Buy (17E TP Bt15.40) Company Update
GFPT Buy (17E TP Bt15.40)
Company Update
Close Bt13.00
Agribusiness August 10, 2016
Earning upgrade/Earnings downgrade/Overview unchanged
Better broiler prices; earnings growth expected in 3Q16; 2016‐17E earnings revised up Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.038
1.137
KT ZMICO vs. consensus Share data
8.9%
4.7%
Reuters / Bloomberg
GFPT.BK/GFPT TB
Paid‐up Shares (m)
1,253.82
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
16.00/466.00
Foreign limit / actual (%)
49.00/15.26
52 week High / Low (Bt)
13.50/8.20
Avg. daily T/O (shares 000) NVDR (%)
2,198.00 3.14
Estimated free float (%)
44.19
Beta
0.57
URL
www.gfpt.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Higher broiler price; better earnings momentum in 3Q The positive signs for the prices of broilers and day‐old chicks will benefit GFPT’s 2H16 earnings. Meanwhile, the profit contributions from affiliates are likely to exceed our estimate. Hence, we have revised up our 2016‐ 17E earnings projections by 12% and 6% and come up with a new 2017E target price of Bt15.40/share (13x PER), which implies upside of 18% vs. the current market price. Furthermore, the firm’s earnings are likely to gain momentum in 3Q16 when the peak season begins. Therefore, we reaffirm our “Buy” call. Brighter outlook, with higher domestic broiler prices The business outlook seems more promising, with broiler prices rising to Bt41‐42/kg (vs. Bt35‐38/kg in 7M16) and the day‐old‐chick price increasing to Bt16.50/kg (vs. Bt11.40/kg in 1H16). The day‐old‐chick price is expected to rise further to Bt18/chick next week (due to supply shortages caused by the bird flu in the US, which led to Thailand banning imports of breeders from the US) as demand is increasing to support export markets, especially Japan, who is seeking replacements for broiler imports from China. Hence, GFPT’s management anticipates domestic broiler prices at not less than Bt40/kg and a flat day‐old‐chick price of Bt16/chick during the rest of the year. Meanwhile, the average raising cost in 2H16 will likely stay below the Bt37/kg seen in 1H16, which should be positive to operators’ profit margins in 2H16. 3Q16 earnings likely to grow by 31%YoY and 12%QoQ Given growing momentum in 3Q16 during the peak export season (thanks especially to growing demand from Japan), accelerating domestic broiler prices since early Aug‐16, lower raw material costs, and better earnings contributions from affiliates, our preliminary estimate calls for 3Q16E net profit to amount to Bt429mn (EPS: Bt0.34), up 31%YoY and 12%QoQ. 2016‐17E core profit projections revised up by 12% and 6% To take into account better‐than‐expected profit contributions from affiliates and better gross profit momentum thanks to higher prices and export volume, we have raised the 2016‐17E core profit projections by 12% and 6% to Bt1.42bn and Bt1.49bn, respectively, with the sales estimates revised slightly downward to reflect lower shrimp feed sales. Financial 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 PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 16,692 1,516 1.21 1.14 555% 0.35 5.81 2013 10.75 9.73 2.24 2.7% 23.0% 53%
2014 17,829 1,780 1.42 1.40 17% 0.40 6.89 2014 9.16 8.40 1.89 3.1% 22.4% 38%
2015 16,467 1,195 0.95 0.95 ‐33% 0.25 7.44 2015 13.64 10.43 1.75 1.9% 13.3% 38%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 16,388 1,422 1.13 1.13 19% 0.32 8.25 2016E 11.47 8.79 1.58 2.4% 14.5% 17%
2017E 17,642 1,486 1.19 1.19 5% 0.32 9.11 2017E 10.97 7.91 1.43 2.5% 13.7% 8%
2Q16 earnings growth of 91%YoY and 39%QoQ, beating forecast by 12% GFPT posted 2Q16 net profit of Bt381mn, beating our estimate and the market consensus by 12% (we estimated Bt341mn). The earnings beat our estimate because the gross profit margin of 13.8% exceeded our estimate of 12%. Meanwhile, the sales amounted to Bt3.90bn (‐3%YoY, 0%QoQ). The gross profit margin in 2Q16 at 13.8% was better than 10.5% in 2Q15 and 11.5% in 1Q16 because the export sales increased 9%YoY and 7%QoQ. Meanwhile, the profit contribution from affiliates rose to Bt108mn (+1063%YoY,+2%QoQ), consisting of the contribution from McKey at Bt60mn (+180%YoY,+11%QoQ due to the higher export volume of cooked products on seasonality and a good net profit margin of 11.5% vs. 3.8% in 2Q15 and 11.8% in 1Q16) and that from GFN amounting to Bt48mn (turning around from a loss of Bt13mn in 1Q15 and down by 8%QoQ). 1H16 net profit amounted to Bt656mn, up 57%YoY, thanks to a growing gross profit margin and the earnings turnaround of affiliates. Strong financial position As of 2Q16, the D/E ratio was at a mere 0.4x vs. 0.44x as of the end of 2015. The interest bearing debts amounted to Bt3.8bn. Meanwhile, shareholders’ equity stood at Bt9.7bn (BVPS = Bt7.71), with retained earnings of Bt7.74bn. Figure 1: 2Q16 earnings review YE Dec (Bt m) Sales COGS Gross profit SG&A expense Others income EBIT Interest expense EBT Tax expense Equity income MI Norm. profit Extra. Items Net profit
2Q15 4,033 ‐3,608 425 ‐280 72 217 ‐33 185 10 9 4 200 0 200
1Q16 3,901 ‐3,453 448 ‐294 64 218 ‐27 191 ‐19 106 3 275 0 275
2Q16 3,902 ‐3,363 539 ‐307 97 330 ‐25 304 ‐29 108 2 381 0 381
0.16
0.22
0.30
Gross margin EBIT margin Norm. profit margin
10.5% 5.4% 5.0%
11.5% 5.6% 7.0%
13.8% 8.4% 9.8%
Revenue Structure Chicken processing Feed Farm and Day‐Old‐Chicks Processed Food Total Revenues
1,606 1,123 1,096 208 4,032
1,635 922 1,128 216 3,901
1,662 921 1,108 212 3,902
EPS (Bt)
% YoY %QoQ 1H15 ‐3.2% 0.0% 7,889 ‐6.8% ‐2.6% ‐7,001 26.8% 20.2% 888 9.5% 4.3% ‐564 34.3% 53.0% 127 51.6% 51.3% 451 ‐23.0% ‐4.7% ‐63 64.9% 59.1% 388 ‐385.4% 50.0% 17 1066.2% 1.8% 21 ‐53.4% ‐37.1% 8 90.7% 38.7% 418 nm nm 0 90.7% 38.7% 418 90.7%
3.5% ‐18.0% 1.1% 2.0% ‐3.2%
38.7%
1.6% ‐0.2% ‐1.8% ‐1.6% 0.0%
1H16 % YoY 2015 2016E % YoY YTD (% of 2016E) 7,803 ‐1.1% 16,467 16,388 ‐0.5% 47.6% ‐6,816 ‐2.6% ‐14,463 ‐14,176 ‐2.0% 48.1% 987 11.2% 2,003 2,212 10.4% 44.6% ‐601 6.6% ‐1,170 ‐1,229 5.0% 48.9% 161 26.8% 229 280 22.3% 57.5% 547 21.2% 1,062 1,263 19.0% 43.3% ‐52 ‐17.8% ‐123 ‐111 ‐9.6% 46.5% 496 27.6% 938 1,152 22.7% 43.0% ‐49 ‐394.3% 20 ‐124 ‐735.8% 39.1% 214 921.8% 249 404 62.4% 53.0% 5 ‐39.2% 18 10 ‐45.1% 50.8% 656 57.1% 1,189 1,422 19.6% 46.1% 0 nm 6 0 nm nm 656 57.1% 1,195 1,422 19.0% 46.1%
0.33
0.52
11.3% 5.7% 5.3%
12.7% 7.0% 8.4%
3,096 2,143 2,238 412 7,889
3,297 1,843 2,236 428 7,803
57.1%
0.95
1.13
12.2% 6.4% 7.2%
13.5% 7.7% 8.7%
19.6%
6.5% ‐14.0% ‐0.1% 3.8% ‐1.1%
Source: SET and KTZMICO Research Figure 2: 2016‐17E earnings revision Bt m Revenues Gross margin Equity income Norm profit EPS (Bt)
Previous Current 2016E 2017E 2016E 2017E 17,395 18,060 16,388 17,642 12.5% 12.8% 13.5% 13.0% 236 275 404 447 1,268 1,400 1,422 1,486 1.01 1.12 1.13 1.18
% Change 2016E 2017E ‐5.8% ‐2.3% 8.0% 2.0% 71.0% 62.5% 12.1% 6.2% 12.1% 6.2%
Source: KTZ Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
46.1%
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit
2013
2014
2015
2016E
16,692
17,829
16,467
16,388
2017E 17,642
(14,451)
(15,334)
(14,463)
(14,176)
(15,348)
2,241
2,495
2,003
2,212
2,293
(1,058)
(1,165)
(1,170)
(1,229)
(1,268)
2,075
2,335
1,903
2,050
2,171
892
1,005
1,070
1,067
1,146
EBIT
1,184
1,329
833
983
1,025
Interest expense
SG&A EBITDA Depreciation & amortization
(186)
(145)
(123)
(111)
(88)
Equity earnings
221
326
249
404
447
Other income / exp.
220
224
229
280
280
1,439
1,733
1,187
1,556
1,665
EBT Corporate tax
(0)
42
20
(124)
(166)
Minority interests
14
19
18
10
12
Extra items
91
23
6
0
0
1,516
1,780
1,195
1,422
1,486
Net profit Reported EPS
1.21
1.42
0.95
1.13
1.19
Fully diluted EPS
1.21
1.42
0.95
1.13
1.19
Core net profit
1,425
1,756
1,189
1,422
1,486
Core EPS
1.21
1.42
0.95
1.13
1.19
Dividend (Bt)
0.35
0.40
0.25
0.32
0.32
2013
2014
2015
2016E
2017E
311
270
592
483
638
3,217
3,274
3,173
3,029
3,280
Investment
1,991
2,281
2,491
2,555
2,620
PP&E-net
5,696
6,158
6,749
6,217
6,135
13,022
13,737
14,976
14,088
14,571
4,127
1,407
2,070
800
300
80
2,167
2,075
1,400
1,200
5,645
5,004
5,533
3,619
3,006
88
100
117
127
139
7,288
8,633
9,327
10,342
11,427
13,022
13,737
14,976
14,088
14,571 2017E
BALANCE SHEET (Btm) Cash and equivalents Inventories
Total assets ST debt & current portion Long-term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm)
2013
2014
2015
2016E
EBIT
1,184
1,329
833
983
1,025
Depreciation & amortization
(892)
(1,005)
(1,070)
(1,067)
(1,146)
Change in working capital
776
107
(67)
355
(244)
FX, non-cash adjustment & others
2,004
2,082
2,068
2,993
2,749
Cash flow from operations
3,072
2,513
1,764
3,264
2,385
Capex (Invest)/Divest
(532)
(565)
(309)
(1,048)
(1,065)
Others
(760)
(775)
(1,078)
(82)
(82)
Cash flow from investing
(1,293)
(1,340)
(1,386)
(1,130)
(1,147)
Debt financing (repayment)
(684)
(1,522)
(612)
578
(1,930)
Equity financing
0
0
0
0
0
Dividend payment
0
(439)
(502)
(313)
(398)
(230)
(163)
(132)
0
0
(1,752)
(1,214)
(55)
(2,244)
(1,082)
Others Cash flow from financing Net change in cash
28
(40)
323
(110)
155
2,540
1,948
1,455
2,216
1,320
2.03
1.55
1.16
1.77
1.05
2013
2014
2015
2016E
2017E
8.6
6.8
(7.6)
(0.5)
7.6
EBITDA growth (%)
135.3
12.5
(18.5)
7.7
5.9
EPS growth (%)
554.7
17.4
(32.9)
19.0
4.6
Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%)
Gross margin (%)
13.4
14.0
12.2
13.5
13.0
EBITDA margin (%)
12.4
13.1
11.6
12.5
12.3
Operating margin (%)
7.1
7.5
5.1
6.0
5.8
Net margin (%)
9.1
10.0
7.3
8.7
8.4
8.5
9.9
7.2
8.7
8.4
(0.0)
2.4
1.6
(8.0)
(10.0)
Core profit margin (%) Effective tax rate (%)
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, PACE, PLE, TPOLY, M‐CHAI, CI. KT ZMICO is a co‐underwriter of ALT, EKH, RJH.
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
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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
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.
Company Update
Close Bt13.00
Agribusiness August 10, 2016
Earning upgrade/Earnings downgrade/Overview unchanged
Better broiler prices; earnings growth expected in 3Q16; 2016‐17E earnings revised up Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.038
1.137
KT ZMICO vs. consensus Share data
8.9%
4.7%
Reuters / Bloomberg
GFPT.BK/GFPT TB
Paid‐up Shares (m)
1,253.82
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
16.00/466.00
Foreign limit / actual (%)
49.00/15.26
52 week High / Low (Bt)
13.50/8.20
Avg. daily T/O (shares 000) NVDR (%)
2,198.00 3.14
Estimated free float (%)
44.19
Beta
0.57
URL
www.gfpt.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Higher broiler price; better earnings momentum in 3Q The positive signs for the prices of broilers and day‐old chicks will benefit GFPT’s 2H16 earnings. Meanwhile, the profit contributions from affiliates are likely to exceed our estimate. Hence, we have revised up our 2016‐ 17E earnings projections by 12% and 6% and come up with a new 2017E target price of Bt15.40/share (13x PER), which implies upside of 18% vs. the current market price. Furthermore, the firm’s earnings are likely to gain momentum in 3Q16 when the peak season begins. Therefore, we reaffirm our “Buy” call. Brighter outlook, with higher domestic broiler prices The business outlook seems more promising, with broiler prices rising to Bt41‐42/kg (vs. Bt35‐38/kg in 7M16) and the day‐old‐chick price increasing to Bt16.50/kg (vs. Bt11.40/kg in 1H16). The day‐old‐chick price is expected to rise further to Bt18/chick next week (due to supply shortages caused by the bird flu in the US, which led to Thailand banning imports of breeders from the US) as demand is increasing to support export markets, especially Japan, who is seeking replacements for broiler imports from China. Hence, GFPT’s management anticipates domestic broiler prices at not less than Bt40/kg and a flat day‐old‐chick price of Bt16/chick during the rest of the year. Meanwhile, the average raising cost in 2H16 will likely stay below the Bt37/kg seen in 1H16, which should be positive to operators’ profit margins in 2H16. 3Q16 earnings likely to grow by 31%YoY and 12%QoQ Given growing momentum in 3Q16 during the peak export season (thanks especially to growing demand from Japan), accelerating domestic broiler prices since early Aug‐16, lower raw material costs, and better earnings contributions from affiliates, our preliminary estimate calls for 3Q16E net profit to amount to Bt429mn (EPS: Bt0.34), up 31%YoY and 12%QoQ. 2016‐17E core profit projections revised up by 12% and 6% To take into account better‐than‐expected profit contributions from affiliates and better gross profit momentum thanks to higher prices and export volume, we have raised the 2016‐17E core profit projections by 12% and 6% to Bt1.42bn and Bt1.49bn, respectively, with the sales estimates revised slightly downward to reflect lower shrimp feed sales. Financial 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 PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 16,692 1,516 1.21 1.14 555% 0.35 5.81 2013 10.75 9.73 2.24 2.7% 23.0% 53%
2014 17,829 1,780 1.42 1.40 17% 0.40 6.89 2014 9.16 8.40 1.89 3.1% 22.4% 38%
2015 16,467 1,195 0.95 0.95 ‐33% 0.25 7.44 2015 13.64 10.43 1.75 1.9% 13.3% 38%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 16,388 1,422 1.13 1.13 19% 0.32 8.25 2016E 11.47 8.79 1.58 2.4% 14.5% 17%
2017E 17,642 1,486 1.19 1.19 5% 0.32 9.11 2017E 10.97 7.91 1.43 2.5% 13.7% 8%
2Q16 earnings growth of 91%YoY and 39%QoQ, beating forecast by 12% GFPT posted 2Q16 net profit of Bt381mn, beating our estimate and the market consensus by 12% (we estimated Bt341mn). The earnings beat our estimate because the gross profit margin of 13.8% exceeded our estimate of 12%. Meanwhile, the sales amounted to Bt3.90bn (‐3%YoY, 0%QoQ). The gross profit margin in 2Q16 at 13.8% was better than 10.5% in 2Q15 and 11.5% in 1Q16 because the export sales increased 9%YoY and 7%QoQ. Meanwhile, the profit contribution from affiliates rose to Bt108mn (+1063%YoY,+2%QoQ), consisting of the contribution from McKey at Bt60mn (+180%YoY,+11%QoQ due to the higher export volume of cooked products on seasonality and a good net profit margin of 11.5% vs. 3.8% in 2Q15 and 11.8% in 1Q16) and that from GFN amounting to Bt48mn (turning around from a loss of Bt13mn in 1Q15 and down by 8%QoQ). 1H16 net profit amounted to Bt656mn, up 57%YoY, thanks to a growing gross profit margin and the earnings turnaround of affiliates. Strong financial position As of 2Q16, the D/E ratio was at a mere 0.4x vs. 0.44x as of the end of 2015. The interest bearing debts amounted to Bt3.8bn. Meanwhile, shareholders’ equity stood at Bt9.7bn (BVPS = Bt7.71), with retained earnings of Bt7.74bn. Figure 1: 2Q16 earnings review YE Dec (Bt m) Sales COGS Gross profit SG&A expense Others income EBIT Interest expense EBT Tax expense Equity income MI Norm. profit Extra. Items Net profit
2Q15 4,033 ‐3,608 425 ‐280 72 217 ‐33 185 10 9 4 200 0 200
1Q16 3,901 ‐3,453 448 ‐294 64 218 ‐27 191 ‐19 106 3 275 0 275
2Q16 3,902 ‐3,363 539 ‐307 97 330 ‐25 304 ‐29 108 2 381 0 381
0.16
0.22
0.30
Gross margin EBIT margin Norm. profit margin
10.5% 5.4% 5.0%
11.5% 5.6% 7.0%
13.8% 8.4% 9.8%
Revenue Structure Chicken processing Feed Farm and Day‐Old‐Chicks Processed Food Total Revenues
1,606 1,123 1,096 208 4,032
1,635 922 1,128 216 3,901
1,662 921 1,108 212 3,902
EPS (Bt)
% YoY %QoQ 1H15 ‐3.2% 0.0% 7,889 ‐6.8% ‐2.6% ‐7,001 26.8% 20.2% 888 9.5% 4.3% ‐564 34.3% 53.0% 127 51.6% 51.3% 451 ‐23.0% ‐4.7% ‐63 64.9% 59.1% 388 ‐385.4% 50.0% 17 1066.2% 1.8% 21 ‐53.4% ‐37.1% 8 90.7% 38.7% 418 nm nm 0 90.7% 38.7% 418 90.7%
3.5% ‐18.0% 1.1% 2.0% ‐3.2%
38.7%
1.6% ‐0.2% ‐1.8% ‐1.6% 0.0%
1H16 % YoY 2015 2016E % YoY YTD (% of 2016E) 7,803 ‐1.1% 16,467 16,388 ‐0.5% 47.6% ‐6,816 ‐2.6% ‐14,463 ‐14,176 ‐2.0% 48.1% 987 11.2% 2,003 2,212 10.4% 44.6% ‐601 6.6% ‐1,170 ‐1,229 5.0% 48.9% 161 26.8% 229 280 22.3% 57.5% 547 21.2% 1,062 1,263 19.0% 43.3% ‐52 ‐17.8% ‐123 ‐111 ‐9.6% 46.5% 496 27.6% 938 1,152 22.7% 43.0% ‐49 ‐394.3% 20 ‐124 ‐735.8% 39.1% 214 921.8% 249 404 62.4% 53.0% 5 ‐39.2% 18 10 ‐45.1% 50.8% 656 57.1% 1,189 1,422 19.6% 46.1% 0 nm 6 0 nm nm 656 57.1% 1,195 1,422 19.0% 46.1%
0.33
0.52
11.3% 5.7% 5.3%
12.7% 7.0% 8.4%
3,096 2,143 2,238 412 7,889
3,297 1,843 2,236 428 7,803
57.1%
0.95
1.13
12.2% 6.4% 7.2%
13.5% 7.7% 8.7%
19.6%
6.5% ‐14.0% ‐0.1% 3.8% ‐1.1%
Source: SET and KTZMICO Research Figure 2: 2016‐17E earnings revision Bt m Revenues Gross margin Equity income Norm profit EPS (Bt)
Previous Current 2016E 2017E 2016E 2017E 17,395 18,060 16,388 17,642 12.5% 12.8% 13.5% 13.0% 236 275 404 447 1,268 1,400 1,422 1,486 1.01 1.12 1.13 1.18
% Change 2016E 2017E ‐5.8% ‐2.3% 8.0% 2.0% 71.0% 62.5% 12.1% 6.2% 12.1% 6.2%
Source: KTZ Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
46.1%
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit
2013
2014
2015
2016E
16,692
17,829
16,467
16,388
2017E 17,642
(14,451)
(15,334)
(14,463)
(14,176)
(15,348)
2,241
2,495
2,003
2,212
2,293
(1,058)
(1,165)
(1,170)
(1,229)
(1,268)
2,075
2,335
1,903
2,050
2,171
892
1,005
1,070
1,067
1,146
EBIT
1,184
1,329
833
983
1,025
Interest expense
SG&A EBITDA Depreciation & amortization
(186)
(145)
(123)
(111)
(88)
Equity earnings
221
326
249
404
447
Other income / exp.
220
224
229
280
280
1,439
1,733
1,187
1,556
1,665
EBT Corporate tax
(0)
42
20
(124)
(166)
Minority interests
14
19
18
10
12
Extra items
91
23
6
0
0
1,516
1,780
1,195
1,422
1,486
Net profit Reported EPS
1.21
1.42
0.95
1.13
1.19
Fully diluted EPS
1.21
1.42
0.95
1.13
1.19
Core net profit
1,425
1,756
1,189
1,422
1,486
Core EPS
1.21
1.42
0.95
1.13
1.19
Dividend (Bt)
0.35
0.40
0.25
0.32
0.32
2013
2014
2015
2016E
2017E
311
270
592
483
638
3,217
3,274
3,173
3,029
3,280
Investment
1,991
2,281
2,491
2,555
2,620
PP&E-net
5,696
6,158
6,749
6,217
6,135
13,022
13,737
14,976
14,088
14,571
4,127
1,407
2,070
800
300
80
2,167
2,075
1,400
1,200
5,645
5,004
5,533
3,619
3,006
88
100
117
127
139
7,288
8,633
9,327
10,342
11,427
13,022
13,737
14,976
14,088
14,571 2017E
BALANCE SHEET (Btm) Cash and equivalents Inventories
Total assets ST debt & current portion Long-term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm)
2013
2014
2015
2016E
EBIT
1,184
1,329
833
983
1,025
Depreciation & amortization
(892)
(1,005)
(1,070)
(1,067)
(1,146)
Change in working capital
776
107
(67)
355
(244)
FX, non-cash adjustment & others
2,004
2,082
2,068
2,993
2,749
Cash flow from operations
3,072
2,513
1,764
3,264
2,385
Capex (Invest)/Divest
(532)
(565)
(309)
(1,048)
(1,065)
Others
(760)
(775)
(1,078)
(82)
(82)
Cash flow from investing
(1,293)
(1,340)
(1,386)
(1,130)
(1,147)
Debt financing (repayment)
(684)
(1,522)
(612)
578
(1,930)
Equity financing
0
0
0
0
0
Dividend payment
0
(439)
(502)
(313)
(398)
(230)
(163)
(132)
0
0
(1,752)
(1,214)
(55)
(2,244)
(1,082)
Others Cash flow from financing Net change in cash
28
(40)
323
(110)
155
2,540
1,948
1,455
2,216
1,320
2.03
1.55
1.16
1.77
1.05
2013
2014
2015
2016E
2017E
8.6
6.8
(7.6)
(0.5)
7.6
EBITDA growth (%)
135.3
12.5
(18.5)
7.7
5.9
EPS growth (%)
554.7
17.4
(32.9)
19.0
4.6
Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%)
Gross margin (%)
13.4
14.0
12.2
13.5
13.0
EBITDA margin (%)
12.4
13.1
11.6
12.5
12.3
Operating margin (%)
7.1
7.5
5.1
6.0
5.8
Net margin (%)
9.1
10.0
7.3
8.7
8.4
8.5
9.9
7.2
8.7
8.4
(0.0)
2.4
1.6
(8.0)
(10.0)
Core profit margin (%) Effective tax rate (%)
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, PACE, PLE, TPOLY, M‐CHAI, CI. KT ZMICO is a co‐underwriter of ALT, EKH, RJH.
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
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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
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.
