1Q16E earnings to remain weak
Total Access Communication Sell (16E TP Bt38.30)
Company Update
Close Bt42.25
ICT
Earnings upgrade/Earnings downgrade/Overview unchanged
March 29, 2016
1Q16E earnings to remain weak Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.914
1.942
KT ZMICO vs. consensus Share data
6.6%
7.6%
Reuters / Bloomberg
Weak earnings expected in 1Q16E We expect DTAC to post a core profit of Bt1.3bn in 1Q16E, decreasing 37%YoY. This should be attributable to a weak top line along with increasing network and SG&A expenses. Its service revenue should have continued to decline 3.8%YoY given the wrestling for 2G subscribers. Its gross margin should have slid to 29% owing to elevated costs from network investment, particularly for the network under the concession. SG&A to sales is expected to have jumped from 16.0% in 1Q15 to 19.3% due to the effort to defend its revenue market share amidst intensified competition. On a QoQ basis, its core profit is expected to have increased by 40%, mainly on lower SG&A to sales. DTAC ran a “Happy dream car” campaign, which offered nine Mercedes Benz during 4Q15.
DTAC.BK/DTAC TB
Paid‐up Shares (m)
2,367.81
Par (Bt)
2.00
Market cap (Bt bn / US$ m)
100.00/2,829.00
Foreign limit / actual (%)
49.00/48.25
52 week High / Low (Bt)
92.00/27.50
Avg. daily T/O (shares 000)
11,728.00
NVDR (%)
7.11
Estimated free float (%)
29.37
Beta URL
1.94
CGR
Anti‐corruption
Level 3A (Established)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Downgrade to SELL Although we upgrade DTAC’s 2016E target price to Bt38.30 (DCF, WACC) in response to the return to a three‐player industry landscape, we retain our cautious view on the company’s profitability outlook. We expect its earnings to be nearly flat during the next three years. The recent rebound of the share price is an opportunity to unload shares; thus, we downgrade the rating to SELL.
Striving to defend market share DTAC confirmed its priority of defending its revenue market share. This will be secured by its strong 4G network with attractive device and price plan offerings. DTAC views that it is not justified to steal ADVANC’s 2G subscribers while earning revenue from the roaming agreement. Nevertheless, the company will soon launch a handset subsidy program to speed up migration of its 2G subscribers as well as defend its market base. Given the perception that its network quality is inferior, we are concerned that its more aggressive marketing campaign will only succeed in defending its position rather than enabling it to gain higher revenue. Fine‐tuning 2016E earnings We revise down 2016E earnings forecast by 9% due to our less optimistic view on its roaming revenue with ADVANC following the Central Court’s ruling on the extension of the 2G system shutdown. Nevertheless, our better long‐term outlook given the three‐player competitive landscape results in the DCF‐based TP increasing to Bt38.30. Financials 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 Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 90,415 10,729 4.53 4.53 ‐1.1% 6.91 13.77 2014 21.30 8.30 7.01 7.2% 32.9% 85.4%
2015 87,753 5,893 2.49 2.61 ‐42.4% 2.83 11.50 2015 12.15 3.92 2.63 9.4% 20.7% 139.1%
2016E 88,335 4,821 2.04 2.04 ‐22.1% 1.02 12.50 2016E 20.75 4.78 3.38 2.4% 17.0% 92.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 85,129 4,945 2.09 2.09 2.6% 1.04 13.56 2017E 20.23 4.61 3.12 2.5% 16.0% 81.0%
2018E 85,828 4,776 2.02 2.02 ‐3.4% 1.01 14.55 2018E 20.95 4.35 2.90 2.4% 14.3% 66.9%
Figure 1: Earnings preview Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. Service Revenue Sales Revenue Gross Profit EBITDA Interest Expense Other income Net profit (loss) Core profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt to equity (x) BVPS (Bt) ROE (%)
1Q15 18,400 4,425 22,884 6,689 7,390 315 18 2,292 2,094 0.97 29.2% 32.3% 10.0% 0.49 9.65 2.64 12.39 6.8%
4Q15 17,834 5,280 23,249 6,257 6,738 372 77 998 940 0.42 26.9% 29.0% 4.3% 0.53 4.28 3.08 11.50 3.4%
1Q16E 17,697 3,098 20,936 6,068 7,567 382 61 1,426 1,315 0.60 29.0% 36.1% 6.8% 0.51 5.46 2.98 11.58 4.8%
%QoQ ‐0.8% ‐41.3% ‐9.9% ‐3.0% 12.3% 2.7% ‐20.9% 42.9% 39.9% 42.9% 2.1% 7.2% 2.5%
0.7%
%YoY ‐3.8% ‐30.0% ‐8.5% ‐9.3% 2.4% 21.0% 238.8% ‐37.8% ‐37.2% ‐37.8% ‐0.2% 3.8% ‐3.2%
2015 71,858 15,411 87,753 25,231 27,941 1,384 297 5,893 6,188 2.49 28.8% 31.8% 6.7% 0.53 6.59 3.08 0.7% 11.50 20.7%
2016E 72,137 15,873 88,335 24,545 26,638 1,313 350 4,821 4,821 2.04 27.8% 30.2% 5.5% 0.48 5.58 2.43 12.50 17.0%
YTD %YoY (% of 2015E) 0.4% 24.5% 3.0% 19.5% 0.7% 23.7% ‐2.7% 24.7% ‐4.7% 28.4% ‐5.1% 29.1% 17.8% 17.4% ‐18.2% 29.6% ‐22.1% 27.3% ‐18.2% 29.6% ‐1.0% ‐1.7% ‐1.3%
8.8%
Source: DTAC and KT Zmico Research Figure 2: PER and EV/EBITDA band
PER (x)
12.0
40.0 35.0
+3SD = 337.9x
EV/EBITDA
+2.0SD = 10.9x
10.0 +1SD = 8.7x
30.0 +1SD = 24.1x
25.0 20.0
Avearge = 17.2x
15.0
8.0 6.0
Average= 6.5x
4.0
‐1SD = 4.2x
2.0
‐1.5SD = 3.1x
10.0 ‐1SD = 10.3x
5.0 ‐
Jun‐ Jul‐ Aug‐ Sep‐ Nov‐ Nov‐ Jan‐ Feb‐ Mar‐ 07 08 09 10 11 12 14 15 16
0.0
Jun‐ Jul‐ Aug‐ Sep‐ Nov‐ Nov‐ Jan‐ Feb‐ Mar‐ 07 08 09 10 11 12 14 15 16
Source: Bloomberg and KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial Summary
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra items Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2014 90,415 (61,387) 29,028 (14,864) 30,900 (16,624) 14,612 (1,337) 286 13,281 (2,551) (7) 10,729 4.53 4.53 10,735 4.53 6.91
2015 87,753 (62,522) 25,231 (16,408) 27,941 (18,796) 9,120 (1,384) 161 7,740 (1,557) (295) 5,893 2.49 2.49 6,188 2.61 2.41
2016E 88,335 (63,790) 24,545 (17,565) 26,638 (19,438) 7,330 (1,313) 221 6,020 (1,204) 0 4,821 2.04 2.04 4,821 2.04 1.02
2017E 85,129 (61,123) 24,006 (16,967) 27,356 (20,105) 7,394 (1,222) 213 6,175 (1,235) 0 4,945 2.09 2.09 4,945 2.09 1.04
2018E 85,828 (62,107) 23,721 (16,665) 28,284 (21,014) 7,427 (1,466) 215 5,964 (1,193) 0 4,776 2.02 2.02 4,776 2.02 1.01
BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Total assets ST debt & current portion Long‐term debt Total liabilities Shareholder equity Total liab. & shareholder equity
2014 5,823 3,891 22,737 106,426 5,664 28,000 73,828 32,591 106,426
2015 10,121 2,826 28,495 110,965 15,000 33,000 83,742 27,221 110,965
2016E 5,587 2,803 39,051 101,595 9,000 24,000 71,987 29,606 101,595
2017E 9,994 2,208 52,941 102,696 23,000 13,000 70,584 32,110 102,696
2018E 5,934 2,824 65,922 100,019 16,000 13,000 65,561 34,455 100,019
CASH FLOW (Btm) EBIT Depreciation & amortization Change in working capital FX, non‐cash adjustment & others 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)
2014 14,612 16,624 19,942 (22,838) 28,340 (10,873) (8,521) (19,393) (2,632) (15,427) (10,800) 20,263 (8,596) 351 17,468 7.38
2015 9,120 18,796 14,555 (17,695) 24,776 (10,173) (11,477) (21,649) 9,336 0 (11,242) 5,000 3,094 6,220 14,603 6.17
2016E 7,330 19,438 14,782 (12,556) 28,993 (16,000) (90) (16,090) (6,000) 0 (2,437) (9,000) (17,437) (4,533) 12,993 5.49
2017E 7,394 20,105 8,954 (12,365) 24,087 (20,000) (240) (20,240) 14,000 0 (2,442) (11,000) 558 4,406 4,087 1.73
2018E 7,427 21,014 2,573 (5,482) 25,530 (20,000) (160) (20,160) (7,000) 0 (2,430) 0 (9,430) (4,060) 5,530 2.34
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 (4.4) 2.7 1.5 32.1 34.2 15.7 11.9 11.9 19.2
2015 (2.9) (9.6) (45.1) 28.8 31.8 10.1 6.7 7.1 20.1
2016E 0.7 (4.7) (18.2) 27.8 30.2 7.9 5.5 5.5 20.0
2017E (3.6) 2.7 2.6 28.2 32.1 8.3 5.8 5.8 20.0
2018E 0.8 3.4 (3.4) 27.6 33.0 8.2 5.6 5.6 20.0
FINANCIAL QUALITY Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
27,841 0.85 10.93
37,879 1.39 6.59
27,413 0.93 5.58
26,006 0.81 6.05
23,066 0.67 5.06
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO is a partnership between KTB and ZMICO. 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. KT ZMICO is a co‐underwriter of TPBI. Anti‐corruption Progress Indicator 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 BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% 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.
Company Update
Close Bt42.25
ICT
Earnings upgrade/Earnings downgrade/Overview unchanged
March 29, 2016
1Q16E earnings to remain weak Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.914
1.942
KT ZMICO vs. consensus Share data
6.6%
7.6%
Reuters / Bloomberg
Weak earnings expected in 1Q16E We expect DTAC to post a core profit of Bt1.3bn in 1Q16E, decreasing 37%YoY. This should be attributable to a weak top line along with increasing network and SG&A expenses. Its service revenue should have continued to decline 3.8%YoY given the wrestling for 2G subscribers. Its gross margin should have slid to 29% owing to elevated costs from network investment, particularly for the network under the concession. SG&A to sales is expected to have jumped from 16.0% in 1Q15 to 19.3% due to the effort to defend its revenue market share amidst intensified competition. On a QoQ basis, its core profit is expected to have increased by 40%, mainly on lower SG&A to sales. DTAC ran a “Happy dream car” campaign, which offered nine Mercedes Benz during 4Q15.
DTAC.BK/DTAC TB
Paid‐up Shares (m)
2,367.81
Par (Bt)
2.00
Market cap (Bt bn / US$ m)
100.00/2,829.00
Foreign limit / actual (%)
49.00/48.25
52 week High / Low (Bt)
92.00/27.50
Avg. daily T/O (shares 000)
11,728.00
NVDR (%)
7.11
Estimated free float (%)
29.37
Beta URL
1.94
CGR
Anti‐corruption
Level 3A (Established)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Downgrade to SELL Although we upgrade DTAC’s 2016E target price to Bt38.30 (DCF, WACC) in response to the return to a three‐player industry landscape, we retain our cautious view on the company’s profitability outlook. We expect its earnings to be nearly flat during the next three years. The recent rebound of the share price is an opportunity to unload shares; thus, we downgrade the rating to SELL.
Striving to defend market share DTAC confirmed its priority of defending its revenue market share. This will be secured by its strong 4G network with attractive device and price plan offerings. DTAC views that it is not justified to steal ADVANC’s 2G subscribers while earning revenue from the roaming agreement. Nevertheless, the company will soon launch a handset subsidy program to speed up migration of its 2G subscribers as well as defend its market base. Given the perception that its network quality is inferior, we are concerned that its more aggressive marketing campaign will only succeed in defending its position rather than enabling it to gain higher revenue. Fine‐tuning 2016E earnings We revise down 2016E earnings forecast by 9% due to our less optimistic view on its roaming revenue with ADVANC following the Central Court’s ruling on the extension of the 2G system shutdown. Nevertheless, our better long‐term outlook given the three‐player competitive landscape results in the DCF‐based TP increasing to Bt38.30. Financials 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 Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 90,415 10,729 4.53 4.53 ‐1.1% 6.91 13.77 2014 21.30 8.30 7.01 7.2% 32.9% 85.4%
2015 87,753 5,893 2.49 2.61 ‐42.4% 2.83 11.50 2015 12.15 3.92 2.63 9.4% 20.7% 139.1%
2016E 88,335 4,821 2.04 2.04 ‐22.1% 1.02 12.50 2016E 20.75 4.78 3.38 2.4% 17.0% 92.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 85,129 4,945 2.09 2.09 2.6% 1.04 13.56 2017E 20.23 4.61 3.12 2.5% 16.0% 81.0%
2018E 85,828 4,776 2.02 2.02 ‐3.4% 1.01 14.55 2018E 20.95 4.35 2.90 2.4% 14.3% 66.9%
Figure 1: Earnings preview Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. Service Revenue Sales Revenue Gross Profit EBITDA Interest Expense Other income Net profit (loss) Core profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt to equity (x) BVPS (Bt) ROE (%)
1Q15 18,400 4,425 22,884 6,689 7,390 315 18 2,292 2,094 0.97 29.2% 32.3% 10.0% 0.49 9.65 2.64 12.39 6.8%
4Q15 17,834 5,280 23,249 6,257 6,738 372 77 998 940 0.42 26.9% 29.0% 4.3% 0.53 4.28 3.08 11.50 3.4%
1Q16E 17,697 3,098 20,936 6,068 7,567 382 61 1,426 1,315 0.60 29.0% 36.1% 6.8% 0.51 5.46 2.98 11.58 4.8%
%QoQ ‐0.8% ‐41.3% ‐9.9% ‐3.0% 12.3% 2.7% ‐20.9% 42.9% 39.9% 42.9% 2.1% 7.2% 2.5%
0.7%
%YoY ‐3.8% ‐30.0% ‐8.5% ‐9.3% 2.4% 21.0% 238.8% ‐37.8% ‐37.2% ‐37.8% ‐0.2% 3.8% ‐3.2%
2015 71,858 15,411 87,753 25,231 27,941 1,384 297 5,893 6,188 2.49 28.8% 31.8% 6.7% 0.53 6.59 3.08 0.7% 11.50 20.7%
2016E 72,137 15,873 88,335 24,545 26,638 1,313 350 4,821 4,821 2.04 27.8% 30.2% 5.5% 0.48 5.58 2.43 12.50 17.0%
YTD %YoY (% of 2015E) 0.4% 24.5% 3.0% 19.5% 0.7% 23.7% ‐2.7% 24.7% ‐4.7% 28.4% ‐5.1% 29.1% 17.8% 17.4% ‐18.2% 29.6% ‐22.1% 27.3% ‐18.2% 29.6% ‐1.0% ‐1.7% ‐1.3%
8.8%
Source: DTAC and KT Zmico Research Figure 2: PER and EV/EBITDA band
PER (x)
12.0
40.0 35.0
+3SD = 337.9x
EV/EBITDA
+2.0SD = 10.9x
10.0 +1SD = 8.7x
30.0 +1SD = 24.1x
25.0 20.0
Avearge = 17.2x
15.0
8.0 6.0
Average= 6.5x
4.0
‐1SD = 4.2x
2.0
‐1.5SD = 3.1x
10.0 ‐1SD = 10.3x
5.0 ‐
Jun‐ Jul‐ Aug‐ Sep‐ Nov‐ Nov‐ Jan‐ Feb‐ Mar‐ 07 08 09 10 11 12 14 15 16
0.0
Jun‐ Jul‐ Aug‐ Sep‐ Nov‐ Nov‐ Jan‐ Feb‐ Mar‐ 07 08 09 10 11 12 14 15 16
Source: Bloomberg and KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial Summary
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Extra items Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2014 90,415 (61,387) 29,028 (14,864) 30,900 (16,624) 14,612 (1,337) 286 13,281 (2,551) (7) 10,729 4.53 4.53 10,735 4.53 6.91
2015 87,753 (62,522) 25,231 (16,408) 27,941 (18,796) 9,120 (1,384) 161 7,740 (1,557) (295) 5,893 2.49 2.49 6,188 2.61 2.41
2016E 88,335 (63,790) 24,545 (17,565) 26,638 (19,438) 7,330 (1,313) 221 6,020 (1,204) 0 4,821 2.04 2.04 4,821 2.04 1.02
2017E 85,129 (61,123) 24,006 (16,967) 27,356 (20,105) 7,394 (1,222) 213 6,175 (1,235) 0 4,945 2.09 2.09 4,945 2.09 1.04
2018E 85,828 (62,107) 23,721 (16,665) 28,284 (21,014) 7,427 (1,466) 215 5,964 (1,193) 0 4,776 2.02 2.02 4,776 2.02 1.01
BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Total assets ST debt & current portion Long‐term debt Total liabilities Shareholder equity Total liab. & shareholder equity
2014 5,823 3,891 22,737 106,426 5,664 28,000 73,828 32,591 106,426
2015 10,121 2,826 28,495 110,965 15,000 33,000 83,742 27,221 110,965
2016E 5,587 2,803 39,051 101,595 9,000 24,000 71,987 29,606 101,595
2017E 9,994 2,208 52,941 102,696 23,000 13,000 70,584 32,110 102,696
2018E 5,934 2,824 65,922 100,019 16,000 13,000 65,561 34,455 100,019
CASH FLOW (Btm) EBIT Depreciation & amortization Change in working capital FX, non‐cash adjustment & others 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)
2014 14,612 16,624 19,942 (22,838) 28,340 (10,873) (8,521) (19,393) (2,632) (15,427) (10,800) 20,263 (8,596) 351 17,468 7.38
2015 9,120 18,796 14,555 (17,695) 24,776 (10,173) (11,477) (21,649) 9,336 0 (11,242) 5,000 3,094 6,220 14,603 6.17
2016E 7,330 19,438 14,782 (12,556) 28,993 (16,000) (90) (16,090) (6,000) 0 (2,437) (9,000) (17,437) (4,533) 12,993 5.49
2017E 7,394 20,105 8,954 (12,365) 24,087 (20,000) (240) (20,240) 14,000 0 (2,442) (11,000) 558 4,406 4,087 1.73
2018E 7,427 21,014 2,573 (5,482) 25,530 (20,000) (160) (20,160) (7,000) 0 (2,430) 0 (9,430) (4,060) 5,530 2.34
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 (4.4) 2.7 1.5 32.1 34.2 15.7 11.9 11.9 19.2
2015 (2.9) (9.6) (45.1) 28.8 31.8 10.1 6.7 7.1 20.1
2016E 0.7 (4.7) (18.2) 27.8 30.2 7.9 5.5 5.5 20.0
2017E (3.6) 2.7 2.6 28.2 32.1 8.3 5.8 5.8 20.0
2018E 0.8 3.4 (3.4) 27.6 33.0 8.2 5.6 5.6 20.0
FINANCIAL QUALITY Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
27,841 0.85 10.93
37,879 1.39 6.59
27,413 0.93 5.58
26,006 0.81 6.05
23,066 0.67 5.06
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO is a partnership between KTB and ZMICO. 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. KT ZMICO is a co‐underwriter of TPBI. Anti‐corruption Progress Indicator 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 BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% 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.
