Downbeat 2Q16 earnings
SVI Buy (16E TP Bt5.80)
Earnings Review
Close Bt4.86
Electronic Components
Earnings upgrade/Earnings downgrade/ Overview unchanged
August 11, 2016
Downbeat 2Q16 earnings Price Performance (%)
Source: SET Smart
FY16
Consensus EPS (Bt) KT ZMICO vs. consensus Share data
FY17
0.333
0.412
125.2%
‐10.2%
Reuters / Bloomberg
SVI.BK/SVI TB
Paid‐up Shares (m)
2,265.75
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
11.00/317.00
Foreign limit / actual (%)
100.00/10.60
52 week High / Low (Bt)
6.05/4.34
Avg. daily T/O (shares 000)
11,749.00
NVDR (%)
6.15
Estimated free float (%)
55.24
Beta
0.47
URL
www.svi.co.th
Bottleneck problem solved, easing capacity limitation SVI’s 2Q16 earnings fell both YoY and QoQ and we believe this is the bottom for the year as the bottleneck problem has been completely solved. We now see positive sentiment on the core profit outlook in 2H16 onwards. We have revised down our 2016‐17E earnings projections by 7‐ 18% to reflect a narrower‐than‐expected gross profit margin and higher SG&A expenses. Accordingly, we have cut our DCF‐based 2016E target price to Bt5.8/share from Bt6.2/share. We reaffirm “Buy”, believing that the firm’s long‐term growth will be driven by benefits from M&A transactions. 2Q16 revenue increased due to full‐quarter consolidation of Seidel SVI reported revenue of Bt2,926mn, up 26%YoY and 39%QoQ, thanks to the full‐quarter consolidation of revenue amounting to Bt768mn from Seidel (+36%QoQ). For SVI alone, the firm’s 2Q16 revenue was at Bt2,159mn, down 7%YoY but up 42%QoQ, with an increase in orders as the key driver. 2Q16 GPM was 33% narrower than expected The gross profit margin (GPM) has improved (widening to 8.9% vs. 7.6% in 1Q16) since the bottleneck was solved. However, as Seidel earned a narrower GPM (at 6.9%), the overall GPM remained rather flat QoQ at 8.4%, but it was narrower YoY when compared to 13.1% in 2Q15. Moreover, M&A and interest expenses pressured 2Q16 core profit down to Bt86mn, falling by 64%YoY and 8%QoQ, short of our estimate and the market consensus. Note, however, that SVI booked an insurance claim covering fire damage in the approximate amount of Bt528mn in 2Q16. 2016‐18E earnings revised down Although the bottleneck has been solved since 2Q16, the 1H16 core profit accounts for a mere 24% of our full‐year projection. While we expect the firm’s 2H16E earnings to beat the 1H16 results thanks to the easing of capacity limitations and increasing orders on seasonality, our projections are unlikely to be achieved. Therefore, we have revised down our 2016E projection by 18% and the 2017‐18E estimates by 7‐11% to reflect the downbeat GPM and larger SG&A caused by M&A.
CGR Level 4 (Certified)
Anti‐corruption
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273 Ruchanon Chiemkarnkit Assistant analyst
Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Norm. profit (Bt mn) Norm. profit growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 8,295 (304) (0.13) ‐119% 719 47.0% 0.08 1.61 2014 15.3 10.6 3.0 1.6% 18.2% ‐104%
2015 8,119 2,029 0.90 766% 697 ‐3.0% 0.11 2.51 2015 15.8 11.2 1.9 2.2% 14.9% ‐50%
2016E 12,496 1,698 0.75 ‐16% 598 ‐14.2% 0.09 3.16 2016E 18.4 11.6 1.5 1.9% 9.3% ‐65%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 14,490 830 0.37 ‐51% 830 38.8% 0.13 3.40 2017E 13.3 8.7 1.4 2.6% 11.2% ‐66%
2018E 15,645 1,001 0.44 21% 1,001 20.7% 0.15 3.69 2018E 11.0 7.2 1.3 3.2% 12.5% ‐68%
Figure 1: SVI’s 2Q16 earnings results Profit and Loss (Btmn) Year‐end 31 Dec
2Q15
1Q16
2Q16
% YoY
% QoQ
6M16
% QoQ
2016E
% YoY
YTD(%2016E)
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
2,317 303 258 (3) 23 6 (55) 954 0 1,137 237 0.50 13.09 11.14 10.23 1.95 79.68 0.20 2.24 4.87
2,104 178 100 (3) 63 (4) (66) (0) 0 27 93 0.01 8.44 4.77 1.27 2.14 13.11 (0.31) 2.54 1.63
2,927 245 174 (2) 35 (49) (40) 528 0 574 86 0.25 8.38 5.96 19.61 n.m. 58.06 n.m. 2.72 1.44
26.3 (19.1) (32.5) (33.4) 50.0 (892.2) (26.8) n.m. n.m. 49.5 (63.9) (49.5)
39.1 38.1 73.6 (37.1) (44.6) 1,279.5 (39.3) n.m. n.m. 2,053.1 (8.1) 2,053.1
5,030 423 275 (5) 98 (53) (106) 528 0 601 179 0.27 8.41 5.46 3.55 2.51 30.47 n.m. 2.72 3.51
35.4 0.4 (14.6) 20.7 79.5 (479.0) 564.6 (52.7) n.m. (57.5) (43.1) (57.5)
12,496 1,205 740 (23) 152 (15) 0 1,100 0 1,698 598 0.75 9.64 5.92 4.79 2.27 21.26 0.09 3.16 9.31
53.9 30.1 (3.2) 278.9 50.0 (202.3) n.m. n.m. n.m. (16.3) (14.2) (16.3)
40.3 35.1 37.1 20.0 64.1 346.2 n.m. n.m. n.m. 35.4 29.9 35.4
Source: KT ZMICO Research Figure 2: Key Assumption Changes List Revenue GPM % %SG&A to sales Core Net profit (Btmn) NPM (%)
New 12,496
2016E Old 12,496
%Change
New
0%
14,490
9.62%
10.62%
5.8% 598 4.8%
5.4% 731.4 5.9%
‐18.2%
2017E Old
2018E Old
%Change
New
14,490
0%
15,645
15,645
%Change 0%
10.48%
11.38%
11.06%
11.66%
5.7% 830 5.7%
5.5% 936 6.5%
‐11.3%
5.6% 1,002 6.4%
5.4% 1,082 6.9%
‐7.4%
Source: KT ZMICO Research Figure 3: PER (average 14.8x) and PBV band (average 2.10x) PER(X)
PBV(X)
18
2.1
Avg.
Source: KT ZMICO Research, Bloomberg
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
1.3
Mar-15
11
Jun-15
-3.0 S.D. 1.5
Feb-15
-2.0 S.D.
1.7
12 Jan-15
-1.0 S.D.
1.9
May-15
13
+1.0 S.D.
Apr-15
14
+2.0 S.D.
2.3
Mar-15
15
2.5
Feb-15
16
+2.0 S.D. +1.5.0 S.D. +1.0 S.D. +0.5 S.D. Avg. -0.5 S.D. -1.0 S.D. -1.5.0 S.D. -2.0 S.D.
+3.0 S.D.
Jan-15
17
2.7
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Gain (loss) from affiliates Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity
2014
2015
2016E
2017E
2018E
8,006 (7,233) 774 (347) 723 296 427 (19) 67 476 14 ‐
8,295 (7,266) 1,029 (402) 806 179 627 (4) 110 732 (13) ‐
8,119 (7,194) 926 (339) 765 178 587 (6) 102 682 15 ‐
12,496 (11,291) 1,205 (721) 740 256 484 (23) 152 613 (15) ‐
14,490 (13,000) 1,490 (801) 984 295 689 (15) 177 851 (21) ‐
15,645 (13,948) 1,697 (849) 1,182 335 848 (12) 192 1,027 (26) ‐
1,106 ‐ 1,623 0.72 489 0.22 0.15
(1,023) ‐ (304) (0.13) 719 0.32 0.08
1,484 ‐ 2,029 0.90 697 0.31 0.11
1,100 ‐ 1,698 0.75 598 0.26 0.09
‐ ‐ 830 0.37 830 0.37 0.13
‐ ‐ 1,001 0.44 1,001 0.44 0.15
2013
2014
2015
2016E
2017E
2018E
1,949 1,960 1,191 ‐ 1,315 77 6,492 73 58 2,243 2,261 4,249 6,492
3,959 759 724 ‐ 918 71 6,431 89 86 2,782 2,266 3,649 6,431
2,992 1,637 1,030 ‐ 1,882 93 7,633 79 89 2,071 2,266 5,681 7,752
5,336 2,054 1,547 ‐ 2,186 134 11,257 400 250 4,207 2,266 7,170 11,377
5,549 2,382 1,781 ‐ 2,252 134 12,097 290 141 4,508 2,266 7,709 12,217
6,065 2,572 1,911 ‐ 2,278 135 12,961 195 160 4,720 2,266 8,360 13,080
2013
2014
2015
2016E
2017E
2018E
1,610 (214) 296 (69) 1,624 (75) (415) (490) (646) 188 (0) 65 (393) 741 1,134 0.50
(291) 2,159 179 554 2,601 (96) (1,931) (2,027) ‐ 10 (521) (27) (538) 37 574 0.25
2,014 92 178 (1,942) 342 (1,226) 1,255 30 ‐ ‐ ‐ (2) (2) 370 372 0.16
1,698 ‐ 256 678 2,633 (561) ‐ (561) 482 ‐ (209) ‐ 273 2,344 2,072 0.91
830 ‐ 295 (42) 1,083 (361) ‐ (361) (219) ‐ (290) ‐ (509) 213 722 0.32
1,001 ‐ 335 (32) 1,304 (361) ‐ (361) (76) ‐ (350) ‐ (427) 516 943 0.42
2013
2014
2015
2016E
2017E
2018E
3.9% 26.3% 11.6% 9.7% 9.0% 5.3% 20.3% 6.1% ‐2.8%
3.6% 11.5% ‐118.6% 12.4% 9.7% 7.6% ‐3.7% 8.7% 1.8%
‐2.1% ‐5.2% ‐766.2% 11.4% 9.4% 7.2% 25.0% 8.6% ‐2.2%
53.9% ‐3.2% ‐16.3% 9.6% 5.9% 3.9% 13.6% 4.8% 2.5%
16.0% 33.0% ‐51.1% 10.3% 6.8% 4.8% 5.7% 5.7% 2.5%
8.0% 20.1% 20.7% 10.8% 7.6% 5.4% 6.4% 6.4% 2.5%
CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013
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
th
th
th
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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.
Earnings Review
Close Bt4.86
Electronic Components
Earnings upgrade/Earnings downgrade/ Overview unchanged
August 11, 2016
Downbeat 2Q16 earnings Price Performance (%)
Source: SET Smart
FY16
Consensus EPS (Bt) KT ZMICO vs. consensus Share data
FY17
0.333
0.412
125.2%
‐10.2%
Reuters / Bloomberg
SVI.BK/SVI TB
Paid‐up Shares (m)
2,265.75
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
11.00/317.00
Foreign limit / actual (%)
100.00/10.60
52 week High / Low (Bt)
6.05/4.34
Avg. daily T/O (shares 000)
11,749.00
NVDR (%)
6.15
Estimated free float (%)
55.24
Beta
0.47
URL
www.svi.co.th
Bottleneck problem solved, easing capacity limitation SVI’s 2Q16 earnings fell both YoY and QoQ and we believe this is the bottom for the year as the bottleneck problem has been completely solved. We now see positive sentiment on the core profit outlook in 2H16 onwards. We have revised down our 2016‐17E earnings projections by 7‐ 18% to reflect a narrower‐than‐expected gross profit margin and higher SG&A expenses. Accordingly, we have cut our DCF‐based 2016E target price to Bt5.8/share from Bt6.2/share. We reaffirm “Buy”, believing that the firm’s long‐term growth will be driven by benefits from M&A transactions. 2Q16 revenue increased due to full‐quarter consolidation of Seidel SVI reported revenue of Bt2,926mn, up 26%YoY and 39%QoQ, thanks to the full‐quarter consolidation of revenue amounting to Bt768mn from Seidel (+36%QoQ). For SVI alone, the firm’s 2Q16 revenue was at Bt2,159mn, down 7%YoY but up 42%QoQ, with an increase in orders as the key driver. 2Q16 GPM was 33% narrower than expected The gross profit margin (GPM) has improved (widening to 8.9% vs. 7.6% in 1Q16) since the bottleneck was solved. However, as Seidel earned a narrower GPM (at 6.9%), the overall GPM remained rather flat QoQ at 8.4%, but it was narrower YoY when compared to 13.1% in 2Q15. Moreover, M&A and interest expenses pressured 2Q16 core profit down to Bt86mn, falling by 64%YoY and 8%QoQ, short of our estimate and the market consensus. Note, however, that SVI booked an insurance claim covering fire damage in the approximate amount of Bt528mn in 2Q16. 2016‐18E earnings revised down Although the bottleneck has been solved since 2Q16, the 1H16 core profit accounts for a mere 24% of our full‐year projection. While we expect the firm’s 2H16E earnings to beat the 1H16 results thanks to the easing of capacity limitations and increasing orders on seasonality, our projections are unlikely to be achieved. Therefore, we have revised down our 2016E projection by 18% and the 2017‐18E estimates by 7‐11% to reflect the downbeat GPM and larger SG&A caused by M&A.
CGR Level 4 (Certified)
Anti‐corruption
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273 Ruchanon Chiemkarnkit Assistant analyst
Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Norm. profit (Bt mn) Norm. profit growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 8,295 (304) (0.13) ‐119% 719 47.0% 0.08 1.61 2014 15.3 10.6 3.0 1.6% 18.2% ‐104%
2015 8,119 2,029 0.90 766% 697 ‐3.0% 0.11 2.51 2015 15.8 11.2 1.9 2.2% 14.9% ‐50%
2016E 12,496 1,698 0.75 ‐16% 598 ‐14.2% 0.09 3.16 2016E 18.4 11.6 1.5 1.9% 9.3% ‐65%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 14,490 830 0.37 ‐51% 830 38.8% 0.13 3.40 2017E 13.3 8.7 1.4 2.6% 11.2% ‐66%
2018E 15,645 1,001 0.44 21% 1,001 20.7% 0.15 3.69 2018E 11.0 7.2 1.3 3.2% 12.5% ‐68%
Figure 1: SVI’s 2Q16 earnings results Profit and Loss (Btmn) Year‐end 31 Dec
2Q15
1Q16
2Q16
% YoY
% QoQ
6M16
% QoQ
2016E
% YoY
YTD(%2016E)
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
2,317 303 258 (3) 23 6 (55) 954 0 1,137 237 0.50 13.09 11.14 10.23 1.95 79.68 0.20 2.24 4.87
2,104 178 100 (3) 63 (4) (66) (0) 0 27 93 0.01 8.44 4.77 1.27 2.14 13.11 (0.31) 2.54 1.63
2,927 245 174 (2) 35 (49) (40) 528 0 574 86 0.25 8.38 5.96 19.61 n.m. 58.06 n.m. 2.72 1.44
26.3 (19.1) (32.5) (33.4) 50.0 (892.2) (26.8) n.m. n.m. 49.5 (63.9) (49.5)
39.1 38.1 73.6 (37.1) (44.6) 1,279.5 (39.3) n.m. n.m. 2,053.1 (8.1) 2,053.1
5,030 423 275 (5) 98 (53) (106) 528 0 601 179 0.27 8.41 5.46 3.55 2.51 30.47 n.m. 2.72 3.51
35.4 0.4 (14.6) 20.7 79.5 (479.0) 564.6 (52.7) n.m. (57.5) (43.1) (57.5)
12,496 1,205 740 (23) 152 (15) 0 1,100 0 1,698 598 0.75 9.64 5.92 4.79 2.27 21.26 0.09 3.16 9.31
53.9 30.1 (3.2) 278.9 50.0 (202.3) n.m. n.m. n.m. (16.3) (14.2) (16.3)
40.3 35.1 37.1 20.0 64.1 346.2 n.m. n.m. n.m. 35.4 29.9 35.4
Source: KT ZMICO Research Figure 2: Key Assumption Changes List Revenue GPM % %SG&A to sales Core Net profit (Btmn) NPM (%)
New 12,496
2016E Old 12,496
%Change
New
0%
14,490
9.62%
10.62%
5.8% 598 4.8%
5.4% 731.4 5.9%
‐18.2%
2017E Old
2018E Old
%Change
New
14,490
0%
15,645
15,645
%Change 0%
10.48%
11.38%
11.06%
11.66%
5.7% 830 5.7%
5.5% 936 6.5%
‐11.3%
5.6% 1,002 6.4%
5.4% 1,082 6.9%
‐7.4%
Source: KT ZMICO Research Figure 3: PER (average 14.8x) and PBV band (average 2.10x) PER(X)
PBV(X)
18
2.1
Avg.
Source: KT ZMICO Research, Bloomberg
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jan-16
Dec-15
Nov-15
Oct-15
Sep-15
Aug-15
Jul-15
Jun-15
May-15
Apr-15
1.3
Mar-15
11
Jun-15
-3.0 S.D. 1.5
Feb-15
-2.0 S.D.
1.7
12 Jan-15
-1.0 S.D.
1.9
May-15
13
+1.0 S.D.
Apr-15
14
+2.0 S.D.
2.3
Mar-15
15
2.5
Feb-15
16
+2.0 S.D. +1.5.0 S.D. +1.0 S.D. +0.5 S.D. Avg. -0.5 S.D. -1.0 S.D. -1.5.0 S.D. -2.0 S.D.
+3.0 S.D.
Jan-15
17
2.7
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Gain (loss) from affiliates Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity
2014
2015
2016E
2017E
2018E
8,006 (7,233) 774 (347) 723 296 427 (19) 67 476 14 ‐
8,295 (7,266) 1,029 (402) 806 179 627 (4) 110 732 (13) ‐
8,119 (7,194) 926 (339) 765 178 587 (6) 102 682 15 ‐
12,496 (11,291) 1,205 (721) 740 256 484 (23) 152 613 (15) ‐
14,490 (13,000) 1,490 (801) 984 295 689 (15) 177 851 (21) ‐
15,645 (13,948) 1,697 (849) 1,182 335 848 (12) 192 1,027 (26) ‐
1,106 ‐ 1,623 0.72 489 0.22 0.15
(1,023) ‐ (304) (0.13) 719 0.32 0.08
1,484 ‐ 2,029 0.90 697 0.31 0.11
1,100 ‐ 1,698 0.75 598 0.26 0.09
‐ ‐ 830 0.37 830 0.37 0.13
‐ ‐ 1,001 0.44 1,001 0.44 0.15
2013
2014
2015
2016E
2017E
2018E
1,949 1,960 1,191 ‐ 1,315 77 6,492 73 58 2,243 2,261 4,249 6,492
3,959 759 724 ‐ 918 71 6,431 89 86 2,782 2,266 3,649 6,431
2,992 1,637 1,030 ‐ 1,882 93 7,633 79 89 2,071 2,266 5,681 7,752
5,336 2,054 1,547 ‐ 2,186 134 11,257 400 250 4,207 2,266 7,170 11,377
5,549 2,382 1,781 ‐ 2,252 134 12,097 290 141 4,508 2,266 7,709 12,217
6,065 2,572 1,911 ‐ 2,278 135 12,961 195 160 4,720 2,266 8,360 13,080
2013
2014
2015
2016E
2017E
2018E
1,610 (214) 296 (69) 1,624 (75) (415) (490) (646) 188 (0) 65 (393) 741 1,134 0.50
(291) 2,159 179 554 2,601 (96) (1,931) (2,027) ‐ 10 (521) (27) (538) 37 574 0.25
2,014 92 178 (1,942) 342 (1,226) 1,255 30 ‐ ‐ ‐ (2) (2) 370 372 0.16
1,698 ‐ 256 678 2,633 (561) ‐ (561) 482 ‐ (209) ‐ 273 2,344 2,072 0.91
830 ‐ 295 (42) 1,083 (361) ‐ (361) (219) ‐ (290) ‐ (509) 213 722 0.32
1,001 ‐ 335 (32) 1,304 (361) ‐ (361) (76) ‐ (350) ‐ (427) 516 943 0.42
2013
2014
2015
2016E
2017E
2018E
3.9% 26.3% 11.6% 9.7% 9.0% 5.3% 20.3% 6.1% ‐2.8%
3.6% 11.5% ‐118.6% 12.4% 9.7% 7.6% ‐3.7% 8.7% 1.8%
‐2.1% ‐5.2% ‐766.2% 11.4% 9.4% 7.2% 25.0% 8.6% ‐2.2%
53.9% ‐3.2% ‐16.3% 9.6% 5.9% 3.9% 13.6% 4.8% 2.5%
16.0% 33.0% ‐51.1% 10.3% 6.8% 4.8% 5.7% 5.7% 2.5%
8.0% 20.1% 20.7% 10.8% 7.6% 5.4% 6.4% 6.4% 2.5%
CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013
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.
