Buy (17E TP Bt14.10) Earnings Review AWS
RS Earnings Review
Buy (17E TP Bt14.10) Close Bt12.50
Media & Publishing August 16, 2017
Beat forecast/Below forecast/In‐line
Earnings below forecast on higher costs and expenses Results date: August 15, 2017 Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.248
0.409
KT ZMICO vs. consensus Share data
41.1%
58.9%
Reuters / Bloomberg
RS.BK/RS TB
Paid‐up Shares (m)
1,009.94
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
13.00/379.00
Foreign limit / actual (%)
49.00/3.15
52 week High / Low (Bt)
14.90/5.95
Avg. daily T/O (shares 000) NVDR (%)
4,197.00 4.28
Estimated free float (%)
41.33
Beta
1.40
URL
www.rs.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6236
Beauty products drove up profit RS reported core profit of Bt52mn, turning from a core loss in 2Q16 and increasing 372%QoQ. The result missed our estimate on higher costs and SG&A but came close to the street forecast. H&B business was the main driver for earnings in 2Q17 and this will continue over the next few quarters. We still hold a positive view for RS’s two main businesses (TV and H&B) and maintain our Buy recommendation. Media revenue dropped both YoY and QoQ Media business did poorer than we expected, declining 18%YoY and 2%QoQ to Bt435mn. The drop was because of the weak performance of satellite channels and radio as the industry is going in that direction. CH8 (which is terrestrial TV) actually saw higher ratings in 2Q17, which increased 45%YoY due to the greater popularity of news programs, boxing, and primetime dramas. Reinforcing the beauty H&B business helped RS achieve its strong turnaround this quarter and this should continue to be the case in the future. The business recorded a new high for sales at Bt301mn, +468%YoY and +51%QoQ. The gross margin dropped slightly from 70% in 1Q17 to 68% but this was within management’s guidance. The gross profit from H&B alone improved 410%YoY and 46%QoQ. By extrapolating the record‐high sales in July at Bt150mn, H&B sales for 3Q17E are likely to increase by over 800%YoY and 50%QoQ, driving up the bottom line next quarter. SG&A dropped on lower marketing expenses SG&A came down from Bt274mn to Bt236mn on the lack of high marketing expenses for H&B, which was still 7% above our assumption. However, the management will not spend much on marketing expenses going forward, with spending size to be limited to only Bt15mn per year. Maintain Buy We think the 2Q17 results marked the beginning of a new era for RS. Its business structure will gradually move toward H&B products with support from high ratings channels like CH8. We maintain our forecast and TP while there is still more upside from the H&B business. Buy rating stands. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 4,306 385 0.43 ‐15.2% 0.30 1.70
2015 3,729 120 0.12 ‐72.1% 0.10 1.78
2016 3,125 (191) (0.20) ‐264% 0.00 1.09
2017E 3,431 337 0.35 278.7% 0.00 1.48
2018E 3,950 628 0.65 86.3% 0.26 2.13
2019E 4,198 762 0.79 21.4% 0.32 2.66
2014 33.16 7.86 7.37 2.4% 21.7% ‐21%
2015 103.48 18.70 7.04 0.8% 7.2% ‐43%
2016 ‐119.85 42.74 11.52 0.0% ‐7.4% 102%
2017E 31.62 12.41 8.44 0.0% 30.8% 65%
2018E 19.24 9.19 5.87 2.1% 36.0% 23%
2019E 15.85 8.21 4.70 2.5% 32.9% 2%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: RS’s 2Q17 earnings review Profit and Loss (Btmn) FY Ended 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Other extraordinary Items Net profit (loss) Normalized profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
YTD
2Q16 747 178 21 (18) 8 20 0 (85) (85) (0.09) 23.9 2.9 (11.4) 0.7 (5.2) 0.7 1.2 (6.0)
1Q17 752 243 168 (24) 14 (14) 45 47 11 0.05 32.3 22.4 1.5 0.7 1.1 0.8 1.1 4.4
2Q17 858 315 221 (23) 9 (13) 0 52 52 0.05 36.7 25.8 6.1 0.8 3.5 1.0 0.0 0.0
% YoY 14.7 76.4 934.6 26.1 7.9 (164.4) n.m. 161.2 161.2 161.8
% QoQ 14.0 29.7 31.1 (3.8) (35.2) (9.0) n.m. 10.7 372.8 10.7
% YoY (18.1) (6.8) 45.8 31.1 112.0 118.3 n.m. 351.8 187.6 430.6
(% 2017E) 46.9 39.8 37.2 40.8 74.9 32.2 n.m. 25.9 18.7 25.9
2017E 3,431 1,400 1,046 (114) 30 (84) 45 382 337 0.40 40.8 30.5 9.8 0.5 4.4 0.7 1.5 30.8
% YoY 9.8 76.3 244.3 37.2 (8.2) (447.7) n.m. 474.1 276.4 479.0
6M17 1,610 557 389 (47) 22 (27) 45 99 63 0.10 34.6 24.2 3.9 0.8 2.3 1.0 0.0 0.0
Sources: RS, KT Zmico Research
Figure 3: RS’s PBV band
Figure 2: RS’s PER band (X)
12.0
+3.0 S.D.
2007‐2008, 2016 earnings is loss.
+1.0 S.D.
+1.0 S.D.
6.0
Avg.
-3.0 S.D.
-50
Source: Bloomberg, KT Zmico Research
Jan-17
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
-4.0
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-17
-2.0
Jan-16
-2.0 S.D.
-2.0 S.D.
Jan-15
-1.0 S.D.
0.0
Jan-14
2.0
-1.0 S.D.
Jan-13
4.0
Avg.
Jan-12
0
+2.0 S.D.
8.0
Jan-11
50
10.0
Jan-10
+2.0 S.D.
+3.0 S.D.
Jan-09
100
+4.0 S.D.
Jan-08
150
(X) 14.0
Jan-07
200
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital 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 (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 4,306 (2,941) 1,365 (792) 1,652 (1,078) 574 (78) 23 519 (107) (44) (27) 341 0.38 385 0.43 0.30
2015 3,729 (2,707) 1,022 (875) 694 (547) 147 (81) 51 118 12 2 (10) 122 0.12 120 0.12 0.10
2016 3,125 (2,331) 794 (959) 304 (468) (165) (83) 33 (215) 24 89 0 (102) (0.10) (191) (0.20) 0.00
2017E 3,431 (2,032) 1,400 (894) 1,046 (540) 506 (114) 30 421 (84) 45 0 382 0.40 337 0.35 0.00
2014 382 1,101 107 5 2,698 289 4,582 8 5 2,838 1,026 1,743 4,582
2015 757 876 163 5 2,510 533 4,844 6 7 3,117 1,014 1,727 4,844
2016 104 648 130 4 2,691 563 4,139 718 469 3,080 1,010 1,060 4,139
2017E 288 711 113 4 2,591 552 4,259 762 469 2,817 1,010 1,442 4,259
2014 368 0 1,078 (93) 1,354 (1,033) 0 (1,032) (293) 100 (311) (8) (512) (191) 321 0.33
2015 132 42 547 470 1,191 (666) 9 (657) (10) 0 (181) 33 (158) 376 534 0.53
2016 (102) 43 468 (1,029) (620) (611) 11 (599) 1,131 0 (100) (465) 565 (653) (1,219) (1.26)
2017E 382 0 540 (342) 580 (440) 0 (440) 44 0 0 0 44 184 140 0.14
2014 24.4% 102.3% ‐15.2% 31.7% 38.4% 13.3% 7.9% 8.9% 20.7%
2015 ‐13.4% ‐58.0% ‐72.1% 27.4% 18.6% 4.0% 3.3% 3.2% ‐10.5%
2016 ‐16.2% ‐56.2% ‐264.4% 25.4% 9.7% ‐5.3% ‐3.3% ‐6.1% 11.2%
2017E 9.8% 244.3% 302.6% 40.8% 30.5% 14.7% 11.1% 9.8% 20.0%
2018E 3,950 (2,157) 1,793 (932) 1,412 (551) 861 (106) 30 785 (157) 0 0 628 0.65 628 0.65 0.26
2019E 4,198 (2,225) 1,973 (954) 1,582 (563) 1,019 (96) 30 953 (191) 0 0 762 0.79 762 0.79 0.32
2018E 760 818 120 4 2,489 578 4,770 912 325 2,701 1,010 2,069 4,770
2019E 1,123 870 124 4 2,384 591 5,096 962 225 2,516 1,010 2,581 5,096
2018E 628 0 551 (263) 916 (449) 0 (449) 6 0 0 0 6 473 467 0.48
2019E 762 0 563 (203) 1,122 (458) 0 (458) (50) 0 (251) 0 (301) 363 664 0.69
2018E 15.1% 35.1% 64.3% 45.4% 35.8% 21.8% 15.9% 15.9% 20.0%
2019E 6.3% 12.0% 21.4% 47.0% 37.7% 24.3% 18.2% 18.2% 20.0%
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, TTL, NMG, SAWAD.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. 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
Buy (17E TP Bt14.10) Close Bt12.50
Media & Publishing August 16, 2017
Beat forecast/Below forecast/In‐line
Earnings below forecast on higher costs and expenses Results date: August 15, 2017 Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.248
0.409
KT ZMICO vs. consensus Share data
41.1%
58.9%
Reuters / Bloomberg
RS.BK/RS TB
Paid‐up Shares (m)
1,009.94
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
13.00/379.00
Foreign limit / actual (%)
49.00/3.15
52 week High / Low (Bt)
14.90/5.95
Avg. daily T/O (shares 000) NVDR (%)
4,197.00 4.28
Estimated free float (%)
41.33
Beta
1.40
URL
www.rs.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6236
Beauty products drove up profit RS reported core profit of Bt52mn, turning from a core loss in 2Q16 and increasing 372%QoQ. The result missed our estimate on higher costs and SG&A but came close to the street forecast. H&B business was the main driver for earnings in 2Q17 and this will continue over the next few quarters. We still hold a positive view for RS’s two main businesses (TV and H&B) and maintain our Buy recommendation. Media revenue dropped both YoY and QoQ Media business did poorer than we expected, declining 18%YoY and 2%QoQ to Bt435mn. The drop was because of the weak performance of satellite channels and radio as the industry is going in that direction. CH8 (which is terrestrial TV) actually saw higher ratings in 2Q17, which increased 45%YoY due to the greater popularity of news programs, boxing, and primetime dramas. Reinforcing the beauty H&B business helped RS achieve its strong turnaround this quarter and this should continue to be the case in the future. The business recorded a new high for sales at Bt301mn, +468%YoY and +51%QoQ. The gross margin dropped slightly from 70% in 1Q17 to 68% but this was within management’s guidance. The gross profit from H&B alone improved 410%YoY and 46%QoQ. By extrapolating the record‐high sales in July at Bt150mn, H&B sales for 3Q17E are likely to increase by over 800%YoY and 50%QoQ, driving up the bottom line next quarter. SG&A dropped on lower marketing expenses SG&A came down from Bt274mn to Bt236mn on the lack of high marketing expenses for H&B, which was still 7% above our assumption. However, the management will not spend much on marketing expenses going forward, with spending size to be limited to only Bt15mn per year. Maintain Buy We think the 2Q17 results marked the beginning of a new era for RS. Its business structure will gradually move toward H&B products with support from high ratings channels like CH8. We maintain our forecast and TP while there is still more upside from the H&B business. Buy rating stands. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 4,306 385 0.43 ‐15.2% 0.30 1.70
2015 3,729 120 0.12 ‐72.1% 0.10 1.78
2016 3,125 (191) (0.20) ‐264% 0.00 1.09
2017E 3,431 337 0.35 278.7% 0.00 1.48
2018E 3,950 628 0.65 86.3% 0.26 2.13
2019E 4,198 762 0.79 21.4% 0.32 2.66
2014 33.16 7.86 7.37 2.4% 21.7% ‐21%
2015 103.48 18.70 7.04 0.8% 7.2% ‐43%
2016 ‐119.85 42.74 11.52 0.0% ‐7.4% 102%
2017E 31.62 12.41 8.44 0.0% 30.8% 65%
2018E 19.24 9.19 5.87 2.1% 36.0% 23%
2019E 15.85 8.21 4.70 2.5% 32.9% 2%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: RS’s 2Q17 earnings review Profit and Loss (Btmn) FY Ended 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Other extraordinary Items Net profit (loss) Normalized profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
YTD
2Q16 747 178 21 (18) 8 20 0 (85) (85) (0.09) 23.9 2.9 (11.4) 0.7 (5.2) 0.7 1.2 (6.0)
1Q17 752 243 168 (24) 14 (14) 45 47 11 0.05 32.3 22.4 1.5 0.7 1.1 0.8 1.1 4.4
2Q17 858 315 221 (23) 9 (13) 0 52 52 0.05 36.7 25.8 6.1 0.8 3.5 1.0 0.0 0.0
% YoY 14.7 76.4 934.6 26.1 7.9 (164.4) n.m. 161.2 161.2 161.8
% QoQ 14.0 29.7 31.1 (3.8) (35.2) (9.0) n.m. 10.7 372.8 10.7
% YoY (18.1) (6.8) 45.8 31.1 112.0 118.3 n.m. 351.8 187.6 430.6
(% 2017E) 46.9 39.8 37.2 40.8 74.9 32.2 n.m. 25.9 18.7 25.9
2017E 3,431 1,400 1,046 (114) 30 (84) 45 382 337 0.40 40.8 30.5 9.8 0.5 4.4 0.7 1.5 30.8
% YoY 9.8 76.3 244.3 37.2 (8.2) (447.7) n.m. 474.1 276.4 479.0
6M17 1,610 557 389 (47) 22 (27) 45 99 63 0.10 34.6 24.2 3.9 0.8 2.3 1.0 0.0 0.0
Sources: RS, KT Zmico Research
Figure 3: RS’s PBV band
Figure 2: RS’s PER band (X)
12.0
+3.0 S.D.
2007‐2008, 2016 earnings is loss.
+1.0 S.D.
+1.0 S.D.
6.0
Avg.
-3.0 S.D.
-50
Source: Bloomberg, KT Zmico Research
Jan-17
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
-4.0
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-17
-2.0
Jan-16
-2.0 S.D.
-2.0 S.D.
Jan-15
-1.0 S.D.
0.0
Jan-14
2.0
-1.0 S.D.
Jan-13
4.0
Avg.
Jan-12
0
+2.0 S.D.
8.0
Jan-11
50
10.0
Jan-10
+2.0 S.D.
+3.0 S.D.
Jan-09
100
+4.0 S.D.
Jan-08
150
(X) 14.0
Jan-07
200
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital 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 (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 4,306 (2,941) 1,365 (792) 1,652 (1,078) 574 (78) 23 519 (107) (44) (27) 341 0.38 385 0.43 0.30
2015 3,729 (2,707) 1,022 (875) 694 (547) 147 (81) 51 118 12 2 (10) 122 0.12 120 0.12 0.10
2016 3,125 (2,331) 794 (959) 304 (468) (165) (83) 33 (215) 24 89 0 (102) (0.10) (191) (0.20) 0.00
2017E 3,431 (2,032) 1,400 (894) 1,046 (540) 506 (114) 30 421 (84) 45 0 382 0.40 337 0.35 0.00
2014 382 1,101 107 5 2,698 289 4,582 8 5 2,838 1,026 1,743 4,582
2015 757 876 163 5 2,510 533 4,844 6 7 3,117 1,014 1,727 4,844
2016 104 648 130 4 2,691 563 4,139 718 469 3,080 1,010 1,060 4,139
2017E 288 711 113 4 2,591 552 4,259 762 469 2,817 1,010 1,442 4,259
2014 368 0 1,078 (93) 1,354 (1,033) 0 (1,032) (293) 100 (311) (8) (512) (191) 321 0.33
2015 132 42 547 470 1,191 (666) 9 (657) (10) 0 (181) 33 (158) 376 534 0.53
2016 (102) 43 468 (1,029) (620) (611) 11 (599) 1,131 0 (100) (465) 565 (653) (1,219) (1.26)
2017E 382 0 540 (342) 580 (440) 0 (440) 44 0 0 0 44 184 140 0.14
2014 24.4% 102.3% ‐15.2% 31.7% 38.4% 13.3% 7.9% 8.9% 20.7%
2015 ‐13.4% ‐58.0% ‐72.1% 27.4% 18.6% 4.0% 3.3% 3.2% ‐10.5%
2016 ‐16.2% ‐56.2% ‐264.4% 25.4% 9.7% ‐5.3% ‐3.3% ‐6.1% 11.2%
2017E 9.8% 244.3% 302.6% 40.8% 30.5% 14.7% 11.1% 9.8% 20.0%
2018E 3,950 (2,157) 1,793 (932) 1,412 (551) 861 (106) 30 785 (157) 0 0 628 0.65 628 0.65 0.26
2019E 4,198 (2,225) 1,973 (954) 1,582 (563) 1,019 (96) 30 953 (191) 0 0 762 0.79 762 0.79 0.32
2018E 760 818 120 4 2,489 578 4,770 912 325 2,701 1,010 2,069 4,770
2019E 1,123 870 124 4 2,384 591 5,096 962 225 2,516 1,010 2,581 5,096
2018E 628 0 551 (263) 916 (449) 0 (449) 6 0 0 0 6 473 467 0.48
2019E 762 0 563 (203) 1,122 (458) 0 (458) (50) 0 (251) 0 (301) 363 664 0.69
2018E 15.1% 35.1% 64.3% 45.4% 35.8% 21.8% 15.9% 15.9% 20.0%
2019E 6.3% 12.0% 21.4% 47.0% 37.7% 24.3% 18.2% 18.2% 20.0%
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, TTL, NMG, SAWAD.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. 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
