Buy (17E TP Bt17.50) Earnings Review
GFPT Buy (17E TP Bt17.50)
Earnings Review
Close Bt14.60
Agribusiness February 23, 2017
Beat forecast/Below forecast/In line
Upbeat 4Q16 and 2016 earnings Results date: February 22, 2017 Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.317
1.392
KT ZMICO vs. consensus Share data
1.7%
0.6%
Reuters / Bloomberg
GFPT.BK/GFPT TB
Paid‐up Shares (m)
1,253.82
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
18.00/523.00
Foreign limit / actual (%)
49.00/14.47
52 week High / Low (Bt)
16.20/10.70
Avg. daily T/O (shares 000) NVDR (%)
4,491.00 5.88
Estimated free float (%)
44.19
Beta
1.16
URL
www.gfpt.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Maintain “Buy” with 2017E target price of Bt17.50/share. Even though the 1Q is the low season for export markets, GFPT’s earnings growth should hold up fairly well at least in 1H17 thanks to sustained low raw material costs and higher prices of live broilers to Bt39‐40/kg (+6% vs. the 4Q16 average of Bt38 and +10% from the 2016 average of Bt37). We maintain our 2016‐17E earnings forecasts of Bt1.7‐ 1.8bn and also leave our “Buy” rating and 2017E target price of Bt17.50/share (13x PER) unchanged. 4Q16 net profit grew by 9%YoY but dropped by 1%QoQ GFPT reported a net profit of Bt492mn for 4Q16 (+9%YoY, ‐1%QoQ), beating our forecast and the market estimate by 16% and 14%, respectively. The upbeat earnings were attributable to FX gain of Bt50mn and a gross profit margin of 17.1% that was better than our estimate of 16.3%. Exclusive of the FX gain, the firm booked core profit of Bt442mn (‐ 1%YoY, ‐11%QoQ), exceeding our projection and the market estimate by 4% and 3%, respectively. The sales amounted to Bt4.5bn (+3%YoY, +2%QoQ) and the gross profit margin widened to 17.1% (vs. 14.3% in 4Q15 and 17% in 3Q16). Meanwhile, the profit contribution from affiliates stood at Bt75mn (‐44%YoY, ‐7%QoQ). 2016 net profit rose by 38%YoY to Bt1.6bn, 4% better than expected The firm’s 2016 net profit amounted to Bt1.6bn, up 38%YoY (surpassing our estimate by 4% due to the FX gain of Bt50mn). While its sales increased merely 1% (note: revenue from the processed chicken meat business increased by 8% but that from feed business decreased by 12%), the gross profit margin still managed to widen to 15% vs. 12.2% in 2015 (because the prices of raw material for feed production, i.e., corn and soybean meal, decreased and the export volume of processed chicken increased). Meanwhile, the profit contribution from affiliates expanded by 49%YoY to Bt371mn, i.e., Bt236mn from McKey (+28%) and Bt135mn from GFN (+121%). Financial position remained strong; 2016 DPS of Bt0.30 was announced As of the end of 2016, the firm’s D/E ratio stood at merely 0.36x, with net interest bearing debts of Bt3.8bn. Meanwhile, shareholders’ equity stood at Bt10.7bn (BVPS = Bt8.50) and the retained earnings amounted to Bt8.7bn. GFPT announced a DPS of Bt0.30 for its 2016 earnings performance, based on a dividend payout of 24%. The firm will go XD on 7 Mar‐17 and pay dividends on 28 Apr‐17. The announced DPS implies a dividend yield of 2.1%. 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 (%)
2014 17,829 1,780 1.42 1.40 17% 0.40 6.89 2014 10.29 9.26 2.12 2.7% 22.4% 38%
2015 16,467 1,195 0.95 0.95 ‐33% 0.25 7.44 2015 15.32 11.49 1.96 1.7% 13.3% 38%
2016 16,693 1,594 1.27 1.27 33% 0.30 8.50 2016 11.48 9.10 1.72 2.1% 16.0% 33%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
2017E 18,236 1,686 1.34 1.34 6% 0.40 9.43 2017E 10.86 8.94 1.55 2.8% 15.0% 27%
2018E 19,403 1,813 1.45 1.45 7% 0.45 10.43 2018E 10.10 8.02 1.40 3.1% 14.6% 20%
4Q16 net profit grew by 9%YoY but dropped by 1%QoQ, 16% better than expected. GFPT reported a net profit of Bt492mn for 4Q16 (+9%YoY, ‐1%QoQ), beating our forecast and the market estimate by 16% and 14%, respectively. The upbeat earnings were attributable to FX gain of Bt50mn and a gross profit margin of 17.1% that was better than our estimate of 16.3%. Exclusive of the FX gain, the firm booked core profit of Bt442mn (‐1%YoY, ‐11%QoQ), exceeding our projection and the market estimate by 4% and 3%, respectively. The sales amounted to Bt4.5bn (+3%YoY, +2%QoQ) and the gross profit margin widened to 17.1% (vs. 14.3% in 4Q15 and 17% in 3Q16). Meanwhile, the profit contribution from affiliates stood at Bt75mn (‐44%YoY, ‐7%QoQ). McKey contributed Bt59mn to GFPT’s earnings (‐37%YoY, ‐6%QoQ as the net profit margin narrowed to 10.4% vs. an unusually good margin of 16.5% seen in 4Q15 and 11.7% in 3Q16). Finally, GFN contributed a profit of Bt17mn to GFPT’s earnings for the quarter (‐51%YoY, QoQ). 2016 net profit rose by 38%YoY to Bt1.6bn, 4% better than expected. The firm’s 2016 net profit amounted to Bt1.6bn, up 38%YoY (surpassing our estimate by 4% due to the FX gain of Bt50mn). Its sales increased merely 1% (note: revenue from the processed chicken meat business, which accounted for 43% of the total sales, increased by 8% because the export volume of processed chicken rose by 28%; however, revenue from feed business, which accounted for 23% of the total sales, decreased by 12%). The more intense competition in the shrimp feed business caused the firm’s animal feed sales volume to drop by 23% YoY and that for livestock feed to fall by 9%YoY. However, the gross profit margin still managed to widen to 15% vs. 12.2% in 2015 (because of lower prices of raw material for feed production, i.e., corn and soybean meal decreased by 8.3%YoY and 9.4%YoY, respectively, and the export volume of processed chicken increased). Meanwhile, the profit contribution from affiliates expanded by 49%YoY to Bt371mn. The contribution from McKey expanded by 28% to Bt236mn (even though sales dropped by 4%, the net profit margin widened to 11.3% vs. 8.5% in 2015 due to the full utilization of cooked chicken production as the firm received larger orders). Finally, the profit contribution from GFN amounted to Bt135mn, up 121% (because the sales increased by 10% and the net profit margin improved to 3.6% vs. 1.8% in 2015 thanks to growing export volume to Japan). Financial position remained strong; 2016 DPS of Bt0.30 was announced. As of the end of 2016, the firm’s D/E ratio stood at merely 0.36x vs. 0.44x as of the end of 2015, with net interest bearing debts of Bt3.8bn (down from Bt4.1bn as of the end of 2015). Meanwhile, shareholders’ equity stood at Bt10.7bn (BVPS = Bt8.50) and the retained earnings amounted to Bt8.7bn. GFPT announced a DPS of Bt0.30 for its 2016 earnings performance, based on a dividend payout of 24%. The firm will go XD on 7 Mar‐17 and pay dividends on 28 Apr‐17. The announced DPS implies a dividend yield of 2.1%. Figure 1: 4Q16 and 2016 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 EPS (Bt)
4Q15 4,340 ‐3,721 619 ‐319 40 340 ‐30 311 6 134 6 445 6 451
3Q16 4,411 ‐3,662 748 ‐310 86 525 ‐25 500 ‐80 81 5 496 0 496
4Q16 4,479 ‐3,713 766 ‐332 34 467 ‐21 446 ‐77 75 3 442 50 492
0.35
0.40
0.35
Gross margin EBIT margin Norm. profit margin
14.3% 7.8% 10.2%
17.0% 11.9% 11.3%
17.1% 10.4% 9.9%
Revenue Structure Chicken processing Feed Farm and Day‐Old‐Chicks Processed Food Total Revenues
1,857 1,117 1,143 223 4,340
1,845 1,116 1,207 243 4,411
2,068 949 1,237 225 4,479
% YoY 3.2% ‐0.2% 23.8% 4.0% ‐16.7% 37.5% ‐27.8% 43.7% ‐1332.5% ‐43.6% ‐55.3% ‐0.6% nm 9.0%
%QoQ 1.6% 1.4% 2.4% 7.3% ‐61.0% ‐10.9% ‐14.4% ‐10.7% ‐3.7% ‐7.4% ‐48.5% ‐10.9% nm ‐0.9%
‐0.6%
‐10.9%
8.8% ‐6.8% 7.2% 11.5% 4.1%
11.0% 21.2% 8.9% 14.6% 13.0%
2015 16,467 ‐14,463 2,003 ‐1,170 229 1,062 ‐123 938 20 249 18 1,189 6 1,195
2016 16,693 ‐14,191 2,502 ‐1,243 280 1,539 ‐98 1,441 ‐206 371 13 1,594 50 1,644
0.95
1.31
12.2% 6.4% 7.2%
15.0% 9.2% 9.5%
6,649 4,458 4,507 853 16,467
7,209 3,908 4,680 896 16,693
% YoY 1.4% ‐1.9% 24.9% 6.2% 22.5% 45.0% ‐20.5% 53.6% ‐1150.5% 49.2% ‐29.9% 34.1% nm 37.6% 38.4%
8.4% ‐12.3% 3.8% 5.1% 1.4%
Source: SET and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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, TFD. KT ZMICO is a co underwriter of RPH.
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 3 of 3
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
Earnings Review
Close Bt14.60
Agribusiness February 23, 2017
Beat forecast/Below forecast/In line
Upbeat 4Q16 and 2016 earnings Results date: February 22, 2017 Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.317
1.392
KT ZMICO vs. consensus Share data
1.7%
0.6%
Reuters / Bloomberg
GFPT.BK/GFPT TB
Paid‐up Shares (m)
1,253.82
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
18.00/523.00
Foreign limit / actual (%)
49.00/14.47
52 week High / Low (Bt)
16.20/10.70
Avg. daily T/O (shares 000) NVDR (%)
4,491.00 5.88
Estimated free float (%)
44.19
Beta
1.16
URL
www.gfpt.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Maintain “Buy” with 2017E target price of Bt17.50/share. Even though the 1Q is the low season for export markets, GFPT’s earnings growth should hold up fairly well at least in 1H17 thanks to sustained low raw material costs and higher prices of live broilers to Bt39‐40/kg (+6% vs. the 4Q16 average of Bt38 and +10% from the 2016 average of Bt37). We maintain our 2016‐17E earnings forecasts of Bt1.7‐ 1.8bn and also leave our “Buy” rating and 2017E target price of Bt17.50/share (13x PER) unchanged. 4Q16 net profit grew by 9%YoY but dropped by 1%QoQ GFPT reported a net profit of Bt492mn for 4Q16 (+9%YoY, ‐1%QoQ), beating our forecast and the market estimate by 16% and 14%, respectively. The upbeat earnings were attributable to FX gain of Bt50mn and a gross profit margin of 17.1% that was better than our estimate of 16.3%. Exclusive of the FX gain, the firm booked core profit of Bt442mn (‐ 1%YoY, ‐11%QoQ), exceeding our projection and the market estimate by 4% and 3%, respectively. The sales amounted to Bt4.5bn (+3%YoY, +2%QoQ) and the gross profit margin widened to 17.1% (vs. 14.3% in 4Q15 and 17% in 3Q16). Meanwhile, the profit contribution from affiliates stood at Bt75mn (‐44%YoY, ‐7%QoQ). 2016 net profit rose by 38%YoY to Bt1.6bn, 4% better than expected The firm’s 2016 net profit amounted to Bt1.6bn, up 38%YoY (surpassing our estimate by 4% due to the FX gain of Bt50mn). While its sales increased merely 1% (note: revenue from the processed chicken meat business increased by 8% but that from feed business decreased by 12%), the gross profit margin still managed to widen to 15% vs. 12.2% in 2015 (because the prices of raw material for feed production, i.e., corn and soybean meal, decreased and the export volume of processed chicken increased). Meanwhile, the profit contribution from affiliates expanded by 49%YoY to Bt371mn, i.e., Bt236mn from McKey (+28%) and Bt135mn from GFN (+121%). Financial position remained strong; 2016 DPS of Bt0.30 was announced As of the end of 2016, the firm’s D/E ratio stood at merely 0.36x, with net interest bearing debts of Bt3.8bn. Meanwhile, shareholders’ equity stood at Bt10.7bn (BVPS = Bt8.50) and the retained earnings amounted to Bt8.7bn. GFPT announced a DPS of Bt0.30 for its 2016 earnings performance, based on a dividend payout of 24%. The firm will go XD on 7 Mar‐17 and pay dividends on 28 Apr‐17. The announced DPS implies a dividend yield of 2.1%. 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 (%)
2014 17,829 1,780 1.42 1.40 17% 0.40 6.89 2014 10.29 9.26 2.12 2.7% 22.4% 38%
2015 16,467 1,195 0.95 0.95 ‐33% 0.25 7.44 2015 15.32 11.49 1.96 1.7% 13.3% 38%
2016 16,693 1,594 1.27 1.27 33% 0.30 8.50 2016 11.48 9.10 1.72 2.1% 16.0% 33%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
2017E 18,236 1,686 1.34 1.34 6% 0.40 9.43 2017E 10.86 8.94 1.55 2.8% 15.0% 27%
2018E 19,403 1,813 1.45 1.45 7% 0.45 10.43 2018E 10.10 8.02 1.40 3.1% 14.6% 20%
4Q16 net profit grew by 9%YoY but dropped by 1%QoQ, 16% better than expected. GFPT reported a net profit of Bt492mn for 4Q16 (+9%YoY, ‐1%QoQ), beating our forecast and the market estimate by 16% and 14%, respectively. The upbeat earnings were attributable to FX gain of Bt50mn and a gross profit margin of 17.1% that was better than our estimate of 16.3%. Exclusive of the FX gain, the firm booked core profit of Bt442mn (‐1%YoY, ‐11%QoQ), exceeding our projection and the market estimate by 4% and 3%, respectively. The sales amounted to Bt4.5bn (+3%YoY, +2%QoQ) and the gross profit margin widened to 17.1% (vs. 14.3% in 4Q15 and 17% in 3Q16). Meanwhile, the profit contribution from affiliates stood at Bt75mn (‐44%YoY, ‐7%QoQ). McKey contributed Bt59mn to GFPT’s earnings (‐37%YoY, ‐6%QoQ as the net profit margin narrowed to 10.4% vs. an unusually good margin of 16.5% seen in 4Q15 and 11.7% in 3Q16). Finally, GFN contributed a profit of Bt17mn to GFPT’s earnings for the quarter (‐51%YoY, QoQ). 2016 net profit rose by 38%YoY to Bt1.6bn, 4% better than expected. The firm’s 2016 net profit amounted to Bt1.6bn, up 38%YoY (surpassing our estimate by 4% due to the FX gain of Bt50mn). Its sales increased merely 1% (note: revenue from the processed chicken meat business, which accounted for 43% of the total sales, increased by 8% because the export volume of processed chicken rose by 28%; however, revenue from feed business, which accounted for 23% of the total sales, decreased by 12%). The more intense competition in the shrimp feed business caused the firm’s animal feed sales volume to drop by 23% YoY and that for livestock feed to fall by 9%YoY. However, the gross profit margin still managed to widen to 15% vs. 12.2% in 2015 (because of lower prices of raw material for feed production, i.e., corn and soybean meal decreased by 8.3%YoY and 9.4%YoY, respectively, and the export volume of processed chicken increased). Meanwhile, the profit contribution from affiliates expanded by 49%YoY to Bt371mn. The contribution from McKey expanded by 28% to Bt236mn (even though sales dropped by 4%, the net profit margin widened to 11.3% vs. 8.5% in 2015 due to the full utilization of cooked chicken production as the firm received larger orders). Finally, the profit contribution from GFN amounted to Bt135mn, up 121% (because the sales increased by 10% and the net profit margin improved to 3.6% vs. 1.8% in 2015 thanks to growing export volume to Japan). Financial position remained strong; 2016 DPS of Bt0.30 was announced. As of the end of 2016, the firm’s D/E ratio stood at merely 0.36x vs. 0.44x as of the end of 2015, with net interest bearing debts of Bt3.8bn (down from Bt4.1bn as of the end of 2015). Meanwhile, shareholders’ equity stood at Bt10.7bn (BVPS = Bt8.50) and the retained earnings amounted to Bt8.7bn. GFPT announced a DPS of Bt0.30 for its 2016 earnings performance, based on a dividend payout of 24%. The firm will go XD on 7 Mar‐17 and pay dividends on 28 Apr‐17. The announced DPS implies a dividend yield of 2.1%. Figure 1: 4Q16 and 2016 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 EPS (Bt)
4Q15 4,340 ‐3,721 619 ‐319 40 340 ‐30 311 6 134 6 445 6 451
3Q16 4,411 ‐3,662 748 ‐310 86 525 ‐25 500 ‐80 81 5 496 0 496
4Q16 4,479 ‐3,713 766 ‐332 34 467 ‐21 446 ‐77 75 3 442 50 492
0.35
0.40
0.35
Gross margin EBIT margin Norm. profit margin
14.3% 7.8% 10.2%
17.0% 11.9% 11.3%
17.1% 10.4% 9.9%
Revenue Structure Chicken processing Feed Farm and Day‐Old‐Chicks Processed Food Total Revenues
1,857 1,117 1,143 223 4,340
1,845 1,116 1,207 243 4,411
2,068 949 1,237 225 4,479
% YoY 3.2% ‐0.2% 23.8% 4.0% ‐16.7% 37.5% ‐27.8% 43.7% ‐1332.5% ‐43.6% ‐55.3% ‐0.6% nm 9.0%
%QoQ 1.6% 1.4% 2.4% 7.3% ‐61.0% ‐10.9% ‐14.4% ‐10.7% ‐3.7% ‐7.4% ‐48.5% ‐10.9% nm ‐0.9%
‐0.6%
‐10.9%
8.8% ‐6.8% 7.2% 11.5% 4.1%
11.0% 21.2% 8.9% 14.6% 13.0%
2015 16,467 ‐14,463 2,003 ‐1,170 229 1,062 ‐123 938 20 249 18 1,189 6 1,195
2016 16,693 ‐14,191 2,502 ‐1,243 280 1,539 ‐98 1,441 ‐206 371 13 1,594 50 1,644
0.95
1.31
12.2% 6.4% 7.2%
15.0% 9.2% 9.5%
6,649 4,458 4,507 853 16,467
7,209 3,908 4,680 896 16,693
% YoY 1.4% ‐1.9% 24.9% 6.2% 22.5% 45.0% ‐20.5% 53.6% ‐1150.5% 49.2% ‐29.9% 34.1% nm 37.6% 38.4%
8.4% ‐12.3% 3.8% 5.1% 1.4%
Source: SET and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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, TFD. KT ZMICO is a co underwriter of RPH.
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 3 of 3
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
