4Q15 results within expectation - Underperform
Advanced Information Technology Underperform (16E TP Bt30.20)
Earnings Review
Close Bt27.75
ICT
Beat forecast/Below forecast/In line
February 17, 2016
4Q15 results within expectation Price Performance (%)
4Q15 results were in line AIT posted a net profit of Bt117mn (EPS: 0.57) in 4Q15, increasing 35%YoY. This came on the back of a 50%YoY increase in revenue and the absence of a loss contribution from Kirz. The GPM retreated to only 22.1% from 24.2% in 4Q14 due to projects yielding a lower margin on high competition as well as a Bt12mn provision for a penalty related to the delay of a project that was scheduled to be completed in 4Q15. On a QoQ basis, its NP dropped 22% thanks to gain on sales from the entire divestment of Kirz recorded in 3Q15.
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
2.707
2.963
KT ZMICO vs. consensus Share data
1.6%
2.9%
Reuters / Bloomberg
AIT.BK/AIT TB
Paid‐up Shares (m)
206.32
Par (Bt)
5.00
Market cap (Bt bn / US$ m)
6.00/161.00
Foreign limit / actual (%)
25.00/5.81
52 week High / Low (Bt)
41.75/23.50
Avg. daily T/O (shares 000)
375.00
NVDR (%)
7.14
Estimated free float (%)
72.36
Beta
0.72
URL
www.ait.co.th
CGR
Anti‐corruption
Level 3B (Established)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Low year‐end backlog leads to rating downgrade The slow pace of new order loading during 2015 led AIT’s earnings to drop 19%. Earnings recovery this year hinges on hopes of ICT spending in the wake of the government’s promotion of the digital economy policy, which we expect to materialize in 2H16. Thus, we again downgrade the rating to UNDERPERFORM from BUY with the target price unchanged at Bt30.20. The attractive yield for the 2H15 period of 5% will be a cushion for the near‐term share price movement.
NP fell 19%YoY in 2015 The delay of public ICT investment dampened AIT’s NP by 19% in 2015 to Bt533mn (EPS: Bt2.58). This was in line with our forecast but 3% higher than the consensus forecast. Stripping out gain on the sale of Kirz, its core earnings dropped 25%YoY due to lower sales (‐21%YoY) and higher SG&A to sales (to 12.9% from 11.3% in 2014). DPS of Bt1.50 for 2H15, implying a 5.4% yield With its healthy cash on hand, AIT decided to pay a DPS of Bt1.50 for the 2H15 operating performance, representing a yield of 5.4% for the period. It will go XD on 6 April and the payment will be made on 6 May. In 2015, AIT will pay a total dividend of Bt2.05, keeping the annualized yield at a high level of 7%. 2016E‐2018E earnings forecasts on hold AIT announced that its backlog on hand was only Bt1.9bn at yearend. Although public ICT spending will be accelerated in 2016 thanks to the government’s digital economy policy, it will materialize in 2H16, in our view. This causes us to keep our 2016E‐2018E earnings forecasts unchanged. Note that we exclude AIT’s plan on data center services investment from our current model given that its stake holding has not yet been finalized. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm EPS (Bt) Norm EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 6,547 659 3.19 3.19 ‐59.2% 2.00 12.94 2014 11.91 8.37 2.94 5.3% 26.0% 6.5%
2015 5,156 533 2.58 2.40 ‐24.8% 2.05 13.87 2015 11.67 7.45 2.02 7.3% 17.9% 0.5%
2016E 5,431 568 2.75 2.75 14.8% 1.93 14.38 2016E 10.07 6.70 1.93 6.9% 19.5% ‐6.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2017E 6,210 630 3.05 3.05 10.9% 2.14 15.50 2017E 9.09 6.20 1.79 7.7% 20.4% ‐2.3%
2018E 6,416 632 3.07 3.07 0.4% 2.15 16.43 2018E 9.05 5.76 1.69 7.7% 19.2% ‐12.7%
Figure 1: Earnings review Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. 4Q14 Revenue 936 Gross profit 226 SG&A (157) EBITDA 153 Interest expense (2) Other income 54 Income tax 32 Net profit (loss) 86 Normalized profit (loss) 86 Reported EPS (Bt) 0.42 Gross margin 24.2% EBITDA margin 16.4% Net margin 9.2% Current ratio (x) 2.65 Interest coverage (x) 58.08 Debt to equity (x) 0.56 BVPS 12.94 ROE 25.0%
3Q15 1,122 256 (136) 134 (1) 15 21 149 112 0.72 22.8% 12.0% 13.3% 2.52 133.27 0.67 13.31 17.0%
4Q15 1,407 311 (189) 212 (0) 26 33 117 117 0.57 22.1% 15.0% 8.3% 2.54 924.12 0.63 13.87 17.8%
%QoQ 25.3% 21.4% 38.8% 57.3% ‐84.1% 80.8% 55.8% ‐21.5% 4.7% ‐21.5%
4.3%
%YoY 50.3% 37.3% 20.3% 38.0% ‐92.4% ‐50.7% 3.8% 35.2% 35.2% 35.2%
2014 6,547 1,481 (741) 957 (12) 104 186 659 659 3.19 22.6% 14.6% 10.1% 2.65 71.03 0.56 7.2% 12.94 26.0%
2015 5,156 1,220 (665) 778 (5) 78 134 533 495 2.58 23.7% 15.1% 10.3% 2.54 124.74 0.63 13.87 17.9%
%YoY ‐21.2% ‐17.6% ‐10.2% ‐18.8% ‐57.3% ‐25.4% ‐27.9% ‐19.1% ‐24.8% ‐19.1%
7.2%
Source: KT Zmico Research Figure 2: Operating summary
Source: KT Zmico Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: PER and PBV band
PER (x)
35.0
PBV (x) 6.0
30.0
5.0
25.0
+3 S.D.
20.0
+2 S.D.
4.0
15.0
+1 S.D.
3.0
+1 S.D.
2.0
Average
10.0
1.0
‐1 S.D.
‐1 S.D.
0.0 Jan‐04 Jul‐04 Jan‐05 Aug‐05 Feb‐06 Sep‐06 Mar‐07 Oct‐07 Apr‐08 Oct‐08 May‐09 Nov‐09 Jun‐10 Dec‐10 Jun‐11 Jan‐12 Jul‐12 Feb‐13 Aug‐13 Feb‐14 Sep‐14 Mar‐15 Oct‐15
0.0
Average
Jan‐04 Jul‐04 F eb‐05 Aug‐05 Mar‐06 S ep‐06 Apr‐07 Oct‐07 May‐08 N ov‐08 Jun‐09 Jan‐10 Jul‐10 F eb‐11 Aug‐11 Mar‐12 S ep‐12 Apr‐13 Oct‐13 May‐14 N ov‐14 Jun‐15 Dec‐15
5.0
+2 S.D.
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial Summary PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2014 6,547 (5,067) 1,481 (741) 957 (113) 844 (12) 104 823 186 21 659 3.19 3.19 659 3.19 2.00
2015 5,156 (3,936) 1,220 (665) 778 (145) 633 (5) 78 619 134 10 533 2.58 2.58 495 2.40 2.05
2016E 5,431 (4,178) 1,253 (656) 828 (153) 675 (6) 79 662 94 0 568 2.75 2.75 568 2.75 1.93
2017E 6,210 (4,782) 1,428 (758) 912 (161) 751 (11) 81 734 104 0 630 3.05 3.05 630 3.05 2.14
2018E 6,416 (4,940) 1,476 (812) 919 (169) 751 (9) 87 736 103 0 632 3.07 3.07 632 3.07 2.15
BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity
2014 1,313 951 170 1,734 4,168 153 44 1,487 11 2,670 4,168
2015 1,292 766 126 2,489 4,673 52 105 1,810 0 2,862 4,673
2016E 1,948 896 150 1,741 4,736 42 86 1,769 0 2,967 4,736
2017E 1,902 934 167 2,026 5,029 42 37 1,830 0 3,199 5,029
2018E 2,160 927 176 1,857 5,120 0 25 1,730 0 3,390 5,120
CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
2014 659 113 1,380 (48) 2,103 (179) (23) (201) (417) 0 (392) 40 (769) 1,133 1,925 9.33
2015 533 153 316 (39) 963 (109) (621) (730) (22) 0 (340) 108 (254) (21) 854 4.14
2016E 568 153 (15) 0 706 (177) 618 440 (29) 0 (464) 3 (491) 656 529 2.56
2017E 630 161 (328) 0 463 (177) 113 (65) (49) 0 (398) 3 (443) (46) 285 1.38
2018E 632 169 119 0 920 (177) 8 (170) (54) 0 (441) 3 (492) 258 743 3.60
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 9.8 15.2 (58.8) 22.6 14.6 11.3 10.1 10.1 22.6
2015 (21.2) (18.8) (19.1) 23.7 15.1 10.8 10.3 9.6 21.7
2016E 5.3 6.5 6.7 23.1 15.3 11.0 10.5 10.5 14.2
2017E 14.3 10.1 10.9 23.0 14.7 10.8 10.1 10.1 14.1
2018E 3.3 0.8 0.4 23.0 14.3 10.3 9.9 9.9 14.0
FINANCIAL QUALITY Total debt (Btm) Total debt to capital employed (x) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
1,487 0.53 174 0.07 71.03
1,810 0.60 14 0.00 124.74
1,769 0.57 (178) (0.06) 117.49
1,830 0.55 (72) (0.02) 68.19
1,730 0.50 (431) (0.13) 83.04
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO is a partnership between KTB and ZMICO. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, SUTHA, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, LPN, ASK. KT ZMICO is a co‐underwriter of TKN.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independe nt external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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th
th
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
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Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
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Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Earnings Review
Close Bt27.75
ICT
Beat forecast/Below forecast/In line
February 17, 2016
4Q15 results within expectation Price Performance (%)
4Q15 results were in line AIT posted a net profit of Bt117mn (EPS: 0.57) in 4Q15, increasing 35%YoY. This came on the back of a 50%YoY increase in revenue and the absence of a loss contribution from Kirz. The GPM retreated to only 22.1% from 24.2% in 4Q14 due to projects yielding a lower margin on high competition as well as a Bt12mn provision for a penalty related to the delay of a project that was scheduled to be completed in 4Q15. On a QoQ basis, its NP dropped 22% thanks to gain on sales from the entire divestment of Kirz recorded in 3Q15.
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
2.707
2.963
KT ZMICO vs. consensus Share data
1.6%
2.9%
Reuters / Bloomberg
AIT.BK/AIT TB
Paid‐up Shares (m)
206.32
Par (Bt)
5.00
Market cap (Bt bn / US$ m)
6.00/161.00
Foreign limit / actual (%)
25.00/5.81
52 week High / Low (Bt)
41.75/23.50
Avg. daily T/O (shares 000)
375.00
NVDR (%)
7.14
Estimated free float (%)
72.36
Beta
0.72
URL
www.ait.co.th
CGR
Anti‐corruption
Level 3B (Established)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Low year‐end backlog leads to rating downgrade The slow pace of new order loading during 2015 led AIT’s earnings to drop 19%. Earnings recovery this year hinges on hopes of ICT spending in the wake of the government’s promotion of the digital economy policy, which we expect to materialize in 2H16. Thus, we again downgrade the rating to UNDERPERFORM from BUY with the target price unchanged at Bt30.20. The attractive yield for the 2H15 period of 5% will be a cushion for the near‐term share price movement.
NP fell 19%YoY in 2015 The delay of public ICT investment dampened AIT’s NP by 19% in 2015 to Bt533mn (EPS: Bt2.58). This was in line with our forecast but 3% higher than the consensus forecast. Stripping out gain on the sale of Kirz, its core earnings dropped 25%YoY due to lower sales (‐21%YoY) and higher SG&A to sales (to 12.9% from 11.3% in 2014). DPS of Bt1.50 for 2H15, implying a 5.4% yield With its healthy cash on hand, AIT decided to pay a DPS of Bt1.50 for the 2H15 operating performance, representing a yield of 5.4% for the period. It will go XD on 6 April and the payment will be made on 6 May. In 2015, AIT will pay a total dividend of Bt2.05, keeping the annualized yield at a high level of 7%. 2016E‐2018E earnings forecasts on hold AIT announced that its backlog on hand was only Bt1.9bn at yearend. Although public ICT spending will be accelerated in 2016 thanks to the government’s digital economy policy, it will materialize in 2H16, in our view. This causes us to keep our 2016E‐2018E earnings forecasts unchanged. Note that we exclude AIT’s plan on data center services investment from our current model given that its stake holding has not yet been finalized. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm EPS (Bt) Norm EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 6,547 659 3.19 3.19 ‐59.2% 2.00 12.94 2014 11.91 8.37 2.94 5.3% 26.0% 6.5%
2015 5,156 533 2.58 2.40 ‐24.8% 2.05 13.87 2015 11.67 7.45 2.02 7.3% 17.9% 0.5%
2016E 5,431 568 2.75 2.75 14.8% 1.93 14.38 2016E 10.07 6.70 1.93 6.9% 19.5% ‐6.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2017E 6,210 630 3.05 3.05 10.9% 2.14 15.50 2017E 9.09 6.20 1.79 7.7% 20.4% ‐2.3%
2018E 6,416 632 3.07 3.07 0.4% 2.15 16.43 2018E 9.05 5.76 1.69 7.7% 19.2% ‐12.7%
Figure 1: Earnings review Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. 4Q14 Revenue 936 Gross profit 226 SG&A (157) EBITDA 153 Interest expense (2) Other income 54 Income tax 32 Net profit (loss) 86 Normalized profit (loss) 86 Reported EPS (Bt) 0.42 Gross margin 24.2% EBITDA margin 16.4% Net margin 9.2% Current ratio (x) 2.65 Interest coverage (x) 58.08 Debt to equity (x) 0.56 BVPS 12.94 ROE 25.0%
3Q15 1,122 256 (136) 134 (1) 15 21 149 112 0.72 22.8% 12.0% 13.3% 2.52 133.27 0.67 13.31 17.0%
4Q15 1,407 311 (189) 212 (0) 26 33 117 117 0.57 22.1% 15.0% 8.3% 2.54 924.12 0.63 13.87 17.8%
%QoQ 25.3% 21.4% 38.8% 57.3% ‐84.1% 80.8% 55.8% ‐21.5% 4.7% ‐21.5%
4.3%
%YoY 50.3% 37.3% 20.3% 38.0% ‐92.4% ‐50.7% 3.8% 35.2% 35.2% 35.2%
2014 6,547 1,481 (741) 957 (12) 104 186 659 659 3.19 22.6% 14.6% 10.1% 2.65 71.03 0.56 7.2% 12.94 26.0%
2015 5,156 1,220 (665) 778 (5) 78 134 533 495 2.58 23.7% 15.1% 10.3% 2.54 124.74 0.63 13.87 17.9%
%YoY ‐21.2% ‐17.6% ‐10.2% ‐18.8% ‐57.3% ‐25.4% ‐27.9% ‐19.1% ‐24.8% ‐19.1%
7.2%
Source: KT Zmico Research Figure 2: Operating summary
Source: KT Zmico Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: PER and PBV band
PER (x)
35.0
PBV (x) 6.0
30.0
5.0
25.0
+3 S.D.
20.0
+2 S.D.
4.0
15.0
+1 S.D.
3.0
+1 S.D.
2.0
Average
10.0
1.0
‐1 S.D.
‐1 S.D.
0.0 Jan‐04 Jul‐04 Jan‐05 Aug‐05 Feb‐06 Sep‐06 Mar‐07 Oct‐07 Apr‐08 Oct‐08 May‐09 Nov‐09 Jun‐10 Dec‐10 Jun‐11 Jan‐12 Jul‐12 Feb‐13 Aug‐13 Feb‐14 Sep‐14 Mar‐15 Oct‐15
0.0
Average
Jan‐04 Jul‐04 F eb‐05 Aug‐05 Mar‐06 S ep‐06 Apr‐07 Oct‐07 May‐08 N ov‐08 Jun‐09 Jan‐10 Jul‐10 F eb‐11 Aug‐11 Mar‐12 S ep‐12 Apr‐13 Oct‐13 May‐14 N ov‐14 Jun‐15 Dec‐15
5.0
+2 S.D.
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial Summary PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2014 6,547 (5,067) 1,481 (741) 957 (113) 844 (12) 104 823 186 21 659 3.19 3.19 659 3.19 2.00
2015 5,156 (3,936) 1,220 (665) 778 (145) 633 (5) 78 619 134 10 533 2.58 2.58 495 2.40 2.05
2016E 5,431 (4,178) 1,253 (656) 828 (153) 675 (6) 79 662 94 0 568 2.75 2.75 568 2.75 1.93
2017E 6,210 (4,782) 1,428 (758) 912 (161) 751 (11) 81 734 104 0 630 3.05 3.05 630 3.05 2.14
2018E 6,416 (4,940) 1,476 (812) 919 (169) 751 (9) 87 736 103 0 632 3.07 3.07 632 3.07 2.15
BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity
2014 1,313 951 170 1,734 4,168 153 44 1,487 11 2,670 4,168
2015 1,292 766 126 2,489 4,673 52 105 1,810 0 2,862 4,673
2016E 1,948 896 150 1,741 4,736 42 86 1,769 0 2,967 4,736
2017E 1,902 934 167 2,026 5,029 42 37 1,830 0 3,199 5,029
2018E 2,160 927 176 1,857 5,120 0 25 1,730 0 3,390 5,120
CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
2014 659 113 1,380 (48) 2,103 (179) (23) (201) (417) 0 (392) 40 (769) 1,133 1,925 9.33
2015 533 153 316 (39) 963 (109) (621) (730) (22) 0 (340) 108 (254) (21) 854 4.14
2016E 568 153 (15) 0 706 (177) 618 440 (29) 0 (464) 3 (491) 656 529 2.56
2017E 630 161 (328) 0 463 (177) 113 (65) (49) 0 (398) 3 (443) (46) 285 1.38
2018E 632 169 119 0 920 (177) 8 (170) (54) 0 (441) 3 (492) 258 743 3.60
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 9.8 15.2 (58.8) 22.6 14.6 11.3 10.1 10.1 22.6
2015 (21.2) (18.8) (19.1) 23.7 15.1 10.8 10.3 9.6 21.7
2016E 5.3 6.5 6.7 23.1 15.3 11.0 10.5 10.5 14.2
2017E 14.3 10.1 10.9 23.0 14.7 10.8 10.1 10.1 14.1
2018E 3.3 0.8 0.4 23.0 14.3 10.3 9.9 9.9 14.0
FINANCIAL QUALITY Total debt (Btm) Total debt to capital employed (x) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
1,487 0.53 174 0.07 71.03
1,810 0.60 14 0.00 124.74
1,769 0.57 (178) (0.06) 117.49
1,830 0.55 (72) (0.02) 68.19
1,730 0.50 (431) (0.13) 83.04
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO is a partnership between KTB and ZMICO. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, SUTHA, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, LPN, ASK. KT ZMICO is a co‐underwriter of TKN.
Anti‐corruption Progress Indicator
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independe nt external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
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Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
