Hana Microelectronics
Hana Microelectronics Outperform (17E TP Bt48.00) Company Update
Close Bt43.00
Electronic Components
February 24, 2017
4Q16 earnings recovery QoQ Price Performance (%)
Source: www.settrade.com
FY17
FY18
Consensus EPS (Bt)
2.871
3.066
KT ZMICO vs. consensus Share data
4.8%
13.2%
Reuters / Bloomberg
HANA.BK/HANA TB
Paid‐up Shares (m)
804.88
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
35.00/989.00
Foreign limit / actual (%)
100.00/70.94
52 week High / Low (Bt)
43.75/27.00
Avg. daily T/O (shares 000)
1,683.00
NVDR (%)
6.63
Estimated free float (%)
46.55
Beta
0.51
URL
www.hanagroup.com
CGR Anti‐corruption
Level 4 (Certified)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
Maintain “Outperform” HANA’s 4Q16 earnings recovered QoQ in line with growth in the IC industry. This points to a positive outlook for 2017E earnings thanks to higher production volume for IC products used in automobiles and cellular phones. We raised our earnings forecasts by 12‐13% to reflect the better margin caused by economies of scale for its capacity in the IC business. The share price is currently traded at 14x PER, vs. the sector’s average of 16x. We view that the PER should be re‐rated to 16x to reflect expected growth of 16%CAGR during 2017‐19E. Maintain an “Outperform” rating and the 2017E target price is revised upwards to Bt48.00/share. 4Q16 earnings recovered strongly QoQ HANA’s 4Q16 core profit amounted to Bt764mn, up 2%YoY and 53%QoQ. The gross profit margin stood at 16.7%, narrowing from 17.9% in 4Q15 (because in 4Q15 the firm benefited from a 9% depreciation of the baht), but improving from 14.2% in 3Q16. The QoQ improvement in the margin was driven by a 7%QoQ increase in sales in 4Q16 on growth in the IC business and recovery in the PCBA business. 2016 earnings fell due to deterioration in laptop/touchpad segment HANA posted 2016 net profit of Bt2,027mn, exceeding our estimate by 13%. The earnings fell by 13%YoY while the gross profit margin narrowed to 14% vs. 15% in 2015 because of lower product prices. The revenue in dollar terms fell by 3%YoY. About 56% of total revenue was contributed by the PCBA business, which dropped by 12%YoY as it was impacted by inventory adjustment for laptop/touchpad products. Meanwhile, sales of IC and microdisplay products still grew by 4% and 200%, respectively, thanks to strong growth in sensor products used in different industries. 2017‐18E earnings revised up by 12‐13% We have revised up 2017‐18E earnings by 12‐13% to reflect a better‐than‐ expected gross profit margin due to economies of scale seen in the IC and sensor production lines. We expect sales from these businesses to continue to recover in 2017‐18E, supported by growth in automotive and cellular phone markets. The share price is currently traded at 14x PER, vs. the sector’s average of 16x. We expect its 2017E earnings to grow by 20%YoY. We view that the PER should be re‐rated to equal the sector’s average. We thus revised up our target price to Bt48.00 (16x PER) vs. Bt34.75 (13x PER). Maintain an “Outperform” rating. Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Norm. profit (Bt mn) Norm. profit growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014
2015
2016
2017E
2018E
21,227 3,405 4.23 48% 1,948 37% 2.00 22.82 2014 17.8 8.8 1.9 4.7% 11.1% ‐41%
20,521 2,066 2.57 ‐39% 2,328 20% 2.00 24.13 2015 14.9 8.5 1.8 4.7% 12.3% ‐42%
20,523 2,105 2.62 2% 2,027 ‐13% 2.00 24.94 2016 17.1 9.1 1.7 4.0% 10.3% ‐42%
22,641 2,422 3.01 15% 2,422 20% 2.05 25.90 2017E 14.3 7.9 1.7 4.8% 11.8% ‐42%
25,438 2,790 3.47 15% 2,790 15% 2.36 27.01 2018E 12.4 7.1 1.6 5.5% 13.1% ‐42%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: HANA 2016 Earnings result Profit and Loss (Btmn) Year‐end 31 Dec
4Q15
3Q16
4Q16
% YoY
% QoQ
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) 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 (%)
5,125 918 933 (2) 126 (5) 71 822 751 1.02 17.9 18.2 16.0 5.1 278.3 (0.4) 24.1 4.2
5,290 749 756 (2) 129 (88) 70 569 499 0.71 14.2 14.3 10.8 5.2 258.2 (0.5) 24.7 2.9
5,726 958 964 (2) 116 (21) (129) 635 764 0.79 16.7 16.8 11.1 5.1 309.0 (0.4) 24.8 3.2
11.7 4.3 3.3 (4.3) (8.4) 330.8 (281.4) (22.7) 1.8 (22.7)
8.2 28.0 27.4 22.0 (10.3) (76.5) (284.4) 11.7 53.0 11.7
2016
% YoY
20,521 3,030 3,084 (8) 468 (47) (262) 2,066 2,328 2.57 14.8 15.0 10.1 5.1 239.6 (0.4) 24.1 12.3
20,523 2,876 2,888 (7) 463 (137) 79 2,105 2,027 2.62 14.0 14.1 10.3 5.1 231.4 (0.4) 24.9 10.3
0.0 (5.1) (6.3) (7.7) (1.0) 190.4 (130.1) 1.9 (12.9) 1.9
2018E Old
%Change
2015
Source: KT ZMICO Research Figure 2: Key Assumption Changes List
New 22,641
Revenue Gross profit margin %
14.5% 2,422 3.01
Core Net profit (Btmn) EPS
2017E Old 21,636 13.9% 2,159 2.68
%Change
New
4.6%
25,438 14.8% 2,790 3.47
12%
23,367 14.4% 2,467 3.06
8.8% 13%
Source: KT ZMICO Research Figure 3: PER (average 11.4x) and PBV band (average 1.3x) PBV(X)
PER(X) 20
2.5
+3.0 S.D.
18 16
+2.0 S.D.
14
+1.0 S.D.
12 10 8 6 4
+2.0 S.D.
2.0
+1.0 S.D. 1.5
Avg. -0.5 S.D. -1.0 S.D.
1.0
-2.0 S.D.
0.5
Avg. -1.0 S.D. -2.0 S.D.
2
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
0.0 Jan-11
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
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 FX Gain (loss) 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
2014
2015
2016
2017E
2018E
17,667 (15,683) 1,984 (905) 2,268 1,188 1,079 (9) 411 1,482 (62) (60) 942 ‐ 2,301 2.86 1,420 1.76 1.50
21,227 (18,358) 2,869 (993) 3,001 1,125 1,876 (8) 448 2,315 (367) 107 1,350 ‐ 3,405 4.23 1,948 2.42 2.00
20,521 (17,491) 3,030 (1,115) 3,084 1,168 1,916 (8) 468 2,375 (47) (262) ‐ ‐ 2,066 2.57 2,328 2.89 2.00
20,523 (17,647) 2,876 (1,167) 2,888 1,180 1,708 (7) 463 2,164 (137) 79 ‐ ‐ 2,105 2.62 2,027 2.52 1.71
22,641 (19,351) 3,290 (1,300) 3,328 1,338 1,990 (7) 488 2,472 (49) ‐ ‐ ‐ 2,422 3.01 2,422 3.01 2.05
25,438 (21,665) 3,773 (1,446) 3,739 1,412 2,327 (6) 525 2,847 (57) ‐ ‐ ‐ 2,790 3.47 2,790 3.47 2.36
2013
2014
2015
2016
2017E
2018E
6,710 3,241 3,172 ‐ 6,857 177 20,157 435 386 3,563 805 16,594 20,157
8,331 3,354 3,329 331 6,566 141 22,051 360 516 3,688 805 18,364 22,051
9,121 3,318 3,367 ‐ 7,075 243 23,123 347 534 3,699 805 19,424 23,123
9,286 3,503 3,336 ‐ 7,327 243 23,695 300 530 3,700 805 20,072 23,772
9,444 3,864 3,658 ‐ 7,389 243 24,598 260 460 3,828 805 20,847 24,676
9,738 4,342 4,096 ‐ 7,277 243 25,694 220 380 4,032 805 21,740 25,772
2013
2014
2015
2016
2017E
2018E
2,399 (279) 1,188 (73) 3,236 (1,367) (239) (1,606) (8) ‐ (1,207) 660 (556) 1,075 1,630 2.03
3,772 (249) 1,125 (464) 4,184 (788) (480) (1,268) (16) ‐ (1,610) (9) (1,635) 1,282 2,917 3.62
2,114 (45) 1,168 (281) 2,956 (1,601) 97 (1,505) ‐ ‐ (1,610) 796 (814) 637 1,451 1.80
2,027 ‐ 1,180 (102) 3,105 (1,510) ‐ (1,510) (52) ‐ (1,378) ‐ (1,430) 165 1,595 1.98
2,422 ‐ 1,338 (446) 3,315 (1,400) ‐ (1,400) (110) ‐ (1,647) ‐ (1,757) 158 1,915 2.38
2,790 ‐ 1,412 (591) 3,611 (1,300) ‐ (1,300) (120) ‐ (1,897) ‐ (2,017) 294 2,311 2.87
2013
2014
2015
2016
2017E
2018E
2.5% 19.4% 38.6% 11.2% 12.8% 6.1% 13.0% 8.0% 4.2%
20.2% 32.3% 48.0% 13.5% 14.1% 8.8% 16.0% 9.2% 15.8%
‐3.3% 2.8% ‐39.3% 14.8% 15.0% 9.3% 10.1% 11.3% 2.0%
0.0% ‐6.3% 1.9% 14.0% 14.1% 8.3% 10.3% 9.9% 6.3%
10.3% 15.2% 15.0% 14.5% 14.7% 8.8% 10.7% 10.7% 2.0%
12.4% 12.4% 15.2% 14.8% 14.7% 9.1% 11.0% 11.0% 2.0%
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
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, POMPUI. 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
Close Bt43.00
Electronic Components
February 24, 2017
4Q16 earnings recovery QoQ Price Performance (%)
Source: www.settrade.com
FY17
FY18
Consensus EPS (Bt)
2.871
3.066
KT ZMICO vs. consensus Share data
4.8%
13.2%
Reuters / Bloomberg
HANA.BK/HANA TB
Paid‐up Shares (m)
804.88
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
35.00/989.00
Foreign limit / actual (%)
100.00/70.94
52 week High / Low (Bt)
43.75/27.00
Avg. daily T/O (shares 000)
1,683.00
NVDR (%)
6.63
Estimated free float (%)
46.55
Beta
0.51
URL
www.hanagroup.com
CGR Anti‐corruption
Level 4 (Certified)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
Maintain “Outperform” HANA’s 4Q16 earnings recovered QoQ in line with growth in the IC industry. This points to a positive outlook for 2017E earnings thanks to higher production volume for IC products used in automobiles and cellular phones. We raised our earnings forecasts by 12‐13% to reflect the better margin caused by economies of scale for its capacity in the IC business. The share price is currently traded at 14x PER, vs. the sector’s average of 16x. We view that the PER should be re‐rated to 16x to reflect expected growth of 16%CAGR during 2017‐19E. Maintain an “Outperform” rating and the 2017E target price is revised upwards to Bt48.00/share. 4Q16 earnings recovered strongly QoQ HANA’s 4Q16 core profit amounted to Bt764mn, up 2%YoY and 53%QoQ. The gross profit margin stood at 16.7%, narrowing from 17.9% in 4Q15 (because in 4Q15 the firm benefited from a 9% depreciation of the baht), but improving from 14.2% in 3Q16. The QoQ improvement in the margin was driven by a 7%QoQ increase in sales in 4Q16 on growth in the IC business and recovery in the PCBA business. 2016 earnings fell due to deterioration in laptop/touchpad segment HANA posted 2016 net profit of Bt2,027mn, exceeding our estimate by 13%. The earnings fell by 13%YoY while the gross profit margin narrowed to 14% vs. 15% in 2015 because of lower product prices. The revenue in dollar terms fell by 3%YoY. About 56% of total revenue was contributed by the PCBA business, which dropped by 12%YoY as it was impacted by inventory adjustment for laptop/touchpad products. Meanwhile, sales of IC and microdisplay products still grew by 4% and 200%, respectively, thanks to strong growth in sensor products used in different industries. 2017‐18E earnings revised up by 12‐13% We have revised up 2017‐18E earnings by 12‐13% to reflect a better‐than‐ expected gross profit margin due to economies of scale seen in the IC and sensor production lines. We expect sales from these businesses to continue to recover in 2017‐18E, supported by growth in automotive and cellular phone markets. The share price is currently traded at 14x PER, vs. the sector’s average of 16x. We expect its 2017E earnings to grow by 20%YoY. We view that the PER should be re‐rated to equal the sector’s average. We thus revised up our target price to Bt48.00 (16x PER) vs. Bt34.75 (13x PER). Maintain an “Outperform” rating. Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Norm. profit (Bt mn) Norm. profit growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014
2015
2016
2017E
2018E
21,227 3,405 4.23 48% 1,948 37% 2.00 22.82 2014 17.8 8.8 1.9 4.7% 11.1% ‐41%
20,521 2,066 2.57 ‐39% 2,328 20% 2.00 24.13 2015 14.9 8.5 1.8 4.7% 12.3% ‐42%
20,523 2,105 2.62 2% 2,027 ‐13% 2.00 24.94 2016 17.1 9.1 1.7 4.0% 10.3% ‐42%
22,641 2,422 3.01 15% 2,422 20% 2.05 25.90 2017E 14.3 7.9 1.7 4.8% 11.8% ‐42%
25,438 2,790 3.47 15% 2,790 15% 2.36 27.01 2018E 12.4 7.1 1.6 5.5% 13.1% ‐42%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: HANA 2016 Earnings result Profit and Loss (Btmn) Year‐end 31 Dec
4Q15
3Q16
4Q16
% YoY
% QoQ
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) 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 (%)
5,125 918 933 (2) 126 (5) 71 822 751 1.02 17.9 18.2 16.0 5.1 278.3 (0.4) 24.1 4.2
5,290 749 756 (2) 129 (88) 70 569 499 0.71 14.2 14.3 10.8 5.2 258.2 (0.5) 24.7 2.9
5,726 958 964 (2) 116 (21) (129) 635 764 0.79 16.7 16.8 11.1 5.1 309.0 (0.4) 24.8 3.2
11.7 4.3 3.3 (4.3) (8.4) 330.8 (281.4) (22.7) 1.8 (22.7)
8.2 28.0 27.4 22.0 (10.3) (76.5) (284.4) 11.7 53.0 11.7
2016
% YoY
20,521 3,030 3,084 (8) 468 (47) (262) 2,066 2,328 2.57 14.8 15.0 10.1 5.1 239.6 (0.4) 24.1 12.3
20,523 2,876 2,888 (7) 463 (137) 79 2,105 2,027 2.62 14.0 14.1 10.3 5.1 231.4 (0.4) 24.9 10.3
0.0 (5.1) (6.3) (7.7) (1.0) 190.4 (130.1) 1.9 (12.9) 1.9
2018E Old
%Change
2015
Source: KT ZMICO Research Figure 2: Key Assumption Changes List
New 22,641
Revenue Gross profit margin %
14.5% 2,422 3.01
Core Net profit (Btmn) EPS
2017E Old 21,636 13.9% 2,159 2.68
%Change
New
4.6%
25,438 14.8% 2,790 3.47
12%
23,367 14.4% 2,467 3.06
8.8% 13%
Source: KT ZMICO Research Figure 3: PER (average 11.4x) and PBV band (average 1.3x) PBV(X)
PER(X) 20
2.5
+3.0 S.D.
18 16
+2.0 S.D.
14
+1.0 S.D.
12 10 8 6 4
+2.0 S.D.
2.0
+1.0 S.D. 1.5
Avg. -0.5 S.D. -1.0 S.D.
1.0
-2.0 S.D.
0.5
Avg. -1.0 S.D. -2.0 S.D.
2
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
0.0 Jan-11
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
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 FX Gain (loss) 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
2014
2015
2016
2017E
2018E
17,667 (15,683) 1,984 (905) 2,268 1,188 1,079 (9) 411 1,482 (62) (60) 942 ‐ 2,301 2.86 1,420 1.76 1.50
21,227 (18,358) 2,869 (993) 3,001 1,125 1,876 (8) 448 2,315 (367) 107 1,350 ‐ 3,405 4.23 1,948 2.42 2.00
20,521 (17,491) 3,030 (1,115) 3,084 1,168 1,916 (8) 468 2,375 (47) (262) ‐ ‐ 2,066 2.57 2,328 2.89 2.00
20,523 (17,647) 2,876 (1,167) 2,888 1,180 1,708 (7) 463 2,164 (137) 79 ‐ ‐ 2,105 2.62 2,027 2.52 1.71
22,641 (19,351) 3,290 (1,300) 3,328 1,338 1,990 (7) 488 2,472 (49) ‐ ‐ ‐ 2,422 3.01 2,422 3.01 2.05
25,438 (21,665) 3,773 (1,446) 3,739 1,412 2,327 (6) 525 2,847 (57) ‐ ‐ ‐ 2,790 3.47 2,790 3.47 2.36
2013
2014
2015
2016
2017E
2018E
6,710 3,241 3,172 ‐ 6,857 177 20,157 435 386 3,563 805 16,594 20,157
8,331 3,354 3,329 331 6,566 141 22,051 360 516 3,688 805 18,364 22,051
9,121 3,318 3,367 ‐ 7,075 243 23,123 347 534 3,699 805 19,424 23,123
9,286 3,503 3,336 ‐ 7,327 243 23,695 300 530 3,700 805 20,072 23,772
9,444 3,864 3,658 ‐ 7,389 243 24,598 260 460 3,828 805 20,847 24,676
9,738 4,342 4,096 ‐ 7,277 243 25,694 220 380 4,032 805 21,740 25,772
2013
2014
2015
2016
2017E
2018E
2,399 (279) 1,188 (73) 3,236 (1,367) (239) (1,606) (8) ‐ (1,207) 660 (556) 1,075 1,630 2.03
3,772 (249) 1,125 (464) 4,184 (788) (480) (1,268) (16) ‐ (1,610) (9) (1,635) 1,282 2,917 3.62
2,114 (45) 1,168 (281) 2,956 (1,601) 97 (1,505) ‐ ‐ (1,610) 796 (814) 637 1,451 1.80
2,027 ‐ 1,180 (102) 3,105 (1,510) ‐ (1,510) (52) ‐ (1,378) ‐ (1,430) 165 1,595 1.98
2,422 ‐ 1,338 (446) 3,315 (1,400) ‐ (1,400) (110) ‐ (1,647) ‐ (1,757) 158 1,915 2.38
2,790 ‐ 1,412 (591) 3,611 (1,300) ‐ (1,300) (120) ‐ (1,897) ‐ (2,017) 294 2,311 2.87
2013
2014
2015
2016
2017E
2018E
2.5% 19.4% 38.6% 11.2% 12.8% 6.1% 13.0% 8.0% 4.2%
20.2% 32.3% 48.0% 13.5% 14.1% 8.8% 16.0% 9.2% 15.8%
‐3.3% 2.8% ‐39.3% 14.8% 15.0% 9.3% 10.1% 11.3% 2.0%
0.0% ‐6.3% 1.9% 14.0% 14.1% 8.3% 10.3% 9.9% 6.3%
10.3% 15.2% 15.0% 14.5% 14.7% 8.8% 10.7% 10.7% 2.0%
12.4% 12.4% 15.2% 14.8% 14.7% 9.1% 11.0% 11.0% 2.0%
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
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, POMPUI. 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
