Industry Update - Global Alliance Partners
Industry Update June 3, 2014
Construction Service
Neutral
Prices exaggerated by easing of political situation The rally of share prices for contractors related to the public sector by 17-29% over a month already reflects the positive impact from the easing of the political crisis to a certain degree, in our view. The NCPO’s intention to continue with infrastructure projects is in line with our expectation and the benefit will enhance earnings performances again in 2016E at the earliest. Hence, we maintain our earnings estimates in 2014-15E and target prices, mostly pegged at the historical average PER or P/BV, which we believe is appropriate for this situation. However, with the positive sentiment, we expect share prices to possibly rally to +0.5SD/+1.0SD in the short term.
Share data 133.22
Close (Pts)
205,925.40
Mkt. Cap. (Btm) PER (x)
21.58
PBV (x)
2.86
Div. Yield (%)
2.25
Only three public sector projects to open bidding this year
Although the National Council for Peace and Order (NCPO) aims to continue with infrastructure investment, we believe implementation will take time; this is due to time and funding limitations for the government, along with the lengthy EIA and HIA processes for some projects. In 2014E, we still expect only three public sector projects valued at Bt86bn to start the bidding process. These projects include: 1) the double track railway project valued at Bt10.8bn, which is expected to announce the bidding result this month; 2) the Green Line Mass Transit project valued at Bt26.5bn, which will start selling TOR for the second time in the next three months, with the bidding process to start in 4Q14; and 3) SBIA phase II valued at Bt48.7bn, which is also expected to start the bidding process in 4Q14. Additional orders assumptions maintained
We decide to maintain our additional orders assumptions of Bt22bn, Bt20bn, and Bt12bn in 2014E for CK, ITD, and STEC, respectively. YTD additional orders already signed and to be signed for ITD and STEC account for 27% and 26% of our full-year estimates, respectively. As ITD has been awarded many construction projects from the State Railway of Thailand (SRT) in the past, we expect the company to win the bidding for the double track railway project. Meanwhile, STEC is likely to announce the bidding result for power plant projects valued at around Bt6bn in 2H14E. CK’s additional orders are likely to have downside risk, especially for the Nam Bak hydroelectric dam in Lao PDR valued at Bt17bn, due to the long power price negotiation process with EGAT. For 2015E, our additional orders assumptions for the big three companies already include the return of public sector investment with estimated additional orders assumptions of Bt30bn, Bt90bn, and Bt30bn for CK, ITD, and STEC, respectively; this will enable earnings to start jumping again in 2016E. Downgrade STEC to SELL; CK switched to Trading BUY
We maintain our 2014E target prices and earnings estimates in 2014-15E for construction service companies under our coverage. As the share prices of stocks related to the public sector have rallied by 17-29% over a month in response to the positive impact from the easing of the political crisis with no significant change in earnings prospects, we decide to downgrade STEC to SELL (from Trading BUY) and switch CK’s recommendation to Trading BUY (from BUY). REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695-5836
page 1 of 6
Figure 1: Rating and valuation summary Rating
14E TP
Return
(Bt)
(%)
13
PER (x) 14E
15E
13
PBV (x) 14E
15E
13
ROE (%) 14E
15E
13
Div. yield (%) 14E
15E
CK
Trading Buy
23.50
6.3
34.3
43.9
43.6
2.2
2.2
2.1
8.6
5.0
4.9
1.9
1.5
1.5
ITD
Trading Buy
4.80
(0.8)
28.3
35.1
36.5
2.0
2.0
1.9
8.3
5.7
5.3
-
0.9
0.8 0.9
NWR
Sell into Strength
2.12
(7.0)
n.a.
n.a.
n.a.
1.5
1.6
1.5
2.3
1.8
4.2
-
-
SRICHA
Sell into Strength
37.00
3.5
11.9
11.6
11.3
4.5
3.8
3.3
41.0
40.0
38.0
4.3
4.3
4.4
STEC
SELL
19.00
(12.4)
22.1
23.1
22.2
4.4
3.9
3.6
22.2
17.9
17.0
2.3
1.9
2.0
STPI
Buy
28.00
25.0
17.4
12.0
18.5
5.6
3.7
3.1
37.0
37.0
18.0
1.5
2.5
1.6
TTCL
Buy
43.00
9.6
33.6
25.9
18.9
4.5
4.2
3.8
16.8
15.0
19.3
1.8
2.3
3.2
24.6
25.3
25.1
3.5
3.0
2.8
19.4
17.5
15.2
1.7
1.9
2.1
Average
Source: KT ZMICO Research
Figure 2: Contractors’ share price performance & relative performance vs. SETCONSTR and SET Closed (Bt)
Price change (%)
Relative to SETCONSTR
2/6/14
1W
1M
3M
12M
1W
1M
3M
22.10
12.2
19.5
31.5
16.6
2.1
7.1
13.6
ITD
4.84
25.4
28.7
32.2
(40.6)
15.4
16.4
14.3
NWR
2.28
26.0
16.9
10.7
(39.7)
15.9
4.6
(7.3)
SRICHA
35.75
5.9
(1.4)
(4.7)
(33.5)
(4.1)
(13.7)
(22.7)
STEC
21.70
7.4
16.7
31.5
(11.4)
(2.6)
4.3
13.5
STPI
22.40
7.7
6.2
9.3
(3.4)
(2.3)
(6.2)
(8.7)
TTCL
39.25
0.6
4.7
5.4
27.6
(9.4)
(7.7)
(12.6)
CK
Relative to SET 12M n.a.
1W
1M
3M
12M
n.a.
8.4
18.1
24.0
(8.8)
21.6
27.4
24.6
(32.9)
22.2
15.6
3.1
(31.9)
2.1
(2.7)
(12.3)
(25.7)
3.6
15.3
23.9
(3.7)
3.9
4.8
1.7
4.4
(3.2)
3.3
(2.2)
(19.9)
n.a. n.a. n.a. n.a. n.a.
Source: KT ZMICO Research
Figure 3: Earnings summary Company CK ITD NWR
Net profit (Btmn)
Norm profit (Btmn)
Norm EPS (Bt)
Norm EPS growth (%)
13
14E
15E
13
14E
15E
13
14E
15E
13
14E
7,674
831
838
1,065
831
838
0.64
0.50
0.51
474.8
(22.0)
15E 0.9
907
669
645
832
669
645
0.17
0.14
0.13
(14.6)
(19.5)
(3.6) 200.0
58
58
157
(49)
58
157
(0.02)
0.02
0.06
n.a.
n.a.
918
953
984
918
953
984
3.01
3.07
3.17
(22.6)
2.0
3.3
STEC
1,733
1,431
1,494
1,498
1,431
1,494
0.98
0.94
0.98
6.3
(4.4)
4.4
STPI
1,909
2,776
1,795
1,909
2,776
1,795
1.29
1.87
1.21
81.7
45.0
(35.3)
TTCL
655
848
1,164
655
848
1,164
1.17
1.52
2.08
15.9
29.5
37.1
13,854
7,567
7,077
6,828
7,567
7,077
SRICHA
Total
Source: KT ZMICO Research
Figure 4: CK’s P/BV Band and sensitivity of market price based on P/BV at different standard deviation levels P/BV (x) +1.0SD 2.8 +0.5SD 2.3 Average 1.8 -0.5SD 1.3 -1.0SD 0.8 14E BVS = 10.37
Market price (Bt) 29.04 24.06 18.67 13.27 7.88
Upside/Downside (%) 31.38 8.86 (15.54) (39.94) (64.34)
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 2 of 6
Figure 5: ITD’s P/BV Band and sensitivity of market price based on P/BV at different standard deviation levels P/BV (x) +1.0SD 2.7 +0.5SD 2.3 Average 2.0 -0.5SD 1.6 -1.0SD 1.3 14E BVS = 2.47
Market price (Bt) 6.67 5.76 4.89 4.03 3.16
Upside/Downside (%) 41.31 24.03 5.40 (13.23) (31.86)
Source: Bloomberg, KT ZMICO Research
Figure 6: STEC’s PER Band and sensitivity of market price based on PER at different standard deviation levels
+1.0SD +0.5SD Average -0.5SD -1.0SD 14E EPS = 0.94
PER (x) 27.0 23.5 20.0 16.5 13.0
Market price (Bt) 25.38 22.09 18.80 15.51 12.22
Upside/Downside (%) 15.36 0.41 (14.55) (29.50) (44.45)
Source: Bloomberg, KT ZMICO Research
Figure 7: NWR’s P/BV Band and sensitivity of market price based on PER at different standard deviation levels
(X)
7.0
PBV
6.0 5.0 4.0 3.0
+1 S.D.
+0.5SD Average -0.5SD -1.0SD 14E BVS = 1.46
PER (x) 1.96 1.46 0.95 0.45
Market price (Bt) 2.86 2.12 1.39 0.65
Upside/Downside (%) 27.55 (5.29) (38.13) (70.98)
2.0 1.0
-1 S.D.
Jan‐02 Aug‐02 Mar‐03 Oct‐03 May‐04 Dec‐04 Jul‐05 Feb‐06 Sep‐06 Apr‐07 Nov‐07 Jun‐08 Jan‐09 Aug‐09 Mar‐10 Oct‐10 May‐11 Dec‐11 Jul‐12 Feb‐13 Sep‐13 Apr‐14
0.0
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 3 of 6
Figure 8: Some government projects expected to open bidding in 2014E Value (Btmn)
Projects
Progress
Double Track: Chachoengsao - Klong 19 - Kaeng Koy
Expected to announce bidding result in Jun-14
Contract 1: Double Track (Cha Choengsao Wihan Daeng), Chord Lines
10,184
Contract 2: Double Track (Wihan Daeng - Buu Yai Section), Railway Tunnel
621
Mass Transit: Dark Green Line (Mo Chit - Saphan Mai – Ku Khot)
Expected to start bidding process in 4Q14
Contract 1: Mo Chit – Saphan Mai Section
14,021
Contract 2: Saphan Mai – Ku Khot Section
6,126
Contract 3: Depot and Park & Ride Facilities
3,709
Contract 4: Track works
2,609
Midfield Satellite and Expansion of Passenger Terminal for SBIA
Expected to start bidding process in Jul-14
Contract 1: Extension on the west side of the existing Passenger Terminal Building
39,046
Contract 2: Midfield Satellite Terminal
7,087
Contract 3: System design and utilities
2,565
Total
85,968
Source: CK, KT ZMICO Research
Figure 9: CK’s active projects Active major projects (as of 1Q14) Purple Line Mass-Transit Project, Contract 1 Purple Line Mass-Transit Project, Contract 4 (M&E) Blue Line Extension Mass-Transit Project, Contract 2 & 5 Green Line Mass-Transit Project, Contract 1 & 2 Xayaburi: A run-of-river Hydropower Plant in Lao P.D.R. New Tobacco Production Plants Si Rat - Outer Bangkok Ring Road Expressway Other Projects Total Backlog Forthcoming projects Bangpa-in Cogeneration (SPP) Phase 2 Nam Bak: Hydro Electric Power Plant in Laos
Remaining (Btmn) 206 19,671 6,527 9,805 45,303 1,654 19,404 1,838 104,408
% to total (%) 0.2 18.8 6.3 9.4 43.4 1.6 18.6 1.8 100.0
4,750 17,000
Sector Mass Transit Mass Transit Mass Transit Mass Transit Power Plant Manufacturing Expressway
Power Plant Power Plant
Source: CK
Figure 10: Summary of sum-of-the-parts (SOTP) valuation for CK Company
CK’s stake (%)
Construction business CK’s investment stake - BECL 15.15 - BMCL 30.19 - CKP 31.78 - TTW 19.04 Minus: Net debt used for associates Net value of CK’s stake in associates
Valuation Method
Value to CK (Bt)
1.8x of 14E adj. BVS of Bt9.00 KT ZMICO’s TP of Bt45.0 Consensus TP of Bt0.97 KT ZMICO’s TP of Bt24.0 KT ZMICO’s TP of Bt12.9
16.6
TP based on Current* market price 16.6
3.2 3.6 5.1 5.9 (11.0) 6.9
2.5 3.9 2.8 4.9 (11.0) 3.1
23.5
19.9
SOTP-based TP Source: KT ZMICO Research Note: * Based on current market prices of BECL, BMCL, CKP, and TTW
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 4 of 6
Figure 11: ITD’s work in hand report summary (as of Feb-14) ITD I Projects Signed after 2013
ITD
PT
ITD
ITD
Aqua
Cem
Thailindo
Hongsa
Trevi
thai
Total
2,752
2,549
0
0
0
8
5,309
II Projects Awarded / Nearly Signed
179,678
0
0
0
0
0
179,679
Total I + II
182,430
2,549
0
0
0
8
184,987
Total Backlog from 4Q13
94,104
18,777
469
25,282
283
51
138,966
276,534
21,326
469
25,282
283
59
323,953
54,167
0
0
197
0
54,364
Grand total III Projects with lowest bid / under negotiation
Source: ITD
Figure 12: STEC’s active projects and new contracts in 2014 Active major projects (as of 2013)
Value (Btmn)
Sector
Purple Line Mass Transit Project, Contract 2
13,100
Mass Transit
Blue Line Extension Mass Transit Project
12,463
Mass Transit
New Parliament building
11,477
Building
8,725
Power Plant
Independent Power Plant, Gulf JP UT Outer Ring Road Expressway
5,980
Road
Phuket International Airport Expansion
4,810
Airport
Kanom Power Plant, KEGCO
4,381
Industrial
LNG Erection Steel Module, STPI
2,540
Industrial
CP Leadership Development Center
2,483
Building
East – West Corridor (Rachapruk – Karnjanapisek)
2,381
Road
Supreme Court
2,360
Building
New Head office for CAT
2,279
Building
Supply of Precast Concrete Element for Expressway
2,020
Road
Burirum International Circuit
1,590
Building
Projects in the process of being signed (2014) Blue Port Project
1,550
Building
Cross-border road work, Lao PDR (signed)
657
Road
Bypass road LamPoon
444
Road
Source: STEC, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 5 of 6
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 BUY: Expecting positive total returns of 15% or more over the next 12 months TRADING BUY: Expecting positive total returns of 10% or more over the next 3 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months.
SELL INTO STRENGTH: Expecting total returns between -10% to +10% over the next 12 month; share price has largely priced in fundamentals
The industry, as defined by the NEUTRAL: analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months.
SELL: Expecting negative total returns of 10% or more over the next 12 months
UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
page 6 of 6
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Construction Service
Neutral
Prices exaggerated by easing of political situation The rally of share prices for contractors related to the public sector by 17-29% over a month already reflects the positive impact from the easing of the political crisis to a certain degree, in our view. The NCPO’s intention to continue with infrastructure projects is in line with our expectation and the benefit will enhance earnings performances again in 2016E at the earliest. Hence, we maintain our earnings estimates in 2014-15E and target prices, mostly pegged at the historical average PER or P/BV, which we believe is appropriate for this situation. However, with the positive sentiment, we expect share prices to possibly rally to +0.5SD/+1.0SD in the short term.
Share data 133.22
Close (Pts)
205,925.40
Mkt. Cap. (Btm) PER (x)
21.58
PBV (x)
2.86
Div. Yield (%)
2.25
Only three public sector projects to open bidding this year
Although the National Council for Peace and Order (NCPO) aims to continue with infrastructure investment, we believe implementation will take time; this is due to time and funding limitations for the government, along with the lengthy EIA and HIA processes for some projects. In 2014E, we still expect only three public sector projects valued at Bt86bn to start the bidding process. These projects include: 1) the double track railway project valued at Bt10.8bn, which is expected to announce the bidding result this month; 2) the Green Line Mass Transit project valued at Bt26.5bn, which will start selling TOR for the second time in the next three months, with the bidding process to start in 4Q14; and 3) SBIA phase II valued at Bt48.7bn, which is also expected to start the bidding process in 4Q14. Additional orders assumptions maintained
We decide to maintain our additional orders assumptions of Bt22bn, Bt20bn, and Bt12bn in 2014E for CK, ITD, and STEC, respectively. YTD additional orders already signed and to be signed for ITD and STEC account for 27% and 26% of our full-year estimates, respectively. As ITD has been awarded many construction projects from the State Railway of Thailand (SRT) in the past, we expect the company to win the bidding for the double track railway project. Meanwhile, STEC is likely to announce the bidding result for power plant projects valued at around Bt6bn in 2H14E. CK’s additional orders are likely to have downside risk, especially for the Nam Bak hydroelectric dam in Lao PDR valued at Bt17bn, due to the long power price negotiation process with EGAT. For 2015E, our additional orders assumptions for the big three companies already include the return of public sector investment with estimated additional orders assumptions of Bt30bn, Bt90bn, and Bt30bn for CK, ITD, and STEC, respectively; this will enable earnings to start jumping again in 2016E. Downgrade STEC to SELL; CK switched to Trading BUY
We maintain our 2014E target prices and earnings estimates in 2014-15E for construction service companies under our coverage. As the share prices of stocks related to the public sector have rallied by 17-29% over a month in response to the positive impact from the easing of the political crisis with no significant change in earnings prospects, we decide to downgrade STEC to SELL (from Trading BUY) and switch CK’s recommendation to Trading BUY (from BUY). REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695-5836
page 1 of 6
Figure 1: Rating and valuation summary Rating
14E TP
Return
(Bt)
(%)
13
PER (x) 14E
15E
13
PBV (x) 14E
15E
13
ROE (%) 14E
15E
13
Div. yield (%) 14E
15E
CK
Trading Buy
23.50
6.3
34.3
43.9
43.6
2.2
2.2
2.1
8.6
5.0
4.9
1.9
1.5
1.5
ITD
Trading Buy
4.80
(0.8)
28.3
35.1
36.5
2.0
2.0
1.9
8.3
5.7
5.3
-
0.9
0.8 0.9
NWR
Sell into Strength
2.12
(7.0)
n.a.
n.a.
n.a.
1.5
1.6
1.5
2.3
1.8
4.2
-
-
SRICHA
Sell into Strength
37.00
3.5
11.9
11.6
11.3
4.5
3.8
3.3
41.0
40.0
38.0
4.3
4.3
4.4
STEC
SELL
19.00
(12.4)
22.1
23.1
22.2
4.4
3.9
3.6
22.2
17.9
17.0
2.3
1.9
2.0
STPI
Buy
28.00
25.0
17.4
12.0
18.5
5.6
3.7
3.1
37.0
37.0
18.0
1.5
2.5
1.6
TTCL
Buy
43.00
9.6
33.6
25.9
18.9
4.5
4.2
3.8
16.8
15.0
19.3
1.8
2.3
3.2
24.6
25.3
25.1
3.5
3.0
2.8
19.4
17.5
15.2
1.7
1.9
2.1
Average
Source: KT ZMICO Research
Figure 2: Contractors’ share price performance & relative performance vs. SETCONSTR and SET Closed (Bt)
Price change (%)
Relative to SETCONSTR
2/6/14
1W
1M
3M
12M
1W
1M
3M
22.10
12.2
19.5
31.5
16.6
2.1
7.1
13.6
ITD
4.84
25.4
28.7
32.2
(40.6)
15.4
16.4
14.3
NWR
2.28
26.0
16.9
10.7
(39.7)
15.9
4.6
(7.3)
SRICHA
35.75
5.9
(1.4)
(4.7)
(33.5)
(4.1)
(13.7)
(22.7)
STEC
21.70
7.4
16.7
31.5
(11.4)
(2.6)
4.3
13.5
STPI
22.40
7.7
6.2
9.3
(3.4)
(2.3)
(6.2)
(8.7)
TTCL
39.25
0.6
4.7
5.4
27.6
(9.4)
(7.7)
(12.6)
CK
Relative to SET 12M n.a.
1W
1M
3M
12M
n.a.
8.4
18.1
24.0
(8.8)
21.6
27.4
24.6
(32.9)
22.2
15.6
3.1
(31.9)
2.1
(2.7)
(12.3)
(25.7)
3.6
15.3
23.9
(3.7)
3.9
4.8
1.7
4.4
(3.2)
3.3
(2.2)
(19.9)
n.a. n.a. n.a. n.a. n.a.
Source: KT ZMICO Research
Figure 3: Earnings summary Company CK ITD NWR
Net profit (Btmn)
Norm profit (Btmn)
Norm EPS (Bt)
Norm EPS growth (%)
13
14E
15E
13
14E
15E
13
14E
15E
13
14E
7,674
831
838
1,065
831
838
0.64
0.50
0.51
474.8
(22.0)
15E 0.9
907
669
645
832
669
645
0.17
0.14
0.13
(14.6)
(19.5)
(3.6) 200.0
58
58
157
(49)
58
157
(0.02)
0.02
0.06
n.a.
n.a.
918
953
984
918
953
984
3.01
3.07
3.17
(22.6)
2.0
3.3
STEC
1,733
1,431
1,494
1,498
1,431
1,494
0.98
0.94
0.98
6.3
(4.4)
4.4
STPI
1,909
2,776
1,795
1,909
2,776
1,795
1.29
1.87
1.21
81.7
45.0
(35.3)
TTCL
655
848
1,164
655
848
1,164
1.17
1.52
2.08
15.9
29.5
37.1
13,854
7,567
7,077
6,828
7,567
7,077
SRICHA
Total
Source: KT ZMICO Research
Figure 4: CK’s P/BV Band and sensitivity of market price based on P/BV at different standard deviation levels P/BV (x) +1.0SD 2.8 +0.5SD 2.3 Average 1.8 -0.5SD 1.3 -1.0SD 0.8 14E BVS = 10.37
Market price (Bt) 29.04 24.06 18.67 13.27 7.88
Upside/Downside (%) 31.38 8.86 (15.54) (39.94) (64.34)
Source: Bloomberg, KT ZMICO Research
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page 2 of 6
Figure 5: ITD’s P/BV Band and sensitivity of market price based on P/BV at different standard deviation levels P/BV (x) +1.0SD 2.7 +0.5SD 2.3 Average 2.0 -0.5SD 1.6 -1.0SD 1.3 14E BVS = 2.47
Market price (Bt) 6.67 5.76 4.89 4.03 3.16
Upside/Downside (%) 41.31 24.03 5.40 (13.23) (31.86)
Source: Bloomberg, KT ZMICO Research
Figure 6: STEC’s PER Band and sensitivity of market price based on PER at different standard deviation levels
+1.0SD +0.5SD Average -0.5SD -1.0SD 14E EPS = 0.94
PER (x) 27.0 23.5 20.0 16.5 13.0
Market price (Bt) 25.38 22.09 18.80 15.51 12.22
Upside/Downside (%) 15.36 0.41 (14.55) (29.50) (44.45)
Source: Bloomberg, KT ZMICO Research
Figure 7: NWR’s P/BV Band and sensitivity of market price based on PER at different standard deviation levels
(X)
7.0
PBV
6.0 5.0 4.0 3.0
+1 S.D.
+0.5SD Average -0.5SD -1.0SD 14E BVS = 1.46
PER (x) 1.96 1.46 0.95 0.45
Market price (Bt) 2.86 2.12 1.39 0.65
Upside/Downside (%) 27.55 (5.29) (38.13) (70.98)
2.0 1.0
-1 S.D.
Jan‐02 Aug‐02 Mar‐03 Oct‐03 May‐04 Dec‐04 Jul‐05 Feb‐06 Sep‐06 Apr‐07 Nov‐07 Jun‐08 Jan‐09 Aug‐09 Mar‐10 Oct‐10 May‐11 Dec‐11 Jul‐12 Feb‐13 Sep‐13 Apr‐14
0.0
Source: Bloomberg, KT ZMICO Research
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page 3 of 6
Figure 8: Some government projects expected to open bidding in 2014E Value (Btmn)
Projects
Progress
Double Track: Chachoengsao - Klong 19 - Kaeng Koy
Expected to announce bidding result in Jun-14
Contract 1: Double Track (Cha Choengsao Wihan Daeng), Chord Lines
10,184
Contract 2: Double Track (Wihan Daeng - Buu Yai Section), Railway Tunnel
621
Mass Transit: Dark Green Line (Mo Chit - Saphan Mai – Ku Khot)
Expected to start bidding process in 4Q14
Contract 1: Mo Chit – Saphan Mai Section
14,021
Contract 2: Saphan Mai – Ku Khot Section
6,126
Contract 3: Depot and Park & Ride Facilities
3,709
Contract 4: Track works
2,609
Midfield Satellite and Expansion of Passenger Terminal for SBIA
Expected to start bidding process in Jul-14
Contract 1: Extension on the west side of the existing Passenger Terminal Building
39,046
Contract 2: Midfield Satellite Terminal
7,087
Contract 3: System design and utilities
2,565
Total
85,968
Source: CK, KT ZMICO Research
Figure 9: CK’s active projects Active major projects (as of 1Q14) Purple Line Mass-Transit Project, Contract 1 Purple Line Mass-Transit Project, Contract 4 (M&E) Blue Line Extension Mass-Transit Project, Contract 2 & 5 Green Line Mass-Transit Project, Contract 1 & 2 Xayaburi: A run-of-river Hydropower Plant in Lao P.D.R. New Tobacco Production Plants Si Rat - Outer Bangkok Ring Road Expressway Other Projects Total Backlog Forthcoming projects Bangpa-in Cogeneration (SPP) Phase 2 Nam Bak: Hydro Electric Power Plant in Laos
Remaining (Btmn) 206 19,671 6,527 9,805 45,303 1,654 19,404 1,838 104,408
% to total (%) 0.2 18.8 6.3 9.4 43.4 1.6 18.6 1.8 100.0
4,750 17,000
Sector Mass Transit Mass Transit Mass Transit Mass Transit Power Plant Manufacturing Expressway
Power Plant Power Plant
Source: CK
Figure 10: Summary of sum-of-the-parts (SOTP) valuation for CK Company
CK’s stake (%)
Construction business CK’s investment stake - BECL 15.15 - BMCL 30.19 - CKP 31.78 - TTW 19.04 Minus: Net debt used for associates Net value of CK’s stake in associates
Valuation Method
Value to CK (Bt)
1.8x of 14E adj. BVS of Bt9.00 KT ZMICO’s TP of Bt45.0 Consensus TP of Bt0.97 KT ZMICO’s TP of Bt24.0 KT ZMICO’s TP of Bt12.9
16.6
TP based on Current* market price 16.6
3.2 3.6 5.1 5.9 (11.0) 6.9
2.5 3.9 2.8 4.9 (11.0) 3.1
23.5
19.9
SOTP-based TP Source: KT ZMICO Research Note: * Based on current market prices of BECL, BMCL, CKP, and TTW
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page 4 of 6
Figure 11: ITD’s work in hand report summary (as of Feb-14) ITD I Projects Signed after 2013
ITD
PT
ITD
ITD
Aqua
Cem
Thailindo
Hongsa
Trevi
thai
Total
2,752
2,549
0
0
0
8
5,309
II Projects Awarded / Nearly Signed
179,678
0
0
0
0
0
179,679
Total I + II
182,430
2,549
0
0
0
8
184,987
Total Backlog from 4Q13
94,104
18,777
469
25,282
283
51
138,966
276,534
21,326
469
25,282
283
59
323,953
54,167
0
0
197
0
54,364
Grand total III Projects with lowest bid / under negotiation
Source: ITD
Figure 12: STEC’s active projects and new contracts in 2014 Active major projects (as of 2013)
Value (Btmn)
Sector
Purple Line Mass Transit Project, Contract 2
13,100
Mass Transit
Blue Line Extension Mass Transit Project
12,463
Mass Transit
New Parliament building
11,477
Building
8,725
Power Plant
Independent Power Plant, Gulf JP UT Outer Ring Road Expressway
5,980
Road
Phuket International Airport Expansion
4,810
Airport
Kanom Power Plant, KEGCO
4,381
Industrial
LNG Erection Steel Module, STPI
2,540
Industrial
CP Leadership Development Center
2,483
Building
East – West Corridor (Rachapruk – Karnjanapisek)
2,381
Road
Supreme Court
2,360
Building
New Head office for CAT
2,279
Building
Supply of Precast Concrete Element for Expressway
2,020
Road
Burirum International Circuit
1,590
Building
Projects in the process of being signed (2014) Blue Port Project
1,550
Building
Cross-border road work, Lao PDR (signed)
657
Road
Bypass road LamPoon
444
Road
Source: STEC, KT ZMICO Research
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page 5 of 6
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 BUY: Expecting positive total returns of 15% or more over the next 12 months TRADING BUY: Expecting positive total returns of 10% or more over the next 3 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months.
SELL INTO STRENGTH: Expecting total returns between -10% to +10% over the next 12 month; share price has largely priced in fundamentals
The industry, as defined by the NEUTRAL: analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months.
SELL: Expecting negative total returns of 10% or more over the next 12 months
UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% over the next 12 months.
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page 6 of 6
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
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Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
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Telephone: (66-2) 686-1500
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Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
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Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
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Fax. (038) 362-430
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Fax. (038) 287-637
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5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
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Telephone: (043) 389-171-193
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Telephone: (02) 689-3100
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Fax. (02) 689-3199
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Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
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Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
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624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
