Core profit to have fallen by 15% in 2016E ...
Delta Electronics (Thailand) Sell (17E TP Bt75.50)
Company Update
Close Bt86.25
Earnings upgrade/Earnings downgrade/Overview unchanged
Electronic Components
February 2, 2017
Core profit to have fallen by 15% in 2016E before growing by 17% in 2017E Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
4.524
5.085
KT ZMICO vs. consensus Share data
‐5.2%
‐1.1%
Reuters / Bloomberg
DELT.BK/DELTA TB
Paid‐up Shares (m)
1,247.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
108.00/3,064.00
Foreign limit / actual (%)
100.00/90.61
52 week High / Low (Bt)
91.00/60.00
Avg. daily T/O (shares 000)
1,742.00
NVDR (%)
5.66
Estimated free float (%)
36.88
Beta
0.91
URL
www.deltathailand.com
CGR
Anti‐corruption
Level 2 (Declared)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
2016‐17E earnings projections revised down; “Sell” maintained We revised down our 2016‐17E earnings forecasts by 8.6% and 3.9%, respectively, to reflect the slowdown in investment in the traditional data center product group and higher R&D expenses in India. However, we still believe the firm’s 2017E earnings will grow by 17%YoY, supported by its attempt to change its major products to electric auto products, auto cooling products and power supply in India where growth is accelerating. We give a 2017E target price at Bt75.50/share, based on 2017E PER of 15x. The current share price has already priced in the 2017E earnings prospects; we maintain “Sell”. 4Q16E core profit to have grown QoQ but dropped YoY We anticipate DELTA to report 4Q16E core profit of Bt1,466mn, up 6.7%QoQ. The core profit is expected to have recovered in line with growing sales for EV/PHEV products as well as auto cooling products that account for around 15% of revenue. However, earnings are expected to have fallen by 9.3%YoY as the revenue may have been unable to offset the slowdown in data center products. Meanwhile, the gross profit margin is expected to have narrowed to 26.9% vs. 28% in 4Q15. High SG&A and high sales of data center products put 2016E earnings under pressure We expect DELTA’s 2016E core profit to have dropped by 15%YoY as revenue in baht terms is projected to have declined slightly by 2% on the back of the depreciation of the baht by 3%. Meanwhile, we expect revenue in USD terms to have dropped by 5%YoY as the firm continued to slow down its investment in high‐margin data center products (i.e., accounting for 40%). Therefore, the gross profit margin is expected to have narrowed to 26.8% vs. 27.3% in 2015. Furthermore, the firm has established a production base and an R&D center in India, which may have resulted in higher SG&A to sales to 15.7% vs. 14% in 2015. 2016‐17E earnings projections revised down We have revised down our 2016‐17E earnings projections by 8.6% and 3.9%, respectively, to reflect the greater‐than‐previously‐expected slowdown in data center products. We expect 2016E revenue to have grown by 17% on the back of its attempt to add exposure in automotive products, which is expected to have expanded by 31% (accounting for 18% of total revenue) in line with ongoing growth in global electric auto markets and power supply. In addition, power supply is expected to have expanded well on the back of ongoing expansion and development of 3G/4G networks. Finally, we expect the power supply business in India to have generated sales growth of 26%, accounting for 26% of its total revenue. 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 (%)
2015
2016E
2017E
2018E
2019E
46,938 6,714 5.38 13% 6,302 14% 3.00 24.50 2015 17.1 12.8 3.5 3.5% 21.7% ‐61%
46,222 5,347 4.29 ‐20% 5,347 ‐15% 2.42 26.36 2016E 20.1 15.1 3.3 2.8% 16.9% ‐63%
49,517 6,274 5.03 17% 6,274 17% 2.84 28.55 2017E 17.1 13.1 3.0 3.3% 18.3% ‐64%
53,748 7,259 5.82 16% 7,259 16% 3.29 31.08 2018E 14.8 11.4 2.8 3.8% 19.5% ‐66%
59,409 8,407 6.74 16% 8,407 16% 3.81 34.01 2019E 12.8 9.9 2.5 4.4% 20.7% ‐67%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: DELTA’s 4Q16E and 2016E earnings preview Profit and Loss (Btmn) Year‐end 31 Dec 4Q15 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 (%)
12,382 3,491 1,816 (10) 154 (109) 94 0 0 1,710 1,616 1.37 28.19 14.67 13.81 3.34 163.90 (0.61) 24.50 5.74
3Q16
4Q16E
% YoY
% QoQ
12M16E
%YoY
11,612 3,078 1,591 (14) 79 (44) 31 0 0 1,405 1,373 1.13 26.51 13.70 12.10 3.15 95.44 (0.57) 24.24 4.75
12,134 3,259 1,631 (8) 99 (31) 35 0 0 1,501 1,466 1.20 26.86 13.44 12.37 n.m. 176.07 n.m. n.m. 0.00
(2.0) (6.6) (10.2) (17.3) (35.5) (71.7) (62.9) n.m. n.m. (12.3) (9.3) (12.3)
4.5 5.9 2.5 (43.7) 26.0 (30.3) 11.3 n.m. n.m. 6.8 6.7 6.8
46,222 12,363 6,009 (43) 462 (165) 136 0 0 5,484 5,347 4.40 26.75 13.00 11.86 n.m. 118.80 n.m. n.m. 0.00
(1.5) (3.5) (15.2) 8.9 14.3 (39.8) (66.9) n.m. n.m. (18.3) (15.1) (18.3)
Source: KT ZMICO Research Figure 2: Key Assumption Changes List Revenue Gross profit margin SG&A to sales (%)
Core Net profit Net profit Margin
New 46,22 26.7% 15.7% 5,347 11.6%
2016E Old %Change 48,89 ‐5.46% 26.9% 15.5% 5,852 12.0%
2017E Old %Change
New 49,51
51,93 26.5
27.1% 15.0% 6,274 12.70
‐8.63%
‐4.66% ‐3.88%
14.6 6,527 12.60
Source: KT ZMICO Research Figure 3: PER (average 13.4x) and PBV band (average 2.8x) 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
46,222 (33,858) 12,363 (7,270) 6,009 916 5,093 (43) 462 5,513 (165) ‐ ‐ ‐ 5,347 4.29 5,347 4.29 2.42
49,517 (36,113) 13,404 (7,438) 6,932 966 5,966 (43) 545 6,468 (194) ‐ ‐ ‐ 6,274 5.03 6,274 5.03 2.84
53,748 (39,069) 14,678 (7,743) 7,955 1,019 6,935 (43) 591 7,484 (225) ‐ ‐ ‐ 7,259 5.82 7,259 5.82 3.29
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
22,426 8,783 6,122 230 6,522 1,281 45,365 346 1,518 12,481 1,247 32,884 45,364
24,549 9,410 6,530 230 6,786 1,281 48,785 346 1,518 13,172 1,247 35,613 48,785
27,271 10,214 7,065 230 6,797 1,281 52,857 346 1,518 14,086 1,247 38,771 52,856
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
5,347 ‐ 916 327 6,589 (1,630) ‐ (1,630) ‐ ‐ (3,021) ‐ (3,021) 1,938 4,959 3.98
6,274 ‐ 966 (343) 6,897 (1,230) ‐ (1,230) ‐ ‐ (3,545) ‐ (3,545) 2,123 5,667 4.54
7,259 ‐ 1,019 (424) 7,854 (1,030) ‐ (1,030) ‐ ‐ (4,101) ‐ (4,101) 2,723 6,824 5.47
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%
‐1.5% ‐15.2% ‐20.4% 26.7% 13.0% 11.0% 11.6% 11.6% 3.0%
7.1% 15.4% 17.3% 27.1% 14.0% 12.0% 12.7% 12.7% 3.0%
8.5% 14.7% 15.7% 27.3% 14.8% 12.9% 13.5% 13.5% 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, M‐CHAI, CRANE, 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
Company Update
Close Bt86.25
Earnings upgrade/Earnings downgrade/Overview unchanged
Electronic Components
February 2, 2017
Core profit to have fallen by 15% in 2016E before growing by 17% in 2017E Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
4.524
5.085
KT ZMICO vs. consensus Share data
‐5.2%
‐1.1%
Reuters / Bloomberg
DELT.BK/DELTA TB
Paid‐up Shares (m)
1,247.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
108.00/3,064.00
Foreign limit / actual (%)
100.00/90.61
52 week High / Low (Bt)
91.00/60.00
Avg. daily T/O (shares 000)
1,742.00
NVDR (%)
5.66
Estimated free float (%)
36.88
Beta
0.91
URL
www.deltathailand.com
CGR
Anti‐corruption
Level 2 (Declared)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
2016‐17E earnings projections revised down; “Sell” maintained We revised down our 2016‐17E earnings forecasts by 8.6% and 3.9%, respectively, to reflect the slowdown in investment in the traditional data center product group and higher R&D expenses in India. However, we still believe the firm’s 2017E earnings will grow by 17%YoY, supported by its attempt to change its major products to electric auto products, auto cooling products and power supply in India where growth is accelerating. We give a 2017E target price at Bt75.50/share, based on 2017E PER of 15x. The current share price has already priced in the 2017E earnings prospects; we maintain “Sell”. 4Q16E core profit to have grown QoQ but dropped YoY We anticipate DELTA to report 4Q16E core profit of Bt1,466mn, up 6.7%QoQ. The core profit is expected to have recovered in line with growing sales for EV/PHEV products as well as auto cooling products that account for around 15% of revenue. However, earnings are expected to have fallen by 9.3%YoY as the revenue may have been unable to offset the slowdown in data center products. Meanwhile, the gross profit margin is expected to have narrowed to 26.9% vs. 28% in 4Q15. High SG&A and high sales of data center products put 2016E earnings under pressure We expect DELTA’s 2016E core profit to have dropped by 15%YoY as revenue in baht terms is projected to have declined slightly by 2% on the back of the depreciation of the baht by 3%. Meanwhile, we expect revenue in USD terms to have dropped by 5%YoY as the firm continued to slow down its investment in high‐margin data center products (i.e., accounting for 40%). Therefore, the gross profit margin is expected to have narrowed to 26.8% vs. 27.3% in 2015. Furthermore, the firm has established a production base and an R&D center in India, which may have resulted in higher SG&A to sales to 15.7% vs. 14% in 2015. 2016‐17E earnings projections revised down We have revised down our 2016‐17E earnings projections by 8.6% and 3.9%, respectively, to reflect the greater‐than‐previously‐expected slowdown in data center products. We expect 2016E revenue to have grown by 17% on the back of its attempt to add exposure in automotive products, which is expected to have expanded by 31% (accounting for 18% of total revenue) in line with ongoing growth in global electric auto markets and power supply. In addition, power supply is expected to have expanded well on the back of ongoing expansion and development of 3G/4G networks. Finally, we expect the power supply business in India to have generated sales growth of 26%, accounting for 26% of its total revenue. 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 (%)
2015
2016E
2017E
2018E
2019E
46,938 6,714 5.38 13% 6,302 14% 3.00 24.50 2015 17.1 12.8 3.5 3.5% 21.7% ‐61%
46,222 5,347 4.29 ‐20% 5,347 ‐15% 2.42 26.36 2016E 20.1 15.1 3.3 2.8% 16.9% ‐63%
49,517 6,274 5.03 17% 6,274 17% 2.84 28.55 2017E 17.1 13.1 3.0 3.3% 18.3% ‐64%
53,748 7,259 5.82 16% 7,259 16% 3.29 31.08 2018E 14.8 11.4 2.8 3.8% 19.5% ‐66%
59,409 8,407 6.74 16% 8,407 16% 3.81 34.01 2019E 12.8 9.9 2.5 4.4% 20.7% ‐67%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: DELTA’s 4Q16E and 2016E earnings preview Profit and Loss (Btmn) Year‐end 31 Dec 4Q15 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 (%)
12,382 3,491 1,816 (10) 154 (109) 94 0 0 1,710 1,616 1.37 28.19 14.67 13.81 3.34 163.90 (0.61) 24.50 5.74
3Q16
4Q16E
% YoY
% QoQ
12M16E
%YoY
11,612 3,078 1,591 (14) 79 (44) 31 0 0 1,405 1,373 1.13 26.51 13.70 12.10 3.15 95.44 (0.57) 24.24 4.75
12,134 3,259 1,631 (8) 99 (31) 35 0 0 1,501 1,466 1.20 26.86 13.44 12.37 n.m. 176.07 n.m. n.m. 0.00
(2.0) (6.6) (10.2) (17.3) (35.5) (71.7) (62.9) n.m. n.m. (12.3) (9.3) (12.3)
4.5 5.9 2.5 (43.7) 26.0 (30.3) 11.3 n.m. n.m. 6.8 6.7 6.8
46,222 12,363 6,009 (43) 462 (165) 136 0 0 5,484 5,347 4.40 26.75 13.00 11.86 n.m. 118.80 n.m. n.m. 0.00
(1.5) (3.5) (15.2) 8.9 14.3 (39.8) (66.9) n.m. n.m. (18.3) (15.1) (18.3)
Source: KT ZMICO Research Figure 2: Key Assumption Changes List Revenue Gross profit margin SG&A to sales (%)
Core Net profit Net profit Margin
New 46,22 26.7% 15.7% 5,347 11.6%
2016E Old %Change 48,89 ‐5.46% 26.9% 15.5% 5,852 12.0%
2017E Old %Change
New 49,51
51,93 26.5
27.1% 15.0% 6,274 12.70
‐8.63%
‐4.66% ‐3.88%
14.6 6,527 12.60
Source: KT ZMICO Research Figure 3: PER (average 13.4x) and PBV band (average 2.8x) 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
46,222 (33,858) 12,363 (7,270) 6,009 916 5,093 (43) 462 5,513 (165) ‐ ‐ ‐ 5,347 4.29 5,347 4.29 2.42
49,517 (36,113) 13,404 (7,438) 6,932 966 5,966 (43) 545 6,468 (194) ‐ ‐ ‐ 6,274 5.03 6,274 5.03 2.84
53,748 (39,069) 14,678 (7,743) 7,955 1,019 6,935 (43) 591 7,484 (225) ‐ ‐ ‐ 7,259 5.82 7,259 5.82 3.29
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
22,426 8,783 6,122 230 6,522 1,281 45,365 346 1,518 12,481 1,247 32,884 45,364
24,549 9,410 6,530 230 6,786 1,281 48,785 346 1,518 13,172 1,247 35,613 48,785
27,271 10,214 7,065 230 6,797 1,281 52,857 346 1,518 14,086 1,247 38,771 52,856
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
5,347 ‐ 916 327 6,589 (1,630) ‐ (1,630) ‐ ‐ (3,021) ‐ (3,021) 1,938 4,959 3.98
6,274 ‐ 966 (343) 6,897 (1,230) ‐ (1,230) ‐ ‐ (3,545) ‐ (3,545) 2,123 5,667 4.54
7,259 ‐ 1,019 (424) 7,854 (1,030) ‐ (1,030) ‐ ‐ (4,101) ‐ (4,101) 2,723 6,824 5.47
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%
‐1.5% ‐15.2% ‐20.4% 26.7% 13.0% 11.0% 11.6% 11.6% 3.0%
7.1% 15.4% 17.3% 27.1% 14.0% 12.0% 12.7% 12.7% 3.0%
8.5% 14.7% 15.7% 27.3% 14.8% 12.9% 13.5% 13.5% 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, M‐CHAI, CRANE, 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
