Buy (17E TP Bt9.10)
RS Earnings Review
Buy (17E TP Bt9.10) Close Bt7.70
Media & Publishing November 15, 2016
Beat forecast / Below forecast / In line
Poor results from drop in H&B business Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.084
0.160
KT ZMICO vs. consensus Share data
‐219%
‐106.2%
Reuters / Bloomberg
RS.BK/RS TB
Paid‐up Shares (m)
1,009.94
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
8.00/219.00
Foreign limit / actual (%)
49.00/3.76
52 week High / Low (Bt)
12.80/5.95
Avg. daily T/O (shares 000) NVDR (%)
4,768.00 4.55
Estimated free float (%)
46.59
Beta
1.13
URL
www.rs.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6236
Expecting a better picture next year RS reported a net loss of Bt61mn for 3Q16, down 446%YoY but up 28%QoQ. The poor result in this quarter was due mainly to a drop in H&B business. We revise down our H&B forecast and cut the company’s bottom line forecasts in 16E and 17E to net losses of 92mn and Bt5mn, respectively. However, we continue to believe that the company will be able to grow its H&B while Adex will continue to recover. This will help support earnings recovery next year. We cut the 17E TP from Bt13.00 to Bt9.10 and keep a Buy rating. Media rose QoQ Revenue from media business dropped 2.2%YoY as RS ceased a radio station and a satellite TV channel this year. However, media revenue increased slightly by 0.7%QoQ, which we believe was led by Ch 8. The two satellite channels still faced challenging times and dragged down the overall gross margin to 12% (vs. 22% in 3Q15 and 24% in 2Q16) since they usually have higher operating leverage than free TV. The company expects that the satellite TV business will be a key supporting factor for a business turnaround upon recovery in Adex. Poor H&B business result H&B business is still facing a challenging time. Total sales declined 29%YoY and 7%QoQ to Bt50mn, 41% below our forecast. The gross margin was maintained at 76% while promotional expenses of H&B caused overall selling expenses to surge 58%YoY. However, they dropped 13%QoQ as planned by the company. We cut H&B revenue to Bt257mn this year and Bt324mn next year and lower the long‐term sales outlook from Bt1,000mn to Bt800mn. We continue to believe that its strategy to boost H&B sales through retailers will eventually bear fruit in the coming years. Net profit cut We revise down the bottom line forecasts in 16E and 17E to net losses of Bt92mn and Bt5mn, respectively. Our 17E TP decreases from Bt13.00 to Bt9.10, providing upside of 18%. Key risks include the poor Adex environment and a potentially lower‐than‐expected performance of the H&B business. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 4,306 341 0.38 ‐13.6% 0.30 1.70
2015 3,729 122 0.12 ‐68.0% 0.10 1.78
2016E 3,270 (92) (0.10) ‐178.8% 0.10 1.10
2017E 3,704 (5) (0.01) ‐94.5% (0.00) 0.99
2018E 4,012 329 0.34 ‐6544.1% 0.14 1.34
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 20.42 4.53 4.54 3.9% 20.8% ‐21%
2015 63.74 9.98 4.34 1.3% 6.9% ‐43%
2016E ‐80.90 14.29 7.00 1.3% ‐6.3% 27%
2017E ‐1,457.6 11.85 7.74 0.0% ‐0.5% 74%
2018E 22.62 7.08 5.76 1.8% 28.0% 66%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: RS’s 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Other extraordinary Items 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 (%)
3Q15 820 222 78 (20) 33 (7) 0 18 18 0.02 27.1 9.5 2.1 1.0 0.6 (0.4) 1.6 1.1
2Q16 747 178 21 (18) 8 20 0 (85) (85) (0.09) 23.9 2.9 (11.4) 0.7 (5.2) 0.7 1.2 (6.0)
3Q16 715 182 70 (23) 2 14 0 (61) (61) (0.06) 25.5 9.7 (8.5) 0.6 (2.3) 0.9 1.2 (5.3)
% YoY (12.8) (18.2) (11.2) 16.6 (92.7) (300.5) n.m. (446.2) (446.2) (460.6)
% QoQ (4.4) 2.0 225.7 28.6 (70.2) (30.5) n.m. 28.3 28.3 27.5
9M16 2,679 780 336 (59) 13 2 0 (39) (39) (0.04) 29.1 12.6 (1.5) 0.6 0.1 0.9 1.2 (2.8)
% YoY 9.0 28.1 (14.8) (7.2) (67.6) (96.6) n.m. 3,546.3 3,546.3 3,881.8
2016 3,270 893 510 (68) 28 23 0 (92) (92) (0.10) 27.3 15.6 (2.8) 0.5 (1.1) 0.3 1.1 (6.3)
% YoY (12.3) (12.6) (30.2) (16.1) (45.6) 86.6 n.m. (175.6) (158.7) (178.8)
%YTD 81.9 87.3 65.9 86.6 46.6 6.6 n.m. 42.5 42.5 46.0
Source: RS, KT ZMICO Research
Figure 2: Earnings revision Year‐end 31 Dec Revenue (Bt'mn) EBITDA (Bt'mn) Share of profit (Bt'mn) Net profit (Bt'mn) % growth Core profit (Bt'mn) % growth Core EPS (Bt) Core EPS growth (%) Gross margin (%) EBITDA margin (%)
Previous 3,658 704 0 63 ‐48% 63 ‐60% 0.06 ‐58% 30.0% 19.2%
2016 New 3,270 510 0 (92) ‐176% (92) ‐159% (0.10) ‐161% 27.3% 15.6%
%chg ‐11% ‐27% n.m. ‐247% ‐127% ‐247% ‐99% ‐247% ‐103% ‐3% ‐4%
Previous 3,946 797 0 140 123% 140 123% 0.14 123% 28.3% 20.2%
2017 New 3,704 616 0 (5) ‐94% (5) ‐94% (0.01) ‐94% 25.1% 16.6%
%chg ‐6% ‐23% n.m. ‐104% ‐217% ‐104% ‐217% ‐104% ‐217% ‐3% ‐4%
2018 Previous New %chg 4,254 4,012 ‐6% 1,192 1,031 ‐14% 0 0 n.m. 459 329 ‐28% 229% ‐6544% ‐6773% 459 329 ‐28% 229% ‐6544% ‐6773% 0.47 0.34 ‐28% 229% ‐6544% ‐6773% 33.4% 31.2% ‐2% 28.0% 25.7% ‐2%
Sources: RS, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
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 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 3,461 (2,109) 1,352 (873) 758 (278) 479 (17) 14 476 (84) 0 2 394 0.44 394 0.44 0.35
2014 4,306 (2,941) 1,365 (835) 1,608 (1,078) 530 (78) 23 475 (107) 0 (27) 341 0.38 341 0.38 0.30
2013 572 1,068 39 5 1,055 210 2,950 292 13 1,364 1,026 1,585 2,950
2014 382 1,101 107 5 2,698 289 4,582 8 5 2,838 1,026 1,743 4,582
2013 392 7 278 294 971 (473) 0 (473) (125) 148 (272) 8 (240) 259 499 0.52
2018E 60 942 166 5 2,552 572 4,297 906 9 2,995 1,014 1,303 4,297
2017E (5) 0 598 (320) 273 (612) 0 (612) 151 0 (97) 0 54 (285) (339) (0.35)
2016E ‐12.3% ‐30.2% ‐161.2% 27.3% 15.6% ‐2.3% ‐2.8% ‐2.8% 20.0%
2018E 4,012 (2,761) 1,251 (831) 1,031 (611) 420 (37) 28 411 (82) 0 0 329 0.34 329 0.34 0.14
2017E 41 870 167 5 2,539 540 4,162 756 8 3,191 1,014 971 4,162
2016E (92) 0 585 (363) 131 (600) 0 (600) 600 0 (97) (465) 38 (431) (469) (0.49)
2015 ‐13.4% ‐54.5% ‐58.7% 27.4% 19.6% 4.9% 3.3% 4.2% ‐8.0%
2017E 3,704 (2,775) 929 (911) 616 (598) 18 (52) 28 (6) 1 0 0 (5) (0.01) (5) (0.01) (0.00)
2016E 326 768 143 5 2,524 496 4,263 606 7 3,189 1,014 1,073 4,263
2015 132 42 547 470 1,191 (666) 9 (657) (10) 0 (181) 33 (158) 376 534 0.53
2014 24.4% 112.3% ‐13.6% 31.7% 37.3% 12.3% 7.9% 7.9% 22.6%
2016E 3,270 (2,377) 893 (968) 510 (585) (75) (68) 28 (115) 23 0 0 (92) (0.10) (92) (0.10) 0.10
2015 757 876 163 5 2,510 533 4,844 6 7 3,117 1,014 1,727 4,844
2014 368 0 1,078 (93) 1,354 (1,033) 0 (1,032) (293) 100 (311) (8) (512) (191) 321 0.33
2013 23.1% 70.1% 34.0% 39.1% 21.9% 13.9% 11.4% 11.4% 17.6%
2015 3,729 (2,707) 1,022 (837) 731 (547) 184 (81) 51 155 12 (35) (10) 122 0.12 157 0.16 0.10
2018E 329 0 611 (450) 490 (624) 0 (624) 151 0 2 0 153 19 (134) (0.14)
2017E 13.3% 20.7% ‐94.5% 25.1% 16.6% 0.5% ‐0.1% ‐0.1% 20.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2018E 8.3% 67.4% ‐6544.1% 31.2% 25.7% 10.5% 8.2% 8.2% 20.0%
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, PACE, TPOLY, M‐CHAI, TFD, SUTHA, CI.
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 Bt9.10) Close Bt7.70
Media & Publishing November 15, 2016
Beat forecast / Below forecast / In line
Poor results from drop in H&B business Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.084
0.160
KT ZMICO vs. consensus Share data
‐219%
‐106.2%
Reuters / Bloomberg
RS.BK/RS TB
Paid‐up Shares (m)
1,009.94
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
8.00/219.00
Foreign limit / actual (%)
49.00/3.76
52 week High / Low (Bt)
12.80/5.95
Avg. daily T/O (shares 000) NVDR (%)
4,768.00 4.55
Estimated free float (%)
46.59
Beta
1.13
URL
www.rs.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6236
Expecting a better picture next year RS reported a net loss of Bt61mn for 3Q16, down 446%YoY but up 28%QoQ. The poor result in this quarter was due mainly to a drop in H&B business. We revise down our H&B forecast and cut the company’s bottom line forecasts in 16E and 17E to net losses of 92mn and Bt5mn, respectively. However, we continue to believe that the company will be able to grow its H&B while Adex will continue to recover. This will help support earnings recovery next year. We cut the 17E TP from Bt13.00 to Bt9.10 and keep a Buy rating. Media rose QoQ Revenue from media business dropped 2.2%YoY as RS ceased a radio station and a satellite TV channel this year. However, media revenue increased slightly by 0.7%QoQ, which we believe was led by Ch 8. The two satellite channels still faced challenging times and dragged down the overall gross margin to 12% (vs. 22% in 3Q15 and 24% in 2Q16) since they usually have higher operating leverage than free TV. The company expects that the satellite TV business will be a key supporting factor for a business turnaround upon recovery in Adex. Poor H&B business result H&B business is still facing a challenging time. Total sales declined 29%YoY and 7%QoQ to Bt50mn, 41% below our forecast. The gross margin was maintained at 76% while promotional expenses of H&B caused overall selling expenses to surge 58%YoY. However, they dropped 13%QoQ as planned by the company. We cut H&B revenue to Bt257mn this year and Bt324mn next year and lower the long‐term sales outlook from Bt1,000mn to Bt800mn. We continue to believe that its strategy to boost H&B sales through retailers will eventually bear fruit in the coming years. Net profit cut We revise down the bottom line forecasts in 16E and 17E to net losses of Bt92mn and Bt5mn, respectively. Our 17E TP decreases from Bt13.00 to Bt9.10, providing upside of 18%. Key risks include the poor Adex environment and a potentially lower‐than‐expected performance of the H&B business. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 4,306 341 0.38 ‐13.6% 0.30 1.70
2015 3,729 122 0.12 ‐68.0% 0.10 1.78
2016E 3,270 (92) (0.10) ‐178.8% 0.10 1.10
2017E 3,704 (5) (0.01) ‐94.5% (0.00) 0.99
2018E 4,012 329 0.34 ‐6544.1% 0.14 1.34
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 20.42 4.53 4.54 3.9% 20.8% ‐21%
2015 63.74 9.98 4.34 1.3% 6.9% ‐43%
2016E ‐80.90 14.29 7.00 1.3% ‐6.3% 27%
2017E ‐1,457.6 11.85 7.74 0.0% ‐0.5% 74%
2018E 22.62 7.08 5.76 1.8% 28.0% 66%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: RS’s 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Other extraordinary Items 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 (%)
3Q15 820 222 78 (20) 33 (7) 0 18 18 0.02 27.1 9.5 2.1 1.0 0.6 (0.4) 1.6 1.1
2Q16 747 178 21 (18) 8 20 0 (85) (85) (0.09) 23.9 2.9 (11.4) 0.7 (5.2) 0.7 1.2 (6.0)
3Q16 715 182 70 (23) 2 14 0 (61) (61) (0.06) 25.5 9.7 (8.5) 0.6 (2.3) 0.9 1.2 (5.3)
% YoY (12.8) (18.2) (11.2) 16.6 (92.7) (300.5) n.m. (446.2) (446.2) (460.6)
% QoQ (4.4) 2.0 225.7 28.6 (70.2) (30.5) n.m. 28.3 28.3 27.5
9M16 2,679 780 336 (59) 13 2 0 (39) (39) (0.04) 29.1 12.6 (1.5) 0.6 0.1 0.9 1.2 (2.8)
% YoY 9.0 28.1 (14.8) (7.2) (67.6) (96.6) n.m. 3,546.3 3,546.3 3,881.8
2016 3,270 893 510 (68) 28 23 0 (92) (92) (0.10) 27.3 15.6 (2.8) 0.5 (1.1) 0.3 1.1 (6.3)
% YoY (12.3) (12.6) (30.2) (16.1) (45.6) 86.6 n.m. (175.6) (158.7) (178.8)
%YTD 81.9 87.3 65.9 86.6 46.6 6.6 n.m. 42.5 42.5 46.0
Source: RS, KT ZMICO Research
Figure 2: Earnings revision Year‐end 31 Dec Revenue (Bt'mn) EBITDA (Bt'mn) Share of profit (Bt'mn) Net profit (Bt'mn) % growth Core profit (Bt'mn) % growth Core EPS (Bt) Core EPS growth (%) Gross margin (%) EBITDA margin (%)
Previous 3,658 704 0 63 ‐48% 63 ‐60% 0.06 ‐58% 30.0% 19.2%
2016 New 3,270 510 0 (92) ‐176% (92) ‐159% (0.10) ‐161% 27.3% 15.6%
%chg ‐11% ‐27% n.m. ‐247% ‐127% ‐247% ‐99% ‐247% ‐103% ‐3% ‐4%
Previous 3,946 797 0 140 123% 140 123% 0.14 123% 28.3% 20.2%
2017 New 3,704 616 0 (5) ‐94% (5) ‐94% (0.01) ‐94% 25.1% 16.6%
%chg ‐6% ‐23% n.m. ‐104% ‐217% ‐104% ‐217% ‐104% ‐217% ‐3% ‐4%
2018 Previous New %chg 4,254 4,012 ‐6% 1,192 1,031 ‐14% 0 0 n.m. 459 329 ‐28% 229% ‐6544% ‐6773% 459 329 ‐28% 229% ‐6544% ‐6773% 0.47 0.34 ‐28% 229% ‐6544% ‐6773% 33.4% 31.2% ‐2% 28.0% 25.7% ‐2%
Sources: RS, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
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 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 3,461 (2,109) 1,352 (873) 758 (278) 479 (17) 14 476 (84) 0 2 394 0.44 394 0.44 0.35
2014 4,306 (2,941) 1,365 (835) 1,608 (1,078) 530 (78) 23 475 (107) 0 (27) 341 0.38 341 0.38 0.30
2013 572 1,068 39 5 1,055 210 2,950 292 13 1,364 1,026 1,585 2,950
2014 382 1,101 107 5 2,698 289 4,582 8 5 2,838 1,026 1,743 4,582
2013 392 7 278 294 971 (473) 0 (473) (125) 148 (272) 8 (240) 259 499 0.52
2018E 60 942 166 5 2,552 572 4,297 906 9 2,995 1,014 1,303 4,297
2017E (5) 0 598 (320) 273 (612) 0 (612) 151 0 (97) 0 54 (285) (339) (0.35)
2016E ‐12.3% ‐30.2% ‐161.2% 27.3% 15.6% ‐2.3% ‐2.8% ‐2.8% 20.0%
2018E 4,012 (2,761) 1,251 (831) 1,031 (611) 420 (37) 28 411 (82) 0 0 329 0.34 329 0.34 0.14
2017E 41 870 167 5 2,539 540 4,162 756 8 3,191 1,014 971 4,162
2016E (92) 0 585 (363) 131 (600) 0 (600) 600 0 (97) (465) 38 (431) (469) (0.49)
2015 ‐13.4% ‐54.5% ‐58.7% 27.4% 19.6% 4.9% 3.3% 4.2% ‐8.0%
2017E 3,704 (2,775) 929 (911) 616 (598) 18 (52) 28 (6) 1 0 0 (5) (0.01) (5) (0.01) (0.00)
2016E 326 768 143 5 2,524 496 4,263 606 7 3,189 1,014 1,073 4,263
2015 132 42 547 470 1,191 (666) 9 (657) (10) 0 (181) 33 (158) 376 534 0.53
2014 24.4% 112.3% ‐13.6% 31.7% 37.3% 12.3% 7.9% 7.9% 22.6%
2016E 3,270 (2,377) 893 (968) 510 (585) (75) (68) 28 (115) 23 0 0 (92) (0.10) (92) (0.10) 0.10
2015 757 876 163 5 2,510 533 4,844 6 7 3,117 1,014 1,727 4,844
2014 368 0 1,078 (93) 1,354 (1,033) 0 (1,032) (293) 100 (311) (8) (512) (191) 321 0.33
2013 23.1% 70.1% 34.0% 39.1% 21.9% 13.9% 11.4% 11.4% 17.6%
2015 3,729 (2,707) 1,022 (837) 731 (547) 184 (81) 51 155 12 (35) (10) 122 0.12 157 0.16 0.10
2018E 329 0 611 (450) 490 (624) 0 (624) 151 0 2 0 153 19 (134) (0.14)
2017E 13.3% 20.7% ‐94.5% 25.1% 16.6% 0.5% ‐0.1% ‐0.1% 20.0%
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2018E 8.3% 67.4% ‐6544.1% 31.2% 25.7% 10.5% 8.2% 8.2% 20.0%
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, PACE, TPOLY, M‐CHAI, TFD, SUTHA, CI.
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
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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
