Berli Jucker Buy (17E TP Bt54.00)
Berli Jucker
Buy (17E TP Bt54.00)
Company Update
Close Bt50.25
Commerce
Earnings upgrade/Earnings downgrade/Overview unchanged
February 14, 2017
Improving profit trend should continue in 17E Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.209
1.846
KT ZMICO vs. consensus Share data
‐18.1%
‐4.1%
Reuters / Bloomberg
BJC.BK/BJC TB
Paid‐up Shares (m)
3,991.09
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
201.00/5,722.00
Foreign limit / actual (%)
49.00/8.82
52 week High / Low (Bt)
56.25/28.69
Avg. daily T/O (shares 000) NVDR (%)
9,466.00 2.87
Estimated free float (%)
20.72
Beta
0.85
URL
www.bjc.co.th
CGR
Anti‐corruption
n.a.
Pornsawat Jirajarus Analyst, no 18228 [email protected]
Packaging business and modern trade high season to boost 4Q16 BJC’s improving profit from the packaging business and the jump in BIGC’s profit in the Q4 high season should be key catalysts for the 4Q16 earnings. Meanwhile, the strong earnings growth trend should continue this year, as rising farm income, growing sales from BIGC’s new stores and improving profitability both at BJC and BIGC will be profit drivers. BJC’s positioning as ASEAN’s leading integrated retail platform and the stock’s prospective PE/EPS growth at 0.5x in 17E (vs. EPS CAGR of 44% in 17‐18E) look appealing. We maintain our Buy call. 4Q16 net profit to rise 70% YoY We estimate BJC’s 4Q16 net profit of Bt1.18bn (EPS of Bt0.30), up 70% YoY but down 35% QoQ. Excluding Fx gain of Bt1.08bn (after tax) in 3Q16 and Bt30mn extra gains in 4Q15, core net profit would rise 77% YoY and 64% QoQ. Improving profit from the packaging business should continue to be a key profit driver YoY, with the high season of modern trade business, the high backlog of the healthcare and technical business and cost savings from cooperation within the group being additional catalysts. This comes despite slowing consumption during the mourning period, which has hindered the sales growth of consumer‐related businesses (packaging, consumer products and modern trade). BIGC’s changing sales strategy should cause its hypermarket’s same‐store sales to continue declining 23% YoY. However, improving profitability and rising rental income should cause BIGC’s net profit to decline just 12% YoY to Bt1.88bn. BJC’s blended gross profit margin should decline 277 bps YoY due to consolidating BIGC, which has a narrower margin. However, the blended EBITDA margin should rise 293 bps YoY from BIGC’s seasonally‐high other income. BJC’s 2016 full‐year net profit should be Bt3.95bn, up 41% YoY. Strong earnings growth trend to continue this year BJC’s second lot of debentures worth Bt28bn was issued in December at an average interest rate of 3.09%. We expect the low interest rate trend to remain supportive when BJC refinances its remaining Bt39bn loan in 1H17. In 1Q17, its modern trade business should receive some impact from the flooding in the southern provinces. However, we believe that other positive factors, e.g., rising farm income, improving consumption in tandem with the overall economy, new stores and improving profitability both at BJC and BIGC, should continue to be key profit drivers in 17E‐18E. We have fine‐ tuned our forecasts but maintain net profit CAGR of 47% in 17E‐18E. Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 43,423 1,680 1.05 (30.85) 0.60 11.32 2014 39.1 16.0 3.6 1.3 9.4 83.9
2015 42,893 2,792 1.75 66.22 0.84 13.03 2015 20.0 11.3 2.7 2.2 14.4 66.7
2016E 125,220 3,950 0.99 (43.53) 0.50 28.12 2016E 50.8 20.5 1.8 1.2 4.8 135.9
66 (0) 2624‐6257
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 155,248 7,092 1.77 79.05 0.89 29.45 2017E 28.3 16.4 1.7 1.8 6.2 128.2
2018E 168,298 8,635 2.16 21.68 1.08 30.84 2018E 23.3 14.8 1.6 2.1 7.2 118.9
Figure 1: Quarterly earnings preview Profit and Loss (Bt mn) FY Ended 31 Dec 3Q15 4Q15 10,388 11,771 Revenue 2,379 2,530 Gross profit 1,820 1,595 EBITDA Interest expense 111 122 Other income 693 167 Income tax 80 125 Forex gain (loss) 94 (15) Other extraordinary Items 0 0 49 25 Gn (Ls) from affiliates 825 693 Net profit (loss) 481 663 Normalized profit (loss) 0.52 0.44 Reported EPS (THB) Gross margin (%) 22.9 21.5 EBITDA margin (%) 17.5 13.5 Net margin (%) 7.9 5.9 Current ratio (x) 1.1 1.2 22.7 12.8 Interest coverage (x) 1.5 1.2 Debt / equity (x) BVPS (Bt) 12.5 13.0 ROE (%) 4.0 4.0
1Q16
2Q16
3Q16
4Q16E
14,717 3,085
40,487 6,651
33,481 6,613
36,536 6,839
% YoY 210.4 170.3
% QoQ 9.1 3.4
2015
2016E
% YoY
2,000 273
6,108 2,003
5,502 1,750
6,020 1,665
277.4 high
9.4 (4.9)
6,350 493
19,630 5,691
209.1 1,055.5
520 198
3,733 365
3,296 626
3,713 413
2,126.8 230.5
12.7 (34.0)
1,479 400
11,261 1,602
661.5 300.5
(27) 0
(299) 0
1,354 0
20 0
n.m. n.m.
(98.5) n.m.
116 0
1,047 0
n.m. n.m.
59 525 549
58 447 706
36 1,800 717
40 1,177 1,177
62.4 69.9 77.5
10.3 (34.6) 64.2
87 2,792 2,075
194 3,950 3,149
122.6 41.5 51.8
0.33 21.0
0.28 16.4
0.45 19.8
0.30 18.7
(32.1)
(34.6)
1.75 22.9
1.36 18.5
(22.6)
13.6 3.6
15.1 1.1
16.4 5.4
16.5 3.2
14.8 6.5
15.7 3.2
0.2 10.1 11.9
0.1 16.7 14.2
0.7 8.8 1.9
n.a. 14.6 n.a.
1.0 15.9 1.5
n.a. 12.3 n.a.
10.6 4.0
12.1 3.4
64.1 2.2
n.a. n.a.
12.0 3.1
n.a. n.a.
42,893 125,220 9,822 23,188
191.9 136.1
Source: Bloomberg, KT ZMICO Research
Figure 2: BJC’s core profit has been driven largely by the packaging business
BJC’s quarterly core profit
BJC’s core profit, breakdown by segment
Core prof it 1,200
800
Packaging
Consumer product
Healthcare & Technical
Modern trade
1,000 600
800 400
600 400
200
200 1Q16
1Q15
1Q14
1Q16
1Q15
1Q14
1Q13
-200
1Q13
-
-
Remark: Profit from modern trade was net off financial and advisory costs.
Source: BJC, KT Zmico estimates
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 4: Earnings revisions
Figure 3: Earnings revisions Forecast revision BJC Revenue %change Gross margin %change EBITDA %change Net profit %change Core net profit %change Gross margin by segment Packaging Consumer products Health&Technical Modern trade Modern trade ‐ Same‐store‐sales growth New stores
2016e 125,220 ‐6.24% 18.5% 1.79% 17,598 0.2% 3,950 ‐4.0% 3,149 ‐9.3%
New 2017e 155,248 ‐8.64% 17.9% 1.39% 22,016 0.3% 7,092 ‐1.0% 7,092 ‐1.0%
2018e 168,298 ‐8.71% 18.1% 1.40% 24,238 0.4% 8,635 ‐0.2% 8,635 ‐0.2%
2016e 133,558
20.9% 16.6% 32.2% 16.2%
21.0% 17.1% 32.4% 16.0%
21.0% 17.4% 32.4% 16.2%
20.7% 16.8% 32.0% 14.0%
16.7%
Old 2017e 169,924 16.5%
2018e 184,345
NOPAT
16.7%
Depreciation
2019E
2020E
2021E
16,598
17,926
18,805
6,820
7,189
7,452
7,742
8,033
769 9,480 -
419 7,355 -
434 7,355 -
296 7,355
Net investment in fixed assets
8,650
Free cash flow to firm (FCFF)
8,031
8,650
NPV of FCFF during adjusted period
21,951
24,132
4,113
7,165
3,473
7,165
NPV of Terminal value less: net interest bearing debt 20.7% 17.3% 32.2% 14.2%
2018E
14,689
104 - 12,120 -
17,569
Net investment in working capital
2017E
13,226
Equity value
20.7% 17.6% 32.2% 14.4%
No. of shares outstanding (mn) Value per share (Bt)
11,629
16,277
19,187
120,130 Market risk premium
9.5%
243,793 Beta - 151,024 Terminal growth rate
0.90 3.00%
215,544 Cost of equity 4,001 Targeted D/E 53.88 WACC
‐13.0% ‐8.0% 2.0% ‐10.3% 1.0% 2.0% 4 10 7 4 10 7
17,879
Source: BJC, KT Zmico estimates
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
13.6% 1.2 8.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. KT ZMICO is a co underwriter of RPH.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Buy (17E TP Bt54.00)
Company Update
Close Bt50.25
Commerce
Earnings upgrade/Earnings downgrade/Overview unchanged
February 14, 2017
Improving profit trend should continue in 17E Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.209
1.846
KT ZMICO vs. consensus Share data
‐18.1%
‐4.1%
Reuters / Bloomberg
BJC.BK/BJC TB
Paid‐up Shares (m)
3,991.09
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
201.00/5,722.00
Foreign limit / actual (%)
49.00/8.82
52 week High / Low (Bt)
56.25/28.69
Avg. daily T/O (shares 000) NVDR (%)
9,466.00 2.87
Estimated free float (%)
20.72
Beta
0.85
URL
www.bjc.co.th
CGR
Anti‐corruption
n.a.
Pornsawat Jirajarus Analyst, no 18228 [email protected]
Packaging business and modern trade high season to boost 4Q16 BJC’s improving profit from the packaging business and the jump in BIGC’s profit in the Q4 high season should be key catalysts for the 4Q16 earnings. Meanwhile, the strong earnings growth trend should continue this year, as rising farm income, growing sales from BIGC’s new stores and improving profitability both at BJC and BIGC will be profit drivers. BJC’s positioning as ASEAN’s leading integrated retail platform and the stock’s prospective PE/EPS growth at 0.5x in 17E (vs. EPS CAGR of 44% in 17‐18E) look appealing. We maintain our Buy call. 4Q16 net profit to rise 70% YoY We estimate BJC’s 4Q16 net profit of Bt1.18bn (EPS of Bt0.30), up 70% YoY but down 35% QoQ. Excluding Fx gain of Bt1.08bn (after tax) in 3Q16 and Bt30mn extra gains in 4Q15, core net profit would rise 77% YoY and 64% QoQ. Improving profit from the packaging business should continue to be a key profit driver YoY, with the high season of modern trade business, the high backlog of the healthcare and technical business and cost savings from cooperation within the group being additional catalysts. This comes despite slowing consumption during the mourning period, which has hindered the sales growth of consumer‐related businesses (packaging, consumer products and modern trade). BIGC’s changing sales strategy should cause its hypermarket’s same‐store sales to continue declining 23% YoY. However, improving profitability and rising rental income should cause BIGC’s net profit to decline just 12% YoY to Bt1.88bn. BJC’s blended gross profit margin should decline 277 bps YoY due to consolidating BIGC, which has a narrower margin. However, the blended EBITDA margin should rise 293 bps YoY from BIGC’s seasonally‐high other income. BJC’s 2016 full‐year net profit should be Bt3.95bn, up 41% YoY. Strong earnings growth trend to continue this year BJC’s second lot of debentures worth Bt28bn was issued in December at an average interest rate of 3.09%. We expect the low interest rate trend to remain supportive when BJC refinances its remaining Bt39bn loan in 1H17. In 1Q17, its modern trade business should receive some impact from the flooding in the southern provinces. However, we believe that other positive factors, e.g., rising farm income, improving consumption in tandem with the overall economy, new stores and improving profitability both at BJC and BIGC, should continue to be key profit drivers in 17E‐18E. We have fine‐ tuned our forecasts but maintain net profit CAGR of 47% in 17E‐18E. Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 43,423 1,680 1.05 (30.85) 0.60 11.32 2014 39.1 16.0 3.6 1.3 9.4 83.9
2015 42,893 2,792 1.75 66.22 0.84 13.03 2015 20.0 11.3 2.7 2.2 14.4 66.7
2016E 125,220 3,950 0.99 (43.53) 0.50 28.12 2016E 50.8 20.5 1.8 1.2 4.8 135.9
66 (0) 2624‐6257
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 155,248 7,092 1.77 79.05 0.89 29.45 2017E 28.3 16.4 1.7 1.8 6.2 128.2
2018E 168,298 8,635 2.16 21.68 1.08 30.84 2018E 23.3 14.8 1.6 2.1 7.2 118.9
Figure 1: Quarterly earnings preview Profit and Loss (Bt mn) FY Ended 31 Dec 3Q15 4Q15 10,388 11,771 Revenue 2,379 2,530 Gross profit 1,820 1,595 EBITDA Interest expense 111 122 Other income 693 167 Income tax 80 125 Forex gain (loss) 94 (15) Other extraordinary Items 0 0 49 25 Gn (Ls) from affiliates 825 693 Net profit (loss) 481 663 Normalized profit (loss) 0.52 0.44 Reported EPS (THB) Gross margin (%) 22.9 21.5 EBITDA margin (%) 17.5 13.5 Net margin (%) 7.9 5.9 Current ratio (x) 1.1 1.2 22.7 12.8 Interest coverage (x) 1.5 1.2 Debt / equity (x) BVPS (Bt) 12.5 13.0 ROE (%) 4.0 4.0
1Q16
2Q16
3Q16
4Q16E
14,717 3,085
40,487 6,651
33,481 6,613
36,536 6,839
% YoY 210.4 170.3
% QoQ 9.1 3.4
2015
2016E
% YoY
2,000 273
6,108 2,003
5,502 1,750
6,020 1,665
277.4 high
9.4 (4.9)
6,350 493
19,630 5,691
209.1 1,055.5
520 198
3,733 365
3,296 626
3,713 413
2,126.8 230.5
12.7 (34.0)
1,479 400
11,261 1,602
661.5 300.5
(27) 0
(299) 0
1,354 0
20 0
n.m. n.m.
(98.5) n.m.
116 0
1,047 0
n.m. n.m.
59 525 549
58 447 706
36 1,800 717
40 1,177 1,177
62.4 69.9 77.5
10.3 (34.6) 64.2
87 2,792 2,075
194 3,950 3,149
122.6 41.5 51.8
0.33 21.0
0.28 16.4
0.45 19.8
0.30 18.7
(32.1)
(34.6)
1.75 22.9
1.36 18.5
(22.6)
13.6 3.6
15.1 1.1
16.4 5.4
16.5 3.2
14.8 6.5
15.7 3.2
0.2 10.1 11.9
0.1 16.7 14.2
0.7 8.8 1.9
n.a. 14.6 n.a.
1.0 15.9 1.5
n.a. 12.3 n.a.
10.6 4.0
12.1 3.4
64.1 2.2
n.a. n.a.
12.0 3.1
n.a. n.a.
42,893 125,220 9,822 23,188
191.9 136.1
Source: Bloomberg, KT ZMICO Research
Figure 2: BJC’s core profit has been driven largely by the packaging business
BJC’s quarterly core profit
BJC’s core profit, breakdown by segment
Core prof it 1,200
800
Packaging
Consumer product
Healthcare & Technical
Modern trade
1,000 600
800 400
600 400
200
200 1Q16
1Q15
1Q14
1Q16
1Q15
1Q14
1Q13
-200
1Q13
-
-
Remark: Profit from modern trade was net off financial and advisory costs.
Source: BJC, KT Zmico estimates
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 4: Earnings revisions
Figure 3: Earnings revisions Forecast revision BJC Revenue %change Gross margin %change EBITDA %change Net profit %change Core net profit %change Gross margin by segment Packaging Consumer products Health&Technical Modern trade Modern trade ‐ Same‐store‐sales growth New stores
2016e 125,220 ‐6.24% 18.5% 1.79% 17,598 0.2% 3,950 ‐4.0% 3,149 ‐9.3%
New 2017e 155,248 ‐8.64% 17.9% 1.39% 22,016 0.3% 7,092 ‐1.0% 7,092 ‐1.0%
2018e 168,298 ‐8.71% 18.1% 1.40% 24,238 0.4% 8,635 ‐0.2% 8,635 ‐0.2%
2016e 133,558
20.9% 16.6% 32.2% 16.2%
21.0% 17.1% 32.4% 16.0%
21.0% 17.4% 32.4% 16.2%
20.7% 16.8% 32.0% 14.0%
16.7%
Old 2017e 169,924 16.5%
2018e 184,345
NOPAT
16.7%
Depreciation
2019E
2020E
2021E
16,598
17,926
18,805
6,820
7,189
7,452
7,742
8,033
769 9,480 -
419 7,355 -
434 7,355 -
296 7,355
Net investment in fixed assets
8,650
Free cash flow to firm (FCFF)
8,031
8,650
NPV of FCFF during adjusted period
21,951
24,132
4,113
7,165
3,473
7,165
NPV of Terminal value less: net interest bearing debt 20.7% 17.3% 32.2% 14.2%
2018E
14,689
104 - 12,120 -
17,569
Net investment in working capital
2017E
13,226
Equity value
20.7% 17.6% 32.2% 14.4%
No. of shares outstanding (mn) Value per share (Bt)
11,629
16,277
19,187
120,130 Market risk premium
9.5%
243,793 Beta - 151,024 Terminal growth rate
0.90 3.00%
215,544 Cost of equity 4,001 Targeted D/E 53.88 WACC
‐13.0% ‐8.0% 2.0% ‐10.3% 1.0% 2.0% 4 10 7 4 10 7
17,879
Source: BJC, KT Zmico estimates
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
13.6% 1.2 8.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. KT ZMICO is a co underwriter of RPH.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
