Brighter 1Q17 earnings outlook
Thai Metal Trade Buy (17E TP Bt20.25)
Company Update
Close Bt15.20
Steel
Earning upgrade/Earnings downgrade/Overview unchanged
April 4, 2017
Brighter 1Q17 earnings outlook Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.307
1.420
KT ZMICO vs. consensus Share data
14%
5.6%
Reuters / Bloomberg
TMT.BK/TMT TB
Paid‐up Shares (m)
435.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/192.00
Foreign limit / actual (%)
49.00/2.56
52 week High / Low (Bt)
18.90/9.55
Avg. daily T/O (shares 000) NVDR (%)
1,054.00 2.64
Estimated free float (%)
21.29
Beta
1.02
URL
www.thaimetaltrade.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst, no. 17621 [email protected] 66 (0) 2624‐6258
Bright profitability; good dividends and share price implying upside We upgrade our rating on TMT to “Buy” (from Outperform) as the firm’s 1Q17E earnings are likely to beat our previous forecast and we expect its 2Q‐4Q17 earnings to be better than the past. Therefore, we believe our 2017E earnings projection seems achievable. Also, the current share price implies potential upside of 33% vs. the DDM‐based target price of Bt20.25/share. We still like TMT for its integrated steel center business with effective management and strong profitability. TMT is expected to offer an excellent dividend yield of 7.3% in 2017. 1Q17E earnings to be better than previously expected with strong sales outlook We have revised up our 1Q17 earnings projection for TMT by 6.4% to Bt267mn (vs. Bt251mn previously), down 4%YoY and 30%QoQ, to reflect the likelihood that the sales volume may beat our previous estimate of 162k tons by 10% to 179k tons thanks to strong sales momentum from clients in the construction material sector (both private and state clients) along with industrial clients (i.e., producers of electricity poles). We now assume an average selling price of Bt21/kg (+9%YoY, +11%QoQ) due to better steel prices during January to February (but weaker in March) in line with global prices. The average selling price remains rather good. We thus expect the firm’s sales value to hit a quarterly record high at Bt3.67bn (+19%YoY, +25%QoQ). As TMT has low‐cost raw material stocks, we expect a gross profit margin at 12.9% (vs. 14.7% in 1Q16 and 10.9% in 4Q16). Bright 2Q‐4Q17E earnings growth; 2017E earnings forecast maintained If the 1Q17 earnings are line with the expectation, the result will account for 41% of our 2017E projection of Bt648mn. The firm’s 2Q‐4Q17 earnings are projected at around Bt130mn/quarter (better than the past at Bt60‐80mn/quarter) We view that this projection is likely to be achievable for TMT as an integrated steel service provider with good management. We thus leave our 2017E earnings forecast unchanged. Targeting sales growth of 10‐15% p.a. with safe expansion plan Due to TMT’s strategy to act as an integrated steel service center that can serve customers well, TMT will have a market share of 18% for HRC products and the firm is expected to run at almost full capacity. Therefore, to achieve its growth target of 10‐15% p.a. in the next three years, TMT will have to expand its capacity by 200k tons p.a. (focusing on structural steel and steel pipes) to 1mn tons/year in the next three years, with capex of Bt1.2bn. The firm will gradually invest in the domestic steel market (the firm has recently prepared land for building a plant and a new warehouse and ordered machinery). The funding will come from long‐term borrowing (bank loans or debentures) to support sustainable growth in the future. We expect EBITDA to show average growth from Bt557mn p.a. during 2010‐2015 to Bt1bn over the next three years. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm EPS (Bt) Norm EPS grw (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 12,251 334 0.77 0.77 ‐24% 0.65 4.98 2014 19.80 4.48 3.05 4.3% 15.4% 114.7%
2015 11,569 321 0.74 0.74 ‐4% 0.65 5.07 2015 20.65 4.69 3.00 4.3% 14.7% 79.9%
2016 12,465 912 2.09 2.09 184% 1.50 6.51 2016 7.26 1.29 2.34 9.9% 36.2% 94.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 14,517 647 1.49 1.49 ‐29% 1.11 6.49 2017E 10.23 1.67 2.34 7.3% 22.9% 109.2%
2018E 15,915 679 1.56 1.56 5% 1.17 6.93 2018E 9.75 1.57 2.19 7.7% 23.2% 116.9%
Figure 1 : 1Q17 and 2017E earnings projections
Consolidated Profit and Loss FY Dec (Btm) Revenue Gross profit EBITDA Interest Expenses Net other income Income tax Forex gain (loss) Other extraordinary items Gn(Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt)
1Q16 4Q16 1Q17E %YoY 3,163 3,018 3,759 19% 465 330 485 4% 386 299 379 ‐2% (10) (14) (15) 53% 14 15 15 6% (69) (51) (67) ‐3% 0 0 0 nm 0 0 0 nm 0 0 0 nm 279 205 267 ‐4% 279 205 267 ‐4% 0.64 0.47 0.61 ‐4%
Gross margin EBITDA margin Net profit margin Current ratio (x) Interest coverage (x) Effective tax rate
14.7% 10.9% 12.9% 12.2% 9.9% 10.1% 8.8% 6.8% 7.1% 1.23 1.25 1.25 39.10 21.34 25.11 19.9% 19.8% 20.0%
%QoQ 2016 2017E 25% 12,465 14,517 47% 1584 1343 27% 1296 999 8% (48) (60) ‐6% 57 52 32% (225) (162) nm 0 0 nm 0 0 nm 0 0 30% 912 647 30% 912 647 30% 2.08 1.47 12.7% 10.4% 7.3% 1.25 26.79 19.8%
YTD %YoY (% of 2017E) 16% 26% ‐15% 36% ‐23% 38% 25% 25% ‐10% 28% ‐28% 41% nm nm nm nm nm nm ‐29% 41% ‐29% 41% ‐29% 41%
9.2% 6.9% 4.5% 1.16 16.53 20.0%
Source: TMT, KT Z Research Figure 2: Quarterly sales volume and gross margin Sales volume (ton)
Gross margin
TMT's quarterly sales volume & GM
200,000
18.0% Sales volumes (ton)
16.7%
Gross margin (%)
180,000
16.0% 14.7%
160,000
12.9% 14.0% 13.0% 11.0%
140,000
10.9%
12.0%
120,000 9.8% 100,000
8.6%
6.8%
6.9%
60,000
8.8% 7.7% 7.1%
8.1%
7.0%
7.6%
80,000
10.0%
8.5%
8.6% 8.2%
7.0% 6.0%
5.1%
6.0% 6.7% 6.0%
8.0% 6.0% 4.0%
40,000
4Q16 1Q17E
2Q16 3Q16
1Q16
3Q15 4Q15
1Q15 2Q15
3Q14 4Q14
1Q14 2Q14
3Q13 4Q13
1Q13 2Q13
4Q12
2Q12 3Q12
0.0% 4Q11 1Q12
0 2Q11 3Q11
2.0%
1Q11
20,000
Source: TMT, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
Figure 3 : HRC prices ( CIS market) US$/ton 1,400
1,200
1,000
800
600
400
200
-
Source: Bloomberg, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
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, CI. KT ZMICO is a co‐underwriter of the TPIPP.
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)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator 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 Bt15.20
Steel
Earning upgrade/Earnings downgrade/Overview unchanged
April 4, 2017
Brighter 1Q17 earnings outlook Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.307
1.420
KT ZMICO vs. consensus Share data
14%
5.6%
Reuters / Bloomberg
TMT.BK/TMT TB
Paid‐up Shares (m)
435.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/192.00
Foreign limit / actual (%)
49.00/2.56
52 week High / Low (Bt)
18.90/9.55
Avg. daily T/O (shares 000) NVDR (%)
1,054.00 2.64
Estimated free float (%)
21.29
Beta
1.02
URL
www.thaimetaltrade.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst, no. 17621 [email protected] 66 (0) 2624‐6258
Bright profitability; good dividends and share price implying upside We upgrade our rating on TMT to “Buy” (from Outperform) as the firm’s 1Q17E earnings are likely to beat our previous forecast and we expect its 2Q‐4Q17 earnings to be better than the past. Therefore, we believe our 2017E earnings projection seems achievable. Also, the current share price implies potential upside of 33% vs. the DDM‐based target price of Bt20.25/share. We still like TMT for its integrated steel center business with effective management and strong profitability. TMT is expected to offer an excellent dividend yield of 7.3% in 2017. 1Q17E earnings to be better than previously expected with strong sales outlook We have revised up our 1Q17 earnings projection for TMT by 6.4% to Bt267mn (vs. Bt251mn previously), down 4%YoY and 30%QoQ, to reflect the likelihood that the sales volume may beat our previous estimate of 162k tons by 10% to 179k tons thanks to strong sales momentum from clients in the construction material sector (both private and state clients) along with industrial clients (i.e., producers of electricity poles). We now assume an average selling price of Bt21/kg (+9%YoY, +11%QoQ) due to better steel prices during January to February (but weaker in March) in line with global prices. The average selling price remains rather good. We thus expect the firm’s sales value to hit a quarterly record high at Bt3.67bn (+19%YoY, +25%QoQ). As TMT has low‐cost raw material stocks, we expect a gross profit margin at 12.9% (vs. 14.7% in 1Q16 and 10.9% in 4Q16). Bright 2Q‐4Q17E earnings growth; 2017E earnings forecast maintained If the 1Q17 earnings are line with the expectation, the result will account for 41% of our 2017E projection of Bt648mn. The firm’s 2Q‐4Q17 earnings are projected at around Bt130mn/quarter (better than the past at Bt60‐80mn/quarter) We view that this projection is likely to be achievable for TMT as an integrated steel service provider with good management. We thus leave our 2017E earnings forecast unchanged. Targeting sales growth of 10‐15% p.a. with safe expansion plan Due to TMT’s strategy to act as an integrated steel service center that can serve customers well, TMT will have a market share of 18% for HRC products and the firm is expected to run at almost full capacity. Therefore, to achieve its growth target of 10‐15% p.a. in the next three years, TMT will have to expand its capacity by 200k tons p.a. (focusing on structural steel and steel pipes) to 1mn tons/year in the next three years, with capex of Bt1.2bn. The firm will gradually invest in the domestic steel market (the firm has recently prepared land for building a plant and a new warehouse and ordered machinery). The funding will come from long‐term borrowing (bank loans or debentures) to support sustainable growth in the future. We expect EBITDA to show average growth from Bt557mn p.a. during 2010‐2015 to Bt1bn over the next three years. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm EPS (Bt) Norm EPS grw (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 12,251 334 0.77 0.77 ‐24% 0.65 4.98 2014 19.80 4.48 3.05 4.3% 15.4% 114.7%
2015 11,569 321 0.74 0.74 ‐4% 0.65 5.07 2015 20.65 4.69 3.00 4.3% 14.7% 79.9%
2016 12,465 912 2.09 2.09 184% 1.50 6.51 2016 7.26 1.29 2.34 9.9% 36.2% 94.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 14,517 647 1.49 1.49 ‐29% 1.11 6.49 2017E 10.23 1.67 2.34 7.3% 22.9% 109.2%
2018E 15,915 679 1.56 1.56 5% 1.17 6.93 2018E 9.75 1.57 2.19 7.7% 23.2% 116.9%
Figure 1 : 1Q17 and 2017E earnings projections
Consolidated Profit and Loss FY Dec (Btm) Revenue Gross profit EBITDA Interest Expenses Net other income Income tax Forex gain (loss) Other extraordinary items Gn(Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt)
1Q16 4Q16 1Q17E %YoY 3,163 3,018 3,759 19% 465 330 485 4% 386 299 379 ‐2% (10) (14) (15) 53% 14 15 15 6% (69) (51) (67) ‐3% 0 0 0 nm 0 0 0 nm 0 0 0 nm 279 205 267 ‐4% 279 205 267 ‐4% 0.64 0.47 0.61 ‐4%
Gross margin EBITDA margin Net profit margin Current ratio (x) Interest coverage (x) Effective tax rate
14.7% 10.9% 12.9% 12.2% 9.9% 10.1% 8.8% 6.8% 7.1% 1.23 1.25 1.25 39.10 21.34 25.11 19.9% 19.8% 20.0%
%QoQ 2016 2017E 25% 12,465 14,517 47% 1584 1343 27% 1296 999 8% (48) (60) ‐6% 57 52 32% (225) (162) nm 0 0 nm 0 0 nm 0 0 30% 912 647 30% 912 647 30% 2.08 1.47 12.7% 10.4% 7.3% 1.25 26.79 19.8%
YTD %YoY (% of 2017E) 16% 26% ‐15% 36% ‐23% 38% 25% 25% ‐10% 28% ‐28% 41% nm nm nm nm nm nm ‐29% 41% ‐29% 41% ‐29% 41%
9.2% 6.9% 4.5% 1.16 16.53 20.0%
Source: TMT, KT Z Research Figure 2: Quarterly sales volume and gross margin Sales volume (ton)
Gross margin
TMT's quarterly sales volume & GM
200,000
18.0% Sales volumes (ton)
16.7%
Gross margin (%)
180,000
16.0% 14.7%
160,000
12.9% 14.0% 13.0% 11.0%
140,000
10.9%
12.0%
120,000 9.8% 100,000
8.6%
6.8%
6.9%
60,000
8.8% 7.7% 7.1%
8.1%
7.0%
7.6%
80,000
10.0%
8.5%
8.6% 8.2%
7.0% 6.0%
5.1%
6.0% 6.7% 6.0%
8.0% 6.0% 4.0%
40,000
4Q16 1Q17E
2Q16 3Q16
1Q16
3Q15 4Q15
1Q15 2Q15
3Q14 4Q14
1Q14 2Q14
3Q13 4Q13
1Q13 2Q13
4Q12
2Q12 3Q12
0.0% 4Q11 1Q12
0 2Q11 3Q11
2.0%
1Q11
20,000
Source: TMT, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17
Figure 3 : HRC prices ( CIS market) US$/ton 1,400
1,200
1,000
800
600
400
200
-
Source: Bloomberg, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
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, CI. KT ZMICO is a co‐underwriter of the TPIPP.
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)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator 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
