Buy (17E TP Bt17.50)
GFPT Buy (17E TP Bt17.50)
Company Update
Close Bt14.90
Agribusiness January 5, 2017
Earning upgrade/Earnings downgrade/Overview unchanged
Earnings projections revised upwards Price Performance (%)
Source: SETTRADE.COM
FY16
FY17
Consensus EPS (Bt)
1.197
1.264
KT ZMICO vs. consensus Share data
5.3%
6.0%
Reuters / Bloomberg
GFPT.BK/GFPT TB
Paid‐up Shares (m)
1,253.82
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
19.00/522.00
Foreign limit / actual (%)
49.00/13.91
52 week High / Low (Bt)
16.20/9.50
Avg. daily T/O (shares 000) NVDR (%)
4,525.00 5.69
Estimated free float (%)
44.19
Beta
1.01
URL
www.gfpt.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Upgrade to “Buy” We have revised up our rating to BUY (from “Outperform”) as the firm’s 4Q16E earnings have grown by more than what we earlier expected. The better outlook is attributable to low feed costs that have helped drive the gross profit margin upwards. Therefore, we have revised our 2016‐ 17E earnings projections up, as well as the 2017E target price, to Bt17.50/share 13x PER), implying a potential upside of 17% vs. the current market price. 4Q16E earnings are expected to have weakened by 6%YoY, better than what we previously expected The firm’s earnings are expected to have grown strongly thanks to low raw material (animal feed) costs as well as volume that weakened only slightly on a QoQ basis. Therefore, we have revised up our 4Q16E earnings projections for GFPT by 18% to Bt423n (vs. Bt385mn previously). We now project sales of Bt Bt4.2bn thanks to the expected export volume of 7,100 tons (+8%YoY,‐12%QoQ) and anticipate a gross profit margin of 16.3% (vs. 14.3% in 4Q15 and 17% . Also, the firm is expected to gain a profit contribution from affiliates amounting to Bt77mn. We therefore expect 4Q16E profit to have fallen by 6%YoY and 15%QoQ. 2016‐17E earnings projections revised upwards by 4% The raw material costs are likely to remain low and thus the gross profit margin may turn out better than what we had expected previously. In addition, the export volume is also likely to beat our expectations, especially the exports to Japan and to the new market for raw broiler exports, i.e., Korea. These favorable factors prompted us to revise upwards our 2016‐17E earnings projections by 4% to Bt1.58‐Bt1.69bn in 2016 and 2017, respective. Long‐term growth prospect intact GFPT Group has a long‐term growth plan with gradual expansion to serve the demand of each market. At its affiliate, GFN, the firm has a plan to expand its 5th production line for cooked products with additional capacity of 500 tons/month by mid‐2017 (vs. the current capacity of 2,200 tons/month). At another affiliate, Mckey, the firm will establish a new factory for cooked products, with additional capacity of 1,000 tons/month (vs. 2,000‐2,500 tons/day currently) by mid‐2018. Furthermore, GFPT will invest Bt800‐1,000mn /year during 2016‐20 to expand its broiler farm capacity from 262,000 chicks/day in 2016 to 318,000 – 384,000 chicks in 2017‐20. The firm will also build a new factory that will combine a broiler slaughterhouse (capacity = 150,000 broilers/day) and a processing base for cooked products (1,000 – 1,500 tons/month). The firm set investment expenditure at Bt3.5bn for these expansion plans and expects the projects to be completed by 2020. Once completed, GFPT’s capacity will double from the current capacity. The investment in new factories will be gradually done during 2017‐19E. 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 10.43 9.36 2.15 2.7% 22.4% 38%
2015 16,467 1,195 0.95 0.95 ‐33% 0.25 7.44 2015 15.53 11.62 1.99 1.7% 13.3% 38%
2016E 16,427 1,575 1.26 1.26 32% 0.35 8.34 2016E 11.78 9.19 1.78 2.4% 15.9% 27%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 18,236 1,685 1.34 1.34 7% 0.40 9.28 2017E 11.01 8.32 1.60 2.7% 15.3% 20%
2018E 19,403 1,812 1.44 1.44 7% 0.45 10.27 2018E 10.24 7.41 1.44 3.0% 14.8% 13%
Figure 1: 4Q16 earnings preview 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) Gross margin EBIT margin Norm. profit margin
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
4Q16E 4,213 ‐3,526 687 ‐325 78 441 ‐28 413 ‐64 77 4 423 0 423
% YoY ‐2.9% ‐5.2% 11.0% 1.7% 94.3% 29.6% ‐6.9% 33.1% ‐1120.0% ‐42.1% ‐34.2% ‐4.9% nm ‐6.2%
%QoQ ‐4.5% ‐3.7% ‐8.2% 4.9% ‐8.9% ‐16.0% 10.5% ‐17.3% ‐20.3% ‐4.9% ‐24.3% ‐14.7% nm ‐14.7%
2015 16,467 ‐14,463 2,003 ‐1,170 229 1,062 ‐123 938 20 249 18 1,189 6 1,195
2016E 16,427 ‐14,004 2,423 ‐1,235 325 1,513 ‐104 1,408 ‐192 373 14 1,575 0 1,575
% YoY ‐0.2% ‐3.2% 21.0% 5.5% 42.0% 42.5% ‐15.4% 50.1% ‐1082.7% 50.0% ‐23.2% 32.5% nm 31.8%
0.35
0.40
0.34
‐4.9%
‐14.7%
0.95
1.26
32.5%
14.3% 7.8% 10.2%
17.0% 11.9% 11.3%
16.3% 10.5% 10.0%
12.2% 6.4% 7.2%
14.8% 9.2% 9.6%
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 16,388 17,642 16,427 18,236 14.5% 14.0% 14.8% 14.0% 375 404 373 404 1,510 1,621 1,575 1,685 1.20 1.29 1.26 1.34
% Change 2016E 2017E 0.2% 3.4% 1.7% 0.0% ‐0.4% 0.0% 4.3% 3.9% 4.3% 3.9%
Source: KTZ Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit
2013
2014
2015
2016E
2017E
16,692
17,829
16,467
16,427
18,236
2018E 19,403
(14,451)
(15,334)
(14,463)
(14,004)
(15,683)
(16,687)
2,241
2,495
2,003
2,423
2,553
2,716
(1,058)
(1,165)
(1,170)
(1,235)
(1,290)
(1,362)
2,075
2,335
1,903
2,325
2,515
2,722
892
1,005
1,070
1,138
1,252
1,367
EBIT
1,184
1,329
833
1,188
1,263
1,355
Interest expense
SG&A EBITDA Depreciation & amortization
(186)
(145)
(123)
(104)
(98)
(85)
Equity earnings
221
326
249
373
404
440
Other income / exp.
220
224
229
325
320
320
1,439
1,733
1,187
1,782
1,889
2,030
EBT Corporate tax
(0)
42
20
(192)
(189)
(203)
Minority interests
14
19
18
14
15
15
Extra items
91
23
6
0
0
0
1,516
1,780
1,195
1,575
1,685
1,812
Net profit Reported EPS
1.21
1.42
0.95
1.26
1.34
1.44
Fully diluted EPS
1.21
1.42
0.95
1.26
1.34
1.44
Core net profit
1,812
1,425
1,756
1,189
1,575
1,685
Core EPS
1.21
1.42
0.95
1.26
1.34
1.44
Dividend (Bt)
0.35
0.40
0.25
0.35
0.40
0.45
2013
2014
2015
2016E
2017E
2018E
311
270
592
492
436
385
Inventories
3,217
3,274
3,173
3,073
3,441
3,661
Investment
1,991
2,281
2,491
2,555
2,620
2,688
PP&E-net
5,696
6,158
6,749
7,359
7,672
7,886
13,022
13,737
14,976
15,475
16,307
16,862
BALANCE SHEET (Btm) Cash and equivalents
Total assets ST debt & current portion Long-term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity
4,127
1,407
2,070
1,900
1,600
1,000
80
2,167
2,075
1,400
1,200
1,000
5,645
5,004
5,533
4,892
4,529
3,819
88
100
117
131
146
161
7,288
8,633
9,327
10,453
11,632
12,882
13,022
13,737
14,976
15,475
16,307
16,862 2018E
CASH FLOW (Btm)
2013
2014
2015
2016E
2017E
EBIT
1,184
1,329
833
1,188
1,263
1,355
Depreciation & amortization
(892)
(1,005)
(1,070)
(1,138)
(1,252)
(1,367)
Change in working capital FX, non-cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others
776
107
(67)
292
(360)
(220)
2,004
2,082
2,068
2,304
2,537
2,767
3,072
2,513
1,764
2,645
2,188
2,534
(1,446)
(1,496)
(1,626)
(1,748)
(1,565)
(1,582)
154
155
239
(78)
(79)
(82)
Cash flow from investing
(1,292)
(1,340)
(1,386)
(1,826)
(1,644)
(1,664)
Debt financing (repayment)
(784)
(1,522)
(612)
578
(830)
(484)
Equity financing
0
0
0
0
0
0
Dividend payment
0
(439)
(502)
(313)
(441)
(506)
(230)
(163)
(132)
224
325
369
(1,752)
(1,214)
(55)
(920)
(600)
(920)
Others Cash flow from financing Net change in cash
28
(41)
322
(100)
(57)
(50)
1,626
1,018
138
897
623
952
1.30
0.81
0.11
0.72
0.50
0.76
2013
2014
2015
2016E
2017E
2018E
8.6
6.8
(7.6)
(0.2)
11.0
6.4
EBITDA growth (%)
135.3
12.5
(18.5)
22.2
8.1
8.2
EPS growth (%)
Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%)
554.7
17.4
(32.9)
31.8
7.0
7.5
Gross margin (%)
13.4
14.0
12.2
14.8
14.0
14.0
EBITDA margin (%)
12.4
13.1
11.6
14.2
13.8
14.0
Operating margin (%)
7.1
7.5
5.1
7.2
6.9
7.0
Net margin (%)
9.1
10.0
7.3
9.6
9.2
9.3
Core profit margin (%)
8.5
9.9
7.2
9.6
9.2
9.3
(0.0)
2.4
1.6
(10.8)
(10.0)
(10.0)
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, M‐CHAI.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Company Update
Close Bt14.90
Agribusiness January 5, 2017
Earning upgrade/Earnings downgrade/Overview unchanged
Earnings projections revised upwards Price Performance (%)
Source: SETTRADE.COM
FY16
FY17
Consensus EPS (Bt)
1.197
1.264
KT ZMICO vs. consensus Share data
5.3%
6.0%
Reuters / Bloomberg
GFPT.BK/GFPT TB
Paid‐up Shares (m)
1,253.82
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
19.00/522.00
Foreign limit / actual (%)
49.00/13.91
52 week High / Low (Bt)
16.20/9.50
Avg. daily T/O (shares 000) NVDR (%)
4,525.00 5.69
Estimated free float (%)
44.19
Beta
1.01
URL
www.gfpt.co.th
CGR
Level 2 (Declared)
Anti‐corruption
Phornsri Laysanitsaerekul Analyst , no 17621 [email protected] 66 (0) 2624‐6258
Upgrade to “Buy” We have revised up our rating to BUY (from “Outperform”) as the firm’s 4Q16E earnings have grown by more than what we earlier expected. The better outlook is attributable to low feed costs that have helped drive the gross profit margin upwards. Therefore, we have revised our 2016‐ 17E earnings projections up, as well as the 2017E target price, to Bt17.50/share 13x PER), implying a potential upside of 17% vs. the current market price. 4Q16E earnings are expected to have weakened by 6%YoY, better than what we previously expected The firm’s earnings are expected to have grown strongly thanks to low raw material (animal feed) costs as well as volume that weakened only slightly on a QoQ basis. Therefore, we have revised up our 4Q16E earnings projections for GFPT by 18% to Bt423n (vs. Bt385mn previously). We now project sales of Bt Bt4.2bn thanks to the expected export volume of 7,100 tons (+8%YoY,‐12%QoQ) and anticipate a gross profit margin of 16.3% (vs. 14.3% in 4Q15 and 17% . Also, the firm is expected to gain a profit contribution from affiliates amounting to Bt77mn. We therefore expect 4Q16E profit to have fallen by 6%YoY and 15%QoQ. 2016‐17E earnings projections revised upwards by 4% The raw material costs are likely to remain low and thus the gross profit margin may turn out better than what we had expected previously. In addition, the export volume is also likely to beat our expectations, especially the exports to Japan and to the new market for raw broiler exports, i.e., Korea. These favorable factors prompted us to revise upwards our 2016‐17E earnings projections by 4% to Bt1.58‐Bt1.69bn in 2016 and 2017, respective. Long‐term growth prospect intact GFPT Group has a long‐term growth plan with gradual expansion to serve the demand of each market. At its affiliate, GFN, the firm has a plan to expand its 5th production line for cooked products with additional capacity of 500 tons/month by mid‐2017 (vs. the current capacity of 2,200 tons/month). At another affiliate, Mckey, the firm will establish a new factory for cooked products, with additional capacity of 1,000 tons/month (vs. 2,000‐2,500 tons/day currently) by mid‐2018. Furthermore, GFPT will invest Bt800‐1,000mn /year during 2016‐20 to expand its broiler farm capacity from 262,000 chicks/day in 2016 to 318,000 – 384,000 chicks in 2017‐20. The firm will also build a new factory that will combine a broiler slaughterhouse (capacity = 150,000 broilers/day) and a processing base for cooked products (1,000 – 1,500 tons/month). The firm set investment expenditure at Bt3.5bn for these expansion plans and expects the projects to be completed by 2020. Once completed, GFPT’s capacity will double from the current capacity. The investment in new factories will be gradually done during 2017‐19E. 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 10.43 9.36 2.15 2.7% 22.4% 38%
2015 16,467 1,195 0.95 0.95 ‐33% 0.25 7.44 2015 15.53 11.62 1.99 1.7% 13.3% 38%
2016E 16,427 1,575 1.26 1.26 32% 0.35 8.34 2016E 11.78 9.19 1.78 2.4% 15.9% 27%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 18,236 1,685 1.34 1.34 7% 0.40 9.28 2017E 11.01 8.32 1.60 2.7% 15.3% 20%
2018E 19,403 1,812 1.44 1.44 7% 0.45 10.27 2018E 10.24 7.41 1.44 3.0% 14.8% 13%
Figure 1: 4Q16 earnings preview 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) Gross margin EBIT margin Norm. profit margin
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
4Q16E 4,213 ‐3,526 687 ‐325 78 441 ‐28 413 ‐64 77 4 423 0 423
% YoY ‐2.9% ‐5.2% 11.0% 1.7% 94.3% 29.6% ‐6.9% 33.1% ‐1120.0% ‐42.1% ‐34.2% ‐4.9% nm ‐6.2%
%QoQ ‐4.5% ‐3.7% ‐8.2% 4.9% ‐8.9% ‐16.0% 10.5% ‐17.3% ‐20.3% ‐4.9% ‐24.3% ‐14.7% nm ‐14.7%
2015 16,467 ‐14,463 2,003 ‐1,170 229 1,062 ‐123 938 20 249 18 1,189 6 1,195
2016E 16,427 ‐14,004 2,423 ‐1,235 325 1,513 ‐104 1,408 ‐192 373 14 1,575 0 1,575
% YoY ‐0.2% ‐3.2% 21.0% 5.5% 42.0% 42.5% ‐15.4% 50.1% ‐1082.7% 50.0% ‐23.2% 32.5% nm 31.8%
0.35
0.40
0.34
‐4.9%
‐14.7%
0.95
1.26
32.5%
14.3% 7.8% 10.2%
17.0% 11.9% 11.3%
16.3% 10.5% 10.0%
12.2% 6.4% 7.2%
14.8% 9.2% 9.6%
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 16,388 17,642 16,427 18,236 14.5% 14.0% 14.8% 14.0% 375 404 373 404 1,510 1,621 1,575 1,685 1.20 1.29 1.26 1.34
% Change 2016E 2017E 0.2% 3.4% 1.7% 0.0% ‐0.4% 0.0% 4.3% 3.9% 4.3% 3.9%
Source: KTZ Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit
2013
2014
2015
2016E
2017E
16,692
17,829
16,467
16,427
18,236
2018E 19,403
(14,451)
(15,334)
(14,463)
(14,004)
(15,683)
(16,687)
2,241
2,495
2,003
2,423
2,553
2,716
(1,058)
(1,165)
(1,170)
(1,235)
(1,290)
(1,362)
2,075
2,335
1,903
2,325
2,515
2,722
892
1,005
1,070
1,138
1,252
1,367
EBIT
1,184
1,329
833
1,188
1,263
1,355
Interest expense
SG&A EBITDA Depreciation & amortization
(186)
(145)
(123)
(104)
(98)
(85)
Equity earnings
221
326
249
373
404
440
Other income / exp.
220
224
229
325
320
320
1,439
1,733
1,187
1,782
1,889
2,030
EBT Corporate tax
(0)
42
20
(192)
(189)
(203)
Minority interests
14
19
18
14
15
15
Extra items
91
23
6
0
0
0
1,516
1,780
1,195
1,575
1,685
1,812
Net profit Reported EPS
1.21
1.42
0.95
1.26
1.34
1.44
Fully diluted EPS
1.21
1.42
0.95
1.26
1.34
1.44
Core net profit
1,812
1,425
1,756
1,189
1,575
1,685
Core EPS
1.21
1.42
0.95
1.26
1.34
1.44
Dividend (Bt)
0.35
0.40
0.25
0.35
0.40
0.45
2013
2014
2015
2016E
2017E
2018E
311
270
592
492
436
385
Inventories
3,217
3,274
3,173
3,073
3,441
3,661
Investment
1,991
2,281
2,491
2,555
2,620
2,688
PP&E-net
5,696
6,158
6,749
7,359
7,672
7,886
13,022
13,737
14,976
15,475
16,307
16,862
BALANCE SHEET (Btm) Cash and equivalents
Total assets ST debt & current portion Long-term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity
4,127
1,407
2,070
1,900
1,600
1,000
80
2,167
2,075
1,400
1,200
1,000
5,645
5,004
5,533
4,892
4,529
3,819
88
100
117
131
146
161
7,288
8,633
9,327
10,453
11,632
12,882
13,022
13,737
14,976
15,475
16,307
16,862 2018E
CASH FLOW (Btm)
2013
2014
2015
2016E
2017E
EBIT
1,184
1,329
833
1,188
1,263
1,355
Depreciation & amortization
(892)
(1,005)
(1,070)
(1,138)
(1,252)
(1,367)
Change in working capital FX, non-cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others
776
107
(67)
292
(360)
(220)
2,004
2,082
2,068
2,304
2,537
2,767
3,072
2,513
1,764
2,645
2,188
2,534
(1,446)
(1,496)
(1,626)
(1,748)
(1,565)
(1,582)
154
155
239
(78)
(79)
(82)
Cash flow from investing
(1,292)
(1,340)
(1,386)
(1,826)
(1,644)
(1,664)
Debt financing (repayment)
(784)
(1,522)
(612)
578
(830)
(484)
Equity financing
0
0
0
0
0
0
Dividend payment
0
(439)
(502)
(313)
(441)
(506)
(230)
(163)
(132)
224
325
369
(1,752)
(1,214)
(55)
(920)
(600)
(920)
Others Cash flow from financing Net change in cash
28
(41)
322
(100)
(57)
(50)
1,626
1,018
138
897
623
952
1.30
0.81
0.11
0.72
0.50
0.76
2013
2014
2015
2016E
2017E
2018E
8.6
6.8
(7.6)
(0.2)
11.0
6.4
EBITDA growth (%)
135.3
12.5
(18.5)
22.2
8.1
8.2
EPS growth (%)
Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%)
554.7
17.4
(32.9)
31.8
7.0
7.5
Gross margin (%)
13.4
14.0
12.2
14.8
14.0
14.0
EBITDA margin (%)
12.4
13.1
11.6
14.2
13.8
14.0
Operating margin (%)
7.1
7.5
5.1
7.2
6.9
7.0
Net margin (%)
9.1
10.0
7.3
9.6
9.2
9.3
Core profit margin (%)
8.5
9.9
7.2
9.6
9.2
9.3
(0.0)
2.4
1.6
(10.8)
(10.0)
(10.0)
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, M‐CHAI.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
