Asia Aviation
Asia Aviation Buy (17E TP Bt7.00)
Company Update
Close Bt6.15
Transport & Logistics April 28, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Temporary headwind Price Performance (%)
Maintain BUY Although AAV’s earnings are likely to decline in 2017E, this will only be a short‐term hiccup, in our view. Strong market leadership in the domestic market from the Air Asia Group network will continue to support AAV’s earnings in the longer term. We maintain our BUY recommendation for AAV with the TP of Bt7.00 (based on 20x PER, ‐0.5SD of historical average). Passenger volume rose 11% in 1Q17 AAV reported passenger volume of 4.85mn in 1Q17, +11% YoY, +11% QoQ. According to AAV, the growth of international and domestic passenger volume is likely to be at the same level. Meanwhile, due to the continuing marketing campaign and ticket promotions to Chinese destinations (both scheduled and charter flights) to address the challenges created by the crackdown on illegal tour operators, AAV was able to maintain Chinese passenger volume in 1Q17 (flat YoY), vs. ‐7% YoY for total Chinese tourist arrivals to Thailand in the same period. We maintain our passenger volume growth of +13% YoY to 19.5mn in 2017E for AAV.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.443
0.485
KT ZMICO vs. consensus Share data
‐21.0%
‐21.6%
Reuters / Bloomberg
AAV.BK/AAV TB
Paid‐up Shares (m)
4,850.00
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
30.00/862.00 0.10/0.10
52 week High / Low (Bt)
7.80/5.35
Avg. daily T/O (shares 000)
58,932.00
NVDR (%)
7.11
Estimated free float (%)
54.61
Beta
1.12
URL
www.aavplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Net profit expected to improve QoQ in 1Q17E, but fall YoY We expect AAV to deliver net profit of Bt668mn in 1Q17E, including norm. of Bt588mn (‐42% YoY, +418% QoQ) and FX gain of Bt80mn owing to the Thai baht strengthening against the US$. We expect AAV’s average ticket fare to still decline to Bt1,600/pax in 1Q17, ‐7% YoY, owing to ticket promotions and ongoing fierce competition. However, the fall of the ticket fare looks better compared with ‐10% YoY in 4Q16, owing partly to the additional excise tax on jet fuel of Bt150/pax in ticket fares for domestic destinations starting from Feb‐17 onward. Revenue in the quarter is likely to increase slightly (+3% YoY). Nevertheless, we expect higher costs in 1Q17E (+15% YoY), mainly from jet fuel expenses (the global jet fuel price increased by 48% YoY to US$64/barrel, coupled with the additional excise tax on jet fuel). Consequently, the gross profit margin is likely to decline and norm. profit is likely to fall sharply on a yearly basis. However, earnings are likely to improve strongly QoQ on seasonal peak season and a lesser impact from the Chinese illegal tour operator crackdown (expect ticket fares to improve by 13% QoQ). Maintain earnings projection AAV’s net profit in 1Q17E is likely to contribute around 39% of our full‐ year projection. Due to the seasonal pattern (peak in Q1 and Q4), we maintain our earnings projection for the whole year. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) DPS (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 30,345 1,078 0.22 1,181 0.24 882.68 0.10 4.15 2015 25.26 9.61 1.48 1.63 5.95 32.00
2016 33,054 1,869 0.39 1,909 0.40 61.68 0.15 4.39 2016 15.62 7.86 1.40 2.44 9.22 41.00
2017E 39,176 1,703 0.35 1,703 0.35 (10.78) 0.14 4.60 2017E 17.51 8.08 1.34 2.22 7.82 43.53
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 43,166 1,822 0.38 1,822 0.38 6.94 0.15 4.83 2018E 16.37 7.39 1.27 2.38 7.97 39.56
2019E 45,204 1,910 0.39 1,910 0.39 4.84 0.15 5.07 2019E 15.62 6.86 1.21 2.49 7.95 35.53
Figure 1: AAV’s PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 45 40 35 +1.0 S.D.
30 25
Avg.
20
-0.50S.D.
15
-1 .0S.D.
Apr-17
Dec-16
Sep-16
Feb-16
May-16
Jul-15
Oct-15
Apr-15
Dec-14
Sep-14
Feb-14
May-14
Jul-13
Nov-13
Apr-13
Dec-12
May-12
Sep-12
10
2017E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
PER (x) 29.0 25.9 22.7 19.6 16.4 13.3 10.1 7.0
Implied market price (Bt) 10.15 9.05 7.95 6.85 5.75 4.64 3.54 2.44
Upside/Downside vs. current market price (%) 63.8 46.0 28.2 10.4 (7.3) (25.1) (42.9) (60.6)
Source: Bloomberg, KT ZMICO Research
Figure 2: 1Q17E earnings preview Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Forex gain (loss) Minority interests Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%) Source: AAV, KT ZMICO Research
1Q16 9,171 2,704 (663) 2,324 (127) 12 (90) (1) (825) 1,009 1,010 0.21
4Q16 7,670 949 (701) 559 (125) 30 67 (72) (106) 41 114 0.01
1Q17E 9,431 2,001 (693) 1,638 (136) 23 (60) 80 (547) 668 588 0.14
% YoY 2.8 (26.0) 4.4 (29.6) 7.3 89.5 (33.8) n.m. (33.7) (33.8) (41.8) (33.8)
% QoQ 23.0 110.8 (1.2) 192.7 9.1 (22.6) (189.4) n.m. 413.8 1,520.9 418.2 1,520.9
2016 33,054 6,366 (2,636) 4,907 (521) 76 191 (40) (1,568) 1,869 1,909 0.385
2017E 39,176 6,500 (2,951) 4,894 (545) 93 ‐ ‐ (1,394) 1,703 1,703 0.351
29.5 25.3 11.0 1.2 16.1 0.6 4.4 19.5
12.4 7.3 0.5 0.9 2.0 0.7 4.4 0.8
21.2 17.4 7.1
19.3 14.8 5.7 0.9 7.2 0.6 4.4 9.0
16.6 12.5 4.3 0.8 6.5 0.5 4.6 7.8
% YoY 18.5 2.1 11.9 (0.3) 4.7 22.2 ‐ ‐ (11.1) (8.9) (10.8) (8.9)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
YTD (% of 17E) 24.1 30.8 23.5 33.5 24.9 24.9 ‐ ‐ 39.2 39.2 34.5 39.2
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A expense EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) 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 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) PROFITABILITY Revenue growth (%) EBITDA growth (%) Core EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x)
2014 25,981 (23,708) 2,273 (1,925) 1,166 (818) 348 (313) 0 231 267 1 (85) 183 0.04 0.04 120 0.02 0.00
2015 30,345 (25,315) 5,030 (2,377) 3,775 (1,122) 2,653 (457) 0 16 2,212 (151) (982) 1,078 0.22 0.22 1,181 0.24 0.10
2016 33,054 (26,688) 6,366 (2,636) 4,907 (1,177) 3,730 (521) 0 37 3,246 191 (1,568) 1,869 0.39 0.39 1,909 0.39 0.15
2017E 39,176 (32,676) 6,500 (2,951) 4,894 (1,345) 3,549 (545) 0 93 3,097 0 (1,394) 1,703 0.35 0.35 1,703 0.35 0.14
2014 6,298 97 16,033 27,073 49,502 959 11,118 22,486 7,482 19,534 49,502
2015 7,591 94 18,216 26,926 52,827 1,261 12,775 24,743 7,941 20,142 52,827
2016 6,733 118 20,425 29,323 56,599 1,792 13,664 26,479 8,850 21,271 56,599
2017E 5,720 153 24,248 29,490 59,610 1,283 14,149 27,055 10,243 22,311 59,610
2014 183 818 654 194 1,848 (980) 3,004 2,025 (1,043) 0 0 0 (1,043) 2,830 3,873 0.80
2015 1,078 1,122 722 1,152 4,074 (452) 268 (184) (2,073) 0 (483) 0 (2,556) 1,334 3,890 0.80
2016 1,869 1,177 1,282 53 4,382 (1,320) (2,203) (3,522) (2,336) 0 (722) 0 (3,058) (2,198) 860 0.18
2017E 1,703 1,345 (263) 0 2,785 (2,310) 0 (2,310) (24) 0 (728) 0 (751) (276) 475 0.10
2014 8.3 (57.0) (86.9) 8.7 4.5 1.3 0.7 0.5 (0.5)
2015 16.8 223.7 882.7 16.6 12.4 8.7 3.6 3.9 6.8
2016 8.9 30.0 61.7 19.3 14.8 11.3 5.7 5.8 (5.9)
2017E 18.5 (0.3) (10. 8) 16.6 12.5 9.1 4.3 4.3 0.0
2014 0.38 0.30
2015 0.41 0.32
2016 0.42 0.41
2017E 0.41 0.44
2018E 43,166 (36,124) 7,043 (3,270) 5,290 (1,517) 3,773 (554) 0 93 3,312 0 (1,490) 1,822 0.38 0.38 1,822 0.38 0.15
2018E 6,651 168 26,984 29,729 63,532 1,436 14,481 28,374 11,734 23,424 63,532
2019E 7,577 177 29,491 29,897 67,141 1,588 14,724 29,255 13,296 24,590 67,141
2018E 1,822 1,517 80 0 3,419 (2,310) 0 (2,310) 485 0 (663) 0 (178) 931 1,109 0.23
2019E 45,402 (37,980) 7,421 (3,487) 5,625 (1,690) 3,935 (569) 0 107 3,472 0 (1,562) 1,910 0.39 0.39 1,910 0.39 0.15
2019E 1,910 1,690 29 0 3,628 (2,390) 0 (2,390) 396 0 (709) 0 (313) 926 1,239 0.26
2018E 10.2 8.1 6.9 16.3 12.3 8.7 4.2 4.2 0.0
2019E 5.2 6.3 4.8 16.3 12.4 8.7 4.2 4.2 0.0
2018E 0.40 0.40
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 0.40 0.36
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. 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, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TFD, TTL, NMG. Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD)
Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) 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 independent 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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Company Update
Close Bt6.15
Transport & Logistics April 28, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Temporary headwind Price Performance (%)
Maintain BUY Although AAV’s earnings are likely to decline in 2017E, this will only be a short‐term hiccup, in our view. Strong market leadership in the domestic market from the Air Asia Group network will continue to support AAV’s earnings in the longer term. We maintain our BUY recommendation for AAV with the TP of Bt7.00 (based on 20x PER, ‐0.5SD of historical average). Passenger volume rose 11% in 1Q17 AAV reported passenger volume of 4.85mn in 1Q17, +11% YoY, +11% QoQ. According to AAV, the growth of international and domestic passenger volume is likely to be at the same level. Meanwhile, due to the continuing marketing campaign and ticket promotions to Chinese destinations (both scheduled and charter flights) to address the challenges created by the crackdown on illegal tour operators, AAV was able to maintain Chinese passenger volume in 1Q17 (flat YoY), vs. ‐7% YoY for total Chinese tourist arrivals to Thailand in the same period. We maintain our passenger volume growth of +13% YoY to 19.5mn in 2017E for AAV.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.443
0.485
KT ZMICO vs. consensus Share data
‐21.0%
‐21.6%
Reuters / Bloomberg
AAV.BK/AAV TB
Paid‐up Shares (m)
4,850.00
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
30.00/862.00 0.10/0.10
52 week High / Low (Bt)
7.80/5.35
Avg. daily T/O (shares 000)
58,932.00
NVDR (%)
7.11
Estimated free float (%)
54.61
Beta
1.12
URL
www.aavplc.co.th
CGR
Anti‐corruption
n.a.
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Net profit expected to improve QoQ in 1Q17E, but fall YoY We expect AAV to deliver net profit of Bt668mn in 1Q17E, including norm. of Bt588mn (‐42% YoY, +418% QoQ) and FX gain of Bt80mn owing to the Thai baht strengthening against the US$. We expect AAV’s average ticket fare to still decline to Bt1,600/pax in 1Q17, ‐7% YoY, owing to ticket promotions and ongoing fierce competition. However, the fall of the ticket fare looks better compared with ‐10% YoY in 4Q16, owing partly to the additional excise tax on jet fuel of Bt150/pax in ticket fares for domestic destinations starting from Feb‐17 onward. Revenue in the quarter is likely to increase slightly (+3% YoY). Nevertheless, we expect higher costs in 1Q17E (+15% YoY), mainly from jet fuel expenses (the global jet fuel price increased by 48% YoY to US$64/barrel, coupled with the additional excise tax on jet fuel). Consequently, the gross profit margin is likely to decline and norm. profit is likely to fall sharply on a yearly basis. However, earnings are likely to improve strongly QoQ on seasonal peak season and a lesser impact from the Chinese illegal tour operator crackdown (expect ticket fares to improve by 13% QoQ). Maintain earnings projection AAV’s net profit in 1Q17E is likely to contribute around 39% of our full‐ year projection. Due to the seasonal pattern (peak in Q1 and Q4), we maintain our earnings projection for the whole year. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) DPS (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 30,345 1,078 0.22 1,181 0.24 882.68 0.10 4.15 2015 25.26 9.61 1.48 1.63 5.95 32.00
2016 33,054 1,869 0.39 1,909 0.40 61.68 0.15 4.39 2016 15.62 7.86 1.40 2.44 9.22 41.00
2017E 39,176 1,703 0.35 1,703 0.35 (10.78) 0.14 4.60 2017E 17.51 8.08 1.34 2.22 7.82 43.53
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 43,166 1,822 0.38 1,822 0.38 6.94 0.15 4.83 2018E 16.37 7.39 1.27 2.38 7.97 39.56
2019E 45,204 1,910 0.39 1,910 0.39 4.84 0.15 5.07 2019E 15.62 6.86 1.21 2.49 7.95 35.53
Figure 1: AAV’s PER band and sensitivity of market prices based on PER at different standard deviation levels (X) 45 40 35 +1.0 S.D.
30 25
Avg.
20
-0.50S.D.
15
-1 .0S.D.
Apr-17
Dec-16
Sep-16
Feb-16
May-16
Jul-15
Oct-15
Apr-15
Dec-14
Sep-14
Feb-14
May-14
Jul-13
Nov-13
Apr-13
Dec-12
May-12
Sep-12
10
2017E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
PER (x) 29.0 25.9 22.7 19.6 16.4 13.3 10.1 7.0
Implied market price (Bt) 10.15 9.05 7.95 6.85 5.75 4.64 3.54 2.44
Upside/Downside vs. current market price (%) 63.8 46.0 28.2 10.4 (7.3) (25.1) (42.9) (60.6)
Source: Bloomberg, KT ZMICO Research
Figure 2: 1Q17E earnings preview Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Forex gain (loss) Minority interests Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%) Source: AAV, KT ZMICO Research
1Q16 9,171 2,704 (663) 2,324 (127) 12 (90) (1) (825) 1,009 1,010 0.21
4Q16 7,670 949 (701) 559 (125) 30 67 (72) (106) 41 114 0.01
1Q17E 9,431 2,001 (693) 1,638 (136) 23 (60) 80 (547) 668 588 0.14
% YoY 2.8 (26.0) 4.4 (29.6) 7.3 89.5 (33.8) n.m. (33.7) (33.8) (41.8) (33.8)
% QoQ 23.0 110.8 (1.2) 192.7 9.1 (22.6) (189.4) n.m. 413.8 1,520.9 418.2 1,520.9
2016 33,054 6,366 (2,636) 4,907 (521) 76 191 (40) (1,568) 1,869 1,909 0.385
2017E 39,176 6,500 (2,951) 4,894 (545) 93 ‐ ‐ (1,394) 1,703 1,703 0.351
29.5 25.3 11.0 1.2 16.1 0.6 4.4 19.5
12.4 7.3 0.5 0.9 2.0 0.7 4.4 0.8
21.2 17.4 7.1
19.3 14.8 5.7 0.9 7.2 0.6 4.4 9.0
16.6 12.5 4.3 0.8 6.5 0.5 4.6 7.8
% YoY 18.5 2.1 11.9 (0.3) 4.7 22.2 ‐ ‐ (11.1) (8.9) (10.8) (8.9)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
YTD (% of 17E) 24.1 30.8 23.5 33.5 24.9 24.9 ‐ ‐ 39.2 39.2 34.5 39.2
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A expense EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) 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 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) PROFITABILITY Revenue growth (%) EBITDA growth (%) Core EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x)
2014 25,981 (23,708) 2,273 (1,925) 1,166 (818) 348 (313) 0 231 267 1 (85) 183 0.04 0.04 120 0.02 0.00
2015 30,345 (25,315) 5,030 (2,377) 3,775 (1,122) 2,653 (457) 0 16 2,212 (151) (982) 1,078 0.22 0.22 1,181 0.24 0.10
2016 33,054 (26,688) 6,366 (2,636) 4,907 (1,177) 3,730 (521) 0 37 3,246 191 (1,568) 1,869 0.39 0.39 1,909 0.39 0.15
2017E 39,176 (32,676) 6,500 (2,951) 4,894 (1,345) 3,549 (545) 0 93 3,097 0 (1,394) 1,703 0.35 0.35 1,703 0.35 0.14
2014 6,298 97 16,033 27,073 49,502 959 11,118 22,486 7,482 19,534 49,502
2015 7,591 94 18,216 26,926 52,827 1,261 12,775 24,743 7,941 20,142 52,827
2016 6,733 118 20,425 29,323 56,599 1,792 13,664 26,479 8,850 21,271 56,599
2017E 5,720 153 24,248 29,490 59,610 1,283 14,149 27,055 10,243 22,311 59,610
2014 183 818 654 194 1,848 (980) 3,004 2,025 (1,043) 0 0 0 (1,043) 2,830 3,873 0.80
2015 1,078 1,122 722 1,152 4,074 (452) 268 (184) (2,073) 0 (483) 0 (2,556) 1,334 3,890 0.80
2016 1,869 1,177 1,282 53 4,382 (1,320) (2,203) (3,522) (2,336) 0 (722) 0 (3,058) (2,198) 860 0.18
2017E 1,703 1,345 (263) 0 2,785 (2,310) 0 (2,310) (24) 0 (728) 0 (751) (276) 475 0.10
2014 8.3 (57.0) (86.9) 8.7 4.5 1.3 0.7 0.5 (0.5)
2015 16.8 223.7 882.7 16.6 12.4 8.7 3.6 3.9 6.8
2016 8.9 30.0 61.7 19.3 14.8 11.3 5.7 5.8 (5.9)
2017E 18.5 (0.3) (10. 8) 16.6 12.5 9.1 4.3 4.3 0.0
2014 0.38 0.30
2015 0.41 0.32
2016 0.42 0.41
2017E 0.41 0.44
2018E 43,166 (36,124) 7,043 (3,270) 5,290 (1,517) 3,773 (554) 0 93 3,312 0 (1,490) 1,822 0.38 0.38 1,822 0.38 0.15
2018E 6,651 168 26,984 29,729 63,532 1,436 14,481 28,374 11,734 23,424 63,532
2019E 7,577 177 29,491 29,897 67,141 1,588 14,724 29,255 13,296 24,590 67,141
2018E 1,822 1,517 80 0 3,419 (2,310) 0 (2,310) 485 0 (663) 0 (178) 931 1,109 0.23
2019E 45,402 (37,980) 7,421 (3,487) 5,625 (1,690) 3,935 (569) 0 107 3,472 0 (1,562) 1,910 0.39 0.39 1,910 0.39 0.15
2019E 1,910 1,690 29 0 3,628 (2,390) 0 (2,390) 396 0 (709) 0 (313) 926 1,239 0.26
2018E 10.2 8.1 6.9 16.3 12.3 8.7 4.2 4.2 0.0
2019E 5.2 6.3 4.8 16.3 12.4 8.7 4.2 4.2 0.0
2018E 0.40 0.40
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 0.40 0.36
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. 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, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TFD, TTL, NMG. Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD)
Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) 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 independent 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
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
