and smart grids. If Thailand progresses toward a more complex and intelligently managed power grid, this business could become another growth avenue for ALT beyond data centers and telecom networks. In terms of financial performance, although the two brokers' estimates differ somewhat, they share the same direction: earnings have passed the trough and have the potential to accelerate during 2027–2028. BYD expects ALT's net profit to be 58 million baht in 2026, rising to 121 million baht in 2027 and 141 million baht in 2028, representing growth of approximately 110% and 16% respectively, while revenue is expected to increase from 1,586 million baht to 1,712 million baht and 1,937 million baht. KGI is more conservative, estimating net profit of 44 million baht in 2026, rising to 64 million baht in 2027 and 97 million baht in 2028, with net profit expected to grow at an average of about 38% per year during 2026–2029 and EBITDA growing at an average of around 15% per year. Although the profit figures differ based on assumptions, the key point is that both brokers agree that ALT is transitioning from an investment and restructuring phase to a phase of harvesting revenue from the assets it has built.

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