17E TP Bt78.50
Delta Electronics (Thailand) Sell (17E TP Bt78.50) Company Update
Close Bt77.50
Earnings upgrade/Earnings downgrade/ Overview unchanged
Electronic Components
October 25, 2016
3Q16E earning recover slightly more than expected Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
4.779
5.232
KT ZMICO vs. consensus Share data
‐1.9%
0.0%
Reuters / Bloomberg
DELT.BK/DELTA TB
Paid‐up Shares (m)
1,247.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
97.00/2,770.00
Foreign limit / actual (%)
100.00/90.37
52 week High / Low (Bt)
92.00/60.00
Avg. daily T/O (shares 000)
1,882.00
NVDR (%)
5.66
Estimated free float (%)
36.88
Beta
0.72
URL
www.deltathailand.com
CGR
Anti‐corruption
Level 2 (Declared)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
Maintain “Sell” rating The QoQ improvement in 3Q16 earnings was slightly better than expected thanks to seasonal factors and the low base effect in 2Q16. However, we stand by our “Sell” rating and the 2016E target price of Bt78.50/share, based on 2016E PER of 15x. We believe the slowdown in investment in traditional data center products as well as R&D expenses will put DELTA’s 2016‐17E earnings under pressure. It should also be noted that DELTA is now changing its strategy to focus on electronic products used in the automotive industry as well as power supply in India where the market has high growth potential. However, as this remains in the early stage, the revenue and margin contributions from this new strategy remain minor. If DELTA becomes more successful than we previously expected, this will be a source of upside risk to our earnings forecasts. 3Q16 core earnings slightly better than expected DELTA reported 3Q16 core profit of Bt1,373mn. Earnings rose 6%QoQ thanks to the low base from 2Q16 but dropped by 12%YoY because the overall sales fell by 12%YoY. Sales were negatively impacted by the slowdown in the sales of products related to data centers, which contributed 40‐45% of total revenue. Therefore, the gross profit margin was down to 26.5% vs. 27.3% in 2Q16. While the sales of products in the automotive and power supply market in India continued to hold up well, the revenue contributions from these product segments remain rather low at 9% and 13% of total revenue currently. Moreover, R&D expenses kept SG&A to sales rather high at 15.1%. This figure was down from 16.6% in 2Q16 due to the sales increase but was higher than 13.9% in 3Q15. Keep 2016‐17E earnings forecasts unchanged We maintain our earnings projections, which call for DELTA’s earnings to fall by 13%YoY in 2016E before rebounding to +12% and +10% in 2017‐18E, respectively. We remain upbeat about DELTA’s move towards the electric vehicle market as well as auto fans and power supply in India where growth potential is high. These segments may yield low margins at around 15‐20% in the early stage and the revenue contributions from the automotive segment and the business in India may be merely 11‐15% and 15‐22%, respectively, during 2016‐17E. However, we believe these business segments will provide upside to our earnings projections in 2016‐18E if the firm manages to drive the growth of sales and integrated services beyond our assumptions of 10% ‐ 20% during 2016‐17E. 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
2015
2016E
2017E
2018E
44,121 5,962 4.78 10% 5,535 13% 2.70 22.12 2014 18.6 13.6 3.7 3.3% 20.9% ‐59%
46,938 6,714 5.38 13% 6,302 14% 3.00 24.50 2015 16.3 12.2 3.4 3.6% 21.7% ‐61%
48,892 5,852 4.69 ‐13% 5,852 ‐7% 2.65 26.54 2016E 17.6 13.3 3.1 3.2% 18.4% ‐62%
51,936 6,527 5.23 12% 6,527 12% 2.96 28.81 2017E 15.8 12.0 2.9 3.6% 18.9% ‐64%
57,404 7,211 5.78 10% 7,211 10% 3.27 31.33 2018E 14.3 11.0 2.6 4.0% 19.2% ‐65%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: DELTA’s 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec 3Q15 Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Gn (Ls) from Net profit (loss) Core profit Reported EPS Gross margin EBITDA margin Net margin (%) Current ratio (x) Interest Debt / equity (x) BVPS (Bt) ROE (%)
12,103 3,158 1,719 (12) 77 (14) 189 0 0 1,741 1,553 1.40 26.09 14.20 14.39 2.99 122.80 0.08 23.29 6.25
2Q16
3Q16
% YoY
% QoQ
9M16
%YoY
11,273 3,070 1,452 (12) 121 (32) 31 0 0 1,329 1,298 1.07 27.23 12.88 11.79 3.15 100.26 (0.57) 23.18 4.39
11,612 3,078 1,591 (14) 79 (44) 31 0 0 1,405 1,373 1.13 26.51 13.70 12.10 n.m. 95.44 n.m. n.m. 4.75
(4.1) (2.5) (7.4) 15.9 2.4 222.3 (83.4) n.m. n.m. (19.3) (11.5) (19.3)
3.0 0.3 9.6 16.3 (34.6) 36.3 1.1 n.m. n.m. 5.7 5.8 5.7
34,087 9,104 4,378 (35) 363 (135) 101 0 0 3,983 3,882 3.19 26.71 12.84 11.69 n.m. 105.70 n.m. n.m. 4.75
(1.4) (2.3) (17.0) 17.3 45.0 (18.8) (68.1) n.m. n.m. (20.4) (17.2) (20.4)
2016E
%YoY
YTD (%2016E)
48,892 13,165 6,503 (43) 489 (181) 0 0 0 5,852 5,852 4.69 26.93 13.30 11.97 3.52 130.32 (0.62) 26.54 18.38
4.2 2.8 (8.3) 8.9 20.9 (34.1) n.m. n.m. n.m. (12.8) (7.1) (12.8)
69.7 69.2 67.3 81.4 74.2 74.3 n.m. n.m. n.m. 68.1 66.3 68.1
Source: KT ZMICO Research
Figure 2: PER (average 12.8x) and PBV band (average 2.7x) PBV(X)
PER(X) 20
-1.0 S.D.
2.0
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Apr-13
Jan-13
Jan-16
Oct-15
Jul-15
Apr-15
1.0
Oct-13
-2.0 S.D.
1.5
Jul-13
-1.5.0 S.D. -2.0.0 S.D.
Jan-15
Jan-13
6
Apr-13
8
Avg.
2.5
Oct-14
-2.0 S.D.
+1.0 S.D.
3.0
Jul-14
10
3.5
Apr-14
12
+2.0 S.D.
4.0
+1.0 S.D. +0.5 S.D. Avg. -0.5 S.D. -1.0 S.D.
Jan-14
14
+3.0 S.D.
4.5
Oct-13
16
+2.0 S.D. +1.5.0 S.D.
Jul-13
18
5.0
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 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
2014
2015
2016E
2017E
2018E
41,201 (30,367) 10,834 (6,110) 5,642 918 4,724 (63) 271 4,932 (67) 18 261 ‐ 5,416 4.34 4,883 3.91 2.40
44,121 (32,304) 11,817 (6,348) 6,349 880 5,468 (73) 222 5,618 (85) 2 195 ‐ 5,962 4.78 5,535 4.44 2.70
46,938 (34,127) 12,811 (6,599) 7,089 878 6,212 (39) 404 6,577 (275) ‐ ‐ ‐ 6,714 5.38 6,302 5.05 3.00
48,892 (35,726) 13,165 (7,578) 6,503 916 5,587 (43) 489 6,033 (181) ‐ ‐ ‐ 5,852 4.69 5,852 4.69 2.65
51,936 (38,155) 13,782 (7,581) 7,167 966 6,201 (43) 571 6,729 (202) ‐ ‐ ‐ 6,527 5.23 6,527 5.23 2.96
57,404 (42,308) 15,096 (8,251) 7,864 1,019 6,845 (43) 631 7,434 (223) ‐ ‐ ‐ 7,211 5.78 7,211 5.78 3.27
2013
2014
2015
2016E
2017E
2018E
14,953 8,254 5,949 483 5,718 1,507 36,865 913 1,176 11,539 1,247 25,326 36,865
17,931 8,371 5,320 245 5,251 1,126 38,245 389 1,187 10,646 1,247 27,598 38,245
20,488 9,654 6,141 230 5,807 1,281 43,602 346 1,518 13,044 1,247 30,558 43,602
22,332 9,291 6,460 230 6,522 1,281 46,116 346 1,518 13,012 1,247 33,103 46,116
24,732 9,869 6,899 230 6,786 1,281 49,797 346 1,518 13,853 1,247 35,943 49,796
27,117 10,908 7,650 230 6,797 1,281 53,984 346 1,518 14,903 1,247 39,079 53,983
2013
2014
2015
2016E
2017E
2018E
5,483 (132) 918 (1,320) 4,949 (586) 221 (365) 5 ‐ (2,994) 575 (2,413) 2,171 4,584 3.68
6,046 (31) 880 359 7,255 (681) 467 (214) (417) ‐ (3,368) (277) (4,062) 2,979 7,041 5.64
6,989 118 878 (971) 7,013 (1,376) 4 (1,372) (60) ‐ (3,742) 717 (3,085) 2,557 5,641 4.52
5,852 ‐ 916 13 6,781 (1,630) ‐ (1,630) ‐ ‐ (3,306) ‐ (3,306) 1,844 5,151 4.13
6,527 ‐ 966 (177) 7,317 (1,230) ‐ (1,230) ‐ ‐ (3,688) ‐ (3,688) 2,399 6,087 4.88
7,211 ‐ 1,019 (740) 7,490 (1,030) ‐ (1,030) ‐ ‐ (4,074) ‐ (4,074) 2,386 6,460 5.18
2013
2014
2015
2016E
2017E
2018E
1.0% 10.7% 24.6% 26.3% 13.7% 11.5% 13.1% 11.9% 1.4%
7.1% 12.5% 10.1% 26.8% 14.4% 12.4% 13.5% 12.5% 1.5%
6.4% 11.7% 12.6% 27.3% 15.1% 13.2% 14.3% 13.4% 4.2%
4.2% ‐8.3% ‐12.8% 26.9% 13.3% 11.4% 12.0% 12.0% 3.0%
6.2% 10.2% 11.5% 26.5% 13.8% 11.9% 12.6% 12.6% 3.0%
10.5% 9.7% 10.5% 26.3% 13.7% 11.9% 12.6% 12.6% 3.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA, BPP.
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
th
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.
Close Bt77.50
Earnings upgrade/Earnings downgrade/ Overview unchanged
Electronic Components
October 25, 2016
3Q16E earning recover slightly more than expected Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
4.779
5.232
KT ZMICO vs. consensus Share data
‐1.9%
0.0%
Reuters / Bloomberg
DELT.BK/DELTA TB
Paid‐up Shares (m)
1,247.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
97.00/2,770.00
Foreign limit / actual (%)
100.00/90.37
52 week High / Low (Bt)
92.00/60.00
Avg. daily T/O (shares 000)
1,882.00
NVDR (%)
5.66
Estimated free float (%)
36.88
Beta
0.72
URL
www.deltathailand.com
CGR
Anti‐corruption
Level 2 (Declared)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
Maintain “Sell” rating The QoQ improvement in 3Q16 earnings was slightly better than expected thanks to seasonal factors and the low base effect in 2Q16. However, we stand by our “Sell” rating and the 2016E target price of Bt78.50/share, based on 2016E PER of 15x. We believe the slowdown in investment in traditional data center products as well as R&D expenses will put DELTA’s 2016‐17E earnings under pressure. It should also be noted that DELTA is now changing its strategy to focus on electronic products used in the automotive industry as well as power supply in India where the market has high growth potential. However, as this remains in the early stage, the revenue and margin contributions from this new strategy remain minor. If DELTA becomes more successful than we previously expected, this will be a source of upside risk to our earnings forecasts. 3Q16 core earnings slightly better than expected DELTA reported 3Q16 core profit of Bt1,373mn. Earnings rose 6%QoQ thanks to the low base from 2Q16 but dropped by 12%YoY because the overall sales fell by 12%YoY. Sales were negatively impacted by the slowdown in the sales of products related to data centers, which contributed 40‐45% of total revenue. Therefore, the gross profit margin was down to 26.5% vs. 27.3% in 2Q16. While the sales of products in the automotive and power supply market in India continued to hold up well, the revenue contributions from these product segments remain rather low at 9% and 13% of total revenue currently. Moreover, R&D expenses kept SG&A to sales rather high at 15.1%. This figure was down from 16.6% in 2Q16 due to the sales increase but was higher than 13.9% in 3Q15. Keep 2016‐17E earnings forecasts unchanged We maintain our earnings projections, which call for DELTA’s earnings to fall by 13%YoY in 2016E before rebounding to +12% and +10% in 2017‐18E, respectively. We remain upbeat about DELTA’s move towards the electric vehicle market as well as auto fans and power supply in India where growth potential is high. These segments may yield low margins at around 15‐20% in the early stage and the revenue contributions from the automotive segment and the business in India may be merely 11‐15% and 15‐22%, respectively, during 2016‐17E. However, we believe these business segments will provide upside to our earnings projections in 2016‐18E if the firm manages to drive the growth of sales and integrated services beyond our assumptions of 10% ‐ 20% during 2016‐17E. 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
2015
2016E
2017E
2018E
44,121 5,962 4.78 10% 5,535 13% 2.70 22.12 2014 18.6 13.6 3.7 3.3% 20.9% ‐59%
46,938 6,714 5.38 13% 6,302 14% 3.00 24.50 2015 16.3 12.2 3.4 3.6% 21.7% ‐61%
48,892 5,852 4.69 ‐13% 5,852 ‐7% 2.65 26.54 2016E 17.6 13.3 3.1 3.2% 18.4% ‐62%
51,936 6,527 5.23 12% 6,527 12% 2.96 28.81 2017E 15.8 12.0 2.9 3.6% 18.9% ‐64%
57,404 7,211 5.78 10% 7,211 10% 3.27 31.33 2018E 14.3 11.0 2.6 4.0% 19.2% ‐65%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: DELTA’s 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec 3Q15 Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Gn (Ls) from Net profit (loss) Core profit Reported EPS Gross margin EBITDA margin Net margin (%) Current ratio (x) Interest Debt / equity (x) BVPS (Bt) ROE (%)
12,103 3,158 1,719 (12) 77 (14) 189 0 0 1,741 1,553 1.40 26.09 14.20 14.39 2.99 122.80 0.08 23.29 6.25
2Q16
3Q16
% YoY
% QoQ
9M16
%YoY
11,273 3,070 1,452 (12) 121 (32) 31 0 0 1,329 1,298 1.07 27.23 12.88 11.79 3.15 100.26 (0.57) 23.18 4.39
11,612 3,078 1,591 (14) 79 (44) 31 0 0 1,405 1,373 1.13 26.51 13.70 12.10 n.m. 95.44 n.m. n.m. 4.75
(4.1) (2.5) (7.4) 15.9 2.4 222.3 (83.4) n.m. n.m. (19.3) (11.5) (19.3)
3.0 0.3 9.6 16.3 (34.6) 36.3 1.1 n.m. n.m. 5.7 5.8 5.7
34,087 9,104 4,378 (35) 363 (135) 101 0 0 3,983 3,882 3.19 26.71 12.84 11.69 n.m. 105.70 n.m. n.m. 4.75
(1.4) (2.3) (17.0) 17.3 45.0 (18.8) (68.1) n.m. n.m. (20.4) (17.2) (20.4)
2016E
%YoY
YTD (%2016E)
48,892 13,165 6,503 (43) 489 (181) 0 0 0 5,852 5,852 4.69 26.93 13.30 11.97 3.52 130.32 (0.62) 26.54 18.38
4.2 2.8 (8.3) 8.9 20.9 (34.1) n.m. n.m. n.m. (12.8) (7.1) (12.8)
69.7 69.2 67.3 81.4 74.2 74.3 n.m. n.m. n.m. 68.1 66.3 68.1
Source: KT ZMICO Research
Figure 2: PER (average 12.8x) and PBV band (average 2.7x) PBV(X)
PER(X) 20
-1.0 S.D.
2.0
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Oct-15
Jul-15
Apr-15
Jan-15
Oct-14
Jul-14
Apr-14
Jan-14
Apr-13
Jan-13
Jan-16
Oct-15
Jul-15
Apr-15
1.0
Oct-13
-2.0 S.D.
1.5
Jul-13
-1.5.0 S.D. -2.0.0 S.D.
Jan-15
Jan-13
6
Apr-13
8
Avg.
2.5
Oct-14
-2.0 S.D.
+1.0 S.D.
3.0
Jul-14
10
3.5
Apr-14
12
+2.0 S.D.
4.0
+1.0 S.D. +0.5 S.D. Avg. -0.5 S.D. -1.0 S.D.
Jan-14
14
+3.0 S.D.
4.5
Oct-13
16
+2.0 S.D. +1.5.0 S.D.
Jul-13
18
5.0
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 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
2014
2015
2016E
2017E
2018E
41,201 (30,367) 10,834 (6,110) 5,642 918 4,724 (63) 271 4,932 (67) 18 261 ‐ 5,416 4.34 4,883 3.91 2.40
44,121 (32,304) 11,817 (6,348) 6,349 880 5,468 (73) 222 5,618 (85) 2 195 ‐ 5,962 4.78 5,535 4.44 2.70
46,938 (34,127) 12,811 (6,599) 7,089 878 6,212 (39) 404 6,577 (275) ‐ ‐ ‐ 6,714 5.38 6,302 5.05 3.00
48,892 (35,726) 13,165 (7,578) 6,503 916 5,587 (43) 489 6,033 (181) ‐ ‐ ‐ 5,852 4.69 5,852 4.69 2.65
51,936 (38,155) 13,782 (7,581) 7,167 966 6,201 (43) 571 6,729 (202) ‐ ‐ ‐ 6,527 5.23 6,527 5.23 2.96
57,404 (42,308) 15,096 (8,251) 7,864 1,019 6,845 (43) 631 7,434 (223) ‐ ‐ ‐ 7,211 5.78 7,211 5.78 3.27
2013
2014
2015
2016E
2017E
2018E
14,953 8,254 5,949 483 5,718 1,507 36,865 913 1,176 11,539 1,247 25,326 36,865
17,931 8,371 5,320 245 5,251 1,126 38,245 389 1,187 10,646 1,247 27,598 38,245
20,488 9,654 6,141 230 5,807 1,281 43,602 346 1,518 13,044 1,247 30,558 43,602
22,332 9,291 6,460 230 6,522 1,281 46,116 346 1,518 13,012 1,247 33,103 46,116
24,732 9,869 6,899 230 6,786 1,281 49,797 346 1,518 13,853 1,247 35,943 49,796
27,117 10,908 7,650 230 6,797 1,281 53,984 346 1,518 14,903 1,247 39,079 53,983
2013
2014
2015
2016E
2017E
2018E
5,483 (132) 918 (1,320) 4,949 (586) 221 (365) 5 ‐ (2,994) 575 (2,413) 2,171 4,584 3.68
6,046 (31) 880 359 7,255 (681) 467 (214) (417) ‐ (3,368) (277) (4,062) 2,979 7,041 5.64
6,989 118 878 (971) 7,013 (1,376) 4 (1,372) (60) ‐ (3,742) 717 (3,085) 2,557 5,641 4.52
5,852 ‐ 916 13 6,781 (1,630) ‐ (1,630) ‐ ‐ (3,306) ‐ (3,306) 1,844 5,151 4.13
6,527 ‐ 966 (177) 7,317 (1,230) ‐ (1,230) ‐ ‐ (3,688) ‐ (3,688) 2,399 6,087 4.88
7,211 ‐ 1,019 (740) 7,490 (1,030) ‐ (1,030) ‐ ‐ (4,074) ‐ (4,074) 2,386 6,460 5.18
2013
2014
2015
2016E
2017E
2018E
1.0% 10.7% 24.6% 26.3% 13.7% 11.5% 13.1% 11.9% 1.4%
7.1% 12.5% 10.1% 26.8% 14.4% 12.4% 13.5% 12.5% 1.5%
6.4% 11.7% 12.6% 27.3% 15.1% 13.2% 14.3% 13.4% 4.2%
4.2% ‐8.3% ‐12.8% 26.9% 13.3% 11.4% 12.0% 12.0% 3.0%
6.2% 10.2% 11.5% 26.5% 13.8% 11.9% 12.6% 12.6% 3.0%
10.5% 9.7% 10.5% 26.3% 13.7% 11.9% 12.6% 12.6% 3.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA, BPP.
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
th
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.
