Hana Microelectronics
Hana Microelectronics Buy (17E TP Bt53.00) Company Update
Close Bt45.25
Electronic Components Earnings upgrade/Earnings downgrade/Overview unchanged
May 15, 2017
Earnings growth on continued expansion of sales volume Price Performance (%)
Source: www.settrade.com
FY17
FY18
Consensus EPS (Bt)
3.127
3.402
KT ZMICO vs. consensus Share data
5.2%
11.1%
Reuters / Bloomberg
HANA.BK/HANA TB
Paid‐up Shares (m)
804.88
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
36.00/1,051.00
Foreign limit / actual (%)
100.00/65.46
52 week High / Low (Bt)
48.50/27.00
Avg. daily T/O (shares 000)
2,147.00
NVDR (%)
8.95
Estimated free float (%)
46.55
Beta
0.70
URL
www.hanagroup.com
CGR Anti‐corruption
Level 4 (Certified)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
Upgrade to Buy from “Outperform” 1Q17 earnings showed strong growth as the gross profit margin improved in line with growing sales volume. We believe the firm’s earnings will grow further in 2Q17. We have revised up our earnings projection by 9% for 2017E and 8.6% for 2018E to reflect a better‐than‐previously‐expected gross profit margin. Following the revisions, we have a new target price of Bt53/share, based on 2017E PER of 16x. We also raise our rating to Buy, believing that the strong semiconductor market will help underpin the 2017E earnings. We also expect HANA to offer attractive dividends of 4.7‐6.4% during 2017‐18E. Sales grow YoY in all segments HANA reported 1Q17 sales of Bt5,238mn, down 8.5%QoQ on seasonality but up 10.4%YoY. About 54% of total revenue was generated by its PCBA business that recovered by 3.8%YoY as the firm began to see more orders for computers. Meanwhile, around 39% of total sales was contributed by the IC business, which expanded by 8%YoY driven by sales of sensors used in cars and mobile phones. Meanwhile, the microdisplay and RFID businesses in the US that just began mass production in 2016 still contributed small revenue (at around 6.8%) but showed good earnings growth of 173%YoY following continued flows of orders. Strong earnings on economies of scale HANA reported 1Q17 net profit of Bt818mn, up 69%YoY and 29%QoQ. Exclusive of forex gain of Bt191mn, the firm reported a core profit of Bt627mn, down by 18% QoQ on seasonality but up by 76%YoY. Economies of scale and lower depreciation costs resulted in a better gross profit margin to 16% vs. 12.5% in 1Q16. Meanwhile, better SG&A management helped push down SG&A to sales to 5.7% vs. 6.9% in 1Q16. 2Q17E earnings to grow well in line with growing semiconductor market Despite a stronger baht/USD vs. the level seen last year, the semiconductor market has expanded well since 2016. This helped drive earnings growth in 1Q17 for HANA and we believe this favorable trend will continue in 2Q17. Revised up earnings forecasts to reflect better profitability We have revised up our earnings forecasts by 9% and 8% for 2017E and 2018E, respectively, to reflect a larger‐than‐previously expected gross profit margin. The 1Q17 earnings accounted for 24% of our full‐year forecast. We expect the firm’s 2017E earnings to grow strongly by 26%YoY, driven by a better gross profit margin and economies of scale, as well as larger sales of products used for mobile phones, cars, and RFID products, which will benefit from growing global semiconductor demand. 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 20,521 2,066 2.57 ‐39% 2,328 20% 2.00 24.13 2015 15.6 9.1 1.9 4.4% 12.3% ‐42%
2016 20,523 2,105 2.62 2% 2,027 ‐13% 1.71 24.94 2016 18.0 9.8 1.8 3.8% 10.3% ‐42%
2017E 22,642 2,644 3.29 26% 2,644 30% 2.23 25.99 2017E 13.8 7.9 1.7 4.9% 12.9% ‐42%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 25,441 3,039 3.78 15% 3,039 15% 2.57 27.20 2018E 12.0 7.1 1.7 5.7% 14.2% ‐42%
2019E 29,213 3,538 4.40 16% 3,538 16% 2.99 28.60 2019E 10.3 6.2 1.6 6.6% 15.8% ‐44%
Figure 1: 1Q17 earnings results Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary 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 (%)
1Q16
4Q16
1Q17
% YoY
% QoQ
2017E
% YoY
% YTD
4,742 582 554 (2) 104 (4) 128 0 484 356 0.60 12.27 11.68 10.20 5.56 147.95 (0.44) 24.58 2.47
5,726 958 964 (2) 116 (21) (129) 0 635 764 0.79 16.74 16.83 11.10 5.06 309.03 (0.44) 24.80 3.19
5,238 844 827 (2) 98 (11) 191 0 818 627 1.02 16.10 15.79 15.61 5.42 278.83 (0.47) 25.43 4.04
10.4 44.9 49.3 11.7 (6.5) 142.6 48.9 n.m. 69.0 76.2 69.0
(8.5) (12.0) (14.2) (10.5) (15.7) (48.3) (248.4) n.m. 28.7 (18.0) 28.7
22,642 3,517 3,555 (7) 488 (54) 0 0 2,644 2,644 3.29 15.53 15.70 11.68 5.16 317.25 (0.42) 25.99 12.90
10.3 22.3 23.1 (5.4) 5.5 (60.7) (100.0) n.m. 25.6 30.5 25.6
23.1 24.0 23.3 27.8 20.0 19.8 n.m. n.m. 30.9 23.7 30.9
Source: KT ZMICO Research Figure 2: Key Assumption Changes List
2017E
2018E
New
Old
%Change
New
Old
%Change
Revenue Gross profit margin %
22,642
22,642
15.5% 2,644 0.27 0.25
14.5% 3,040 3.01 3.01
0% 9.2%
25,441 15.8% 0.33 0.29
25,441 14.8% 2,790 3.47 3.47
0% 8.6%
Core Net profit (Btmn) Basic EPS Diluted EPS
Source: KT ZMICO Research Global sales of semiconductors in Mar‐17 grew by 18.1%YoY, a six‐year high. HANA’s major products, e.g., Sensor RFID and Opto, showed strong growth and are expected to benefit from growing global demand. Figure 2: Global Semiconductor Sales in March
Figure 3: 2017 IC Market Growth Forecast
Source: WSTS, KT ZMICO Research
Source: IC insights, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 4: 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.
Avg. -0.5 S.D. -1.0 S.D.
1.0
-2.0 S.D.
0.5
-1.0 S.D. -2.0 S.D.
2 0
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
0.0
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
2015
2016
2017E
2018E
2019E
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 2.00
22,642 (19,352) 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
25,441 (21,667) 3,774 (1,446) 3,740 1,412 2,327 (6) 525 2,847 (57) ‐ ‐ ‐ 2,790 3.47 2,790 3.47 2.36
29,213 (24,792) 4,421 (1,638) 4,265 1,483 2,783 (5) 569 3,347 (67) ‐ ‐ ‐ 3,280 4.08 3,280 4.08 2.77
2014
2015
2016
2017E
2018E
2019E
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 3,865 3,658 ‐ 7,389 243 24,598 260 460 3,829 805 20,847 24,676
9,737 4,342 4,096 ‐ 7,277 243 25,695 220 380 4,032 805 21,740 25,772
10,251 4,986 4,687 ‐ 6,894 243 27,061 160 320 4,349 805 22,790 27,138
2014
2015
2016
2017E
2018E
2019E
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) ‐ (1,610) ‐ (1,430) 165 1,595 1.98
2,422 ‐ 1,338 (446) 3,315 (1,400) ‐ (1,400) (110) ‐ (1,647) ‐ (1,757) 157 1,915 2.38
2,790 ‐ 1,412 (592) 3,611 (1,300) ‐ (1,300) (120) ‐ (1,897) ‐ (2,017) 293 2,311 2.87
3,280 ‐ 1,483 (798) 3,965 (1,100) ‐ (1,100) (120) ‐ (2,230) ‐ (2,350) 514 2,865 3.56
2014
2015
2016
2017E
2018E
2019E
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% 15.1% 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%
14.8% 14.0% 17.6% 15.1% 14.6% 9.5% 11.2% 11.2% 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 (%)
2014
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
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, TFD, TTL, NMG.
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)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
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 5 of 5
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 Bt45.25
Electronic Components Earnings upgrade/Earnings downgrade/Overview unchanged
May 15, 2017
Earnings growth on continued expansion of sales volume Price Performance (%)
Source: www.settrade.com
FY17
FY18
Consensus EPS (Bt)
3.127
3.402
KT ZMICO vs. consensus Share data
5.2%
11.1%
Reuters / Bloomberg
HANA.BK/HANA TB
Paid‐up Shares (m)
804.88
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
36.00/1,051.00
Foreign limit / actual (%)
100.00/65.46
52 week High / Low (Bt)
48.50/27.00
Avg. daily T/O (shares 000)
2,147.00
NVDR (%)
8.95
Estimated free float (%)
46.55
Beta
0.70
URL
www.hanagroup.com
CGR Anti‐corruption
Level 4 (Certified)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
Upgrade to Buy from “Outperform” 1Q17 earnings showed strong growth as the gross profit margin improved in line with growing sales volume. We believe the firm’s earnings will grow further in 2Q17. We have revised up our earnings projection by 9% for 2017E and 8.6% for 2018E to reflect a better‐than‐previously‐expected gross profit margin. Following the revisions, we have a new target price of Bt53/share, based on 2017E PER of 16x. We also raise our rating to Buy, believing that the strong semiconductor market will help underpin the 2017E earnings. We also expect HANA to offer attractive dividends of 4.7‐6.4% during 2017‐18E. Sales grow YoY in all segments HANA reported 1Q17 sales of Bt5,238mn, down 8.5%QoQ on seasonality but up 10.4%YoY. About 54% of total revenue was generated by its PCBA business that recovered by 3.8%YoY as the firm began to see more orders for computers. Meanwhile, around 39% of total sales was contributed by the IC business, which expanded by 8%YoY driven by sales of sensors used in cars and mobile phones. Meanwhile, the microdisplay and RFID businesses in the US that just began mass production in 2016 still contributed small revenue (at around 6.8%) but showed good earnings growth of 173%YoY following continued flows of orders. Strong earnings on economies of scale HANA reported 1Q17 net profit of Bt818mn, up 69%YoY and 29%QoQ. Exclusive of forex gain of Bt191mn, the firm reported a core profit of Bt627mn, down by 18% QoQ on seasonality but up by 76%YoY. Economies of scale and lower depreciation costs resulted in a better gross profit margin to 16% vs. 12.5% in 1Q16. Meanwhile, better SG&A management helped push down SG&A to sales to 5.7% vs. 6.9% in 1Q16. 2Q17E earnings to grow well in line with growing semiconductor market Despite a stronger baht/USD vs. the level seen last year, the semiconductor market has expanded well since 2016. This helped drive earnings growth in 1Q17 for HANA and we believe this favorable trend will continue in 2Q17. Revised up earnings forecasts to reflect better profitability We have revised up our earnings forecasts by 9% and 8% for 2017E and 2018E, respectively, to reflect a larger‐than‐previously expected gross profit margin. The 1Q17 earnings accounted for 24% of our full‐year forecast. We expect the firm’s 2017E earnings to grow strongly by 26%YoY, driven by a better gross profit margin and economies of scale, as well as larger sales of products used for mobile phones, cars, and RFID products, which will benefit from growing global semiconductor demand. 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 20,521 2,066 2.57 ‐39% 2,328 20% 2.00 24.13 2015 15.6 9.1 1.9 4.4% 12.3% ‐42%
2016 20,523 2,105 2.62 2% 2,027 ‐13% 1.71 24.94 2016 18.0 9.8 1.8 3.8% 10.3% ‐42%
2017E 22,642 2,644 3.29 26% 2,644 30% 2.23 25.99 2017E 13.8 7.9 1.7 4.9% 12.9% ‐42%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2018E 25,441 3,039 3.78 15% 3,039 15% 2.57 27.20 2018E 12.0 7.1 1.7 5.7% 14.2% ‐42%
2019E 29,213 3,538 4.40 16% 3,538 16% 2.99 28.60 2019E 10.3 6.2 1.6 6.6% 15.8% ‐44%
Figure 1: 1Q17 earnings results Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary 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 (%)
1Q16
4Q16
1Q17
% YoY
% QoQ
2017E
% YoY
% YTD
4,742 582 554 (2) 104 (4) 128 0 484 356 0.60 12.27 11.68 10.20 5.56 147.95 (0.44) 24.58 2.47
5,726 958 964 (2) 116 (21) (129) 0 635 764 0.79 16.74 16.83 11.10 5.06 309.03 (0.44) 24.80 3.19
5,238 844 827 (2) 98 (11) 191 0 818 627 1.02 16.10 15.79 15.61 5.42 278.83 (0.47) 25.43 4.04
10.4 44.9 49.3 11.7 (6.5) 142.6 48.9 n.m. 69.0 76.2 69.0
(8.5) (12.0) (14.2) (10.5) (15.7) (48.3) (248.4) n.m. 28.7 (18.0) 28.7
22,642 3,517 3,555 (7) 488 (54) 0 0 2,644 2,644 3.29 15.53 15.70 11.68 5.16 317.25 (0.42) 25.99 12.90
10.3 22.3 23.1 (5.4) 5.5 (60.7) (100.0) n.m. 25.6 30.5 25.6
23.1 24.0 23.3 27.8 20.0 19.8 n.m. n.m. 30.9 23.7 30.9
Source: KT ZMICO Research Figure 2: Key Assumption Changes List
2017E
2018E
New
Old
%Change
New
Old
%Change
Revenue Gross profit margin %
22,642
22,642
15.5% 2,644 0.27 0.25
14.5% 3,040 3.01 3.01
0% 9.2%
25,441 15.8% 0.33 0.29
25,441 14.8% 2,790 3.47 3.47
0% 8.6%
Core Net profit (Btmn) Basic EPS Diluted EPS
Source: KT ZMICO Research Global sales of semiconductors in Mar‐17 grew by 18.1%YoY, a six‐year high. HANA’s major products, e.g., Sensor RFID and Opto, showed strong growth and are expected to benefit from growing global demand. Figure 2: Global Semiconductor Sales in March
Figure 3: 2017 IC Market Growth Forecast
Source: WSTS, KT ZMICO Research
Source: IC insights, KT ZMICO Research
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Figure 4: 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.
Avg. -0.5 S.D. -1.0 S.D.
1.0
-2.0 S.D.
0.5
-1.0 S.D. -2.0 S.D.
2 0
Source: Bloomberg, KT ZMICO Research
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Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
0.0
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
2015
2016
2017E
2018E
2019E
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 2.00
22,642 (19,352) 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
25,441 (21,667) 3,774 (1,446) 3,740 1,412 2,327 (6) 525 2,847 (57) ‐ ‐ ‐ 2,790 3.47 2,790 3.47 2.36
29,213 (24,792) 4,421 (1,638) 4,265 1,483 2,783 (5) 569 3,347 (67) ‐ ‐ ‐ 3,280 4.08 3,280 4.08 2.77
2014
2015
2016
2017E
2018E
2019E
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 3,865 3,658 ‐ 7,389 243 24,598 260 460 3,829 805 20,847 24,676
9,737 4,342 4,096 ‐ 7,277 243 25,695 220 380 4,032 805 21,740 25,772
10,251 4,986 4,687 ‐ 6,894 243 27,061 160 320 4,349 805 22,790 27,138
2014
2015
2016
2017E
2018E
2019E
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) ‐ (1,610) ‐ (1,430) 165 1,595 1.98
2,422 ‐ 1,338 (446) 3,315 (1,400) ‐ (1,400) (110) ‐ (1,647) ‐ (1,757) 157 1,915 2.38
2,790 ‐ 1,412 (592) 3,611 (1,300) ‐ (1,300) (120) ‐ (1,897) ‐ (2,017) 293 2,311 2.87
3,280 ‐ 1,483 (798) 3,965 (1,100) ‐ (1,100) (120) ‐ (2,230) ‐ (2,350) 514 2,865 3.56
2014
2015
2016
2017E
2018E
2019E
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% 15.1% 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%
14.8% 14.0% 17.6% 15.1% 14.6% 9.5% 11.2% 11.2% 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 (%)
2014
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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, TFD, TTL, NMG.
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)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
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 5 of 5
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
