LPN Development AWS
L.P.N. Development Sell (17E TP Bt9.00) Company Update
Close Bt12.40
Property Development February 10, 2017
Earnings upgrade /Earnings downgrade/Overview unchanged
4Q16 and 2016 earnings lower than expected Price Performance (%) Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.106
1.354
KT ZMICO vs. consensus Share data
0.4%
‐2.5%
Reuters / Bloomberg
LPN.BK/ LPN TB
Paid‐up Shares (m)
1,475.70
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
18.00/523.00
Foreign limit / actual (%)
39.00/25.55
52 week High / Low (Bt)
14.50/9.80
Avg. daily T/O (shares 000) NVDR (%)
8,194.00 6.49
Estimated free float (%)
75.51
Beta
0.80
URL
www.lpn.co.th
CGR
Anti‐corruption
Worarat Powpaka Analyst, no. 17992 [email protected] 66 (0) 2624‐6248
Level 2 (Declared)
Maintain Sell with the new 17E TP at Bt9 We maintain sell on LPN with the new 17E TP at Bt9 after we revised down the 2017E net profit by 11.6%. Although the new 2017E launches will drive 2017E presales, inventory and condos to be finished in 2017E worth Bt14bn, which are in the low‐end segment, will remain a burden as its target group is still experiencing a financial source problem. LPN’s near‐term catalyst to support its share price is the 2H16 dividend yield of 4.8%. 4Q16 earnings declined both YoY and QoQ LPN reported 4Q16 net profit at Bt281mn (‐2.3% YoY, ‐9.1% QoQ), 36% below our forecast, mainly due to lower‐than‐expected transfers. 4Q16 transfers were Bt2.35bn (‐22.7% YoY, ‐3.4% QoQ), 23% lower than our estimate. The average GPM was in line at 30.9% and SG&A to revenue was 17.3%, higher than our estimate on the lower transfer base. 2016 net profit declined 9.8% YoY LPN's 2016 net earnings amounted to Bt2.18bn (‐9.8% YoY), 6.7% below our estimate due to lower‐than‐expected transfers. 2016 transfers were Bt13.86bn (‐13.3% YoY), 4.9% below our estimate. The average GPM was in line at 31.3%. The SG&A expense‐to‐revenue ratio was 12.8%, higher than our estimate of 12.2%. Hence, 2016 net earnings were lower than expected. Announced 2H16 DPS at Bt0.6, implying a yield of 4.8% LPN announced its 2H16 DPS at Bt0.60, implying a yield of 4.8%. It will go XD on February 21 and the dividend will be paid on April 11, 2017. Revise down 2017E net profit by 11.6% but maintain 2018E We revised down our 2017E net profit by 11.6%. The downward revision was mainly from lower transfers in 2017E by 13.4% to Bt10.87bn, in line with LPN’s transfer target, along with the presales and transfer trends of existing projects in 2016, which were slower than our previous expectation. Meanwhile, we maintain our 2018E net profit because LPN will have 7‐8 condo launches in 2017E worth Bt13bn, which will be realized in late 2018E and likely support our 2018E transfer forecast. Third project sold 25% of project units LPN launched a third project, namely, Lumpini Ville Ratburana Riverview 2, on Feb 6, 2017. It launched 330 units (50% of total units) and sold 170 units or 25% of the total units. Meanwhile, Lumpini Phetchaburi‐ Makkasan is now 70% sold after including foreign buyers’ value. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) Normalized PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 12,867 2,021 1.37 (13.2) 1.37 (13.2) 0.80 7.05 2014 9.1 9.1 9.1 1.8 6.5 20.2 52.4
2015 16,627 2,413 1.64 19.4 1.64 19.4 0.90 7.85 2015 7.6 7.6 7.2 1.6 7.3 22.0 37.9
2016 14,602 2,176 1.47 (9.8) 1.46 (10.4) 0.90 8.41 2016 8.4 8.5 7.9 1.5 7.3 18.1 29.7
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 11,665 1,633 1.11 (24.9) 1.11 (24.4) 0.55 8.62 2017E 11.2 11.2 11.5 1.4 4.5 13.0 47.1
2018E 13,705 1,953 1.32 19.6 1.32 19.6 0.66 9.39 2018E 9.4 9.4 9.7 1.3 5.3 14.7 45.5
Figure 1: Quarterly earnings review Profit and Loss (Btmn) FY Ended 31 Dec 4Q15
3Q16
4Q16
% YoY
% QoQ
2015
2016
% YoY
3,042 3,223 1,021
2,272 2,465 785
2,350 2,550 784
(22.7) (20.9) (23.2)
3.4 3.4 (0.2)
15,981 16,627 5,151
13,855 14,602 4,560
(13.3) (12.2) (11.5)
EBITDA
451
405
368
(18.5)
(9.3)
3,167
2,772
(12.5)
Interest expense
(1)
(1)
(2)
55.7
38.8
(11)
(6)
(49.1)
Other income
9
5
10
5.5
91.5
35
27
(21.9)
Income tax
(149)
(82)
(71)
(52.4)
(13.8)
(707)
(561)
(20.7)
Net profit (loss)
288
310
281
(2.3)
(9.1)
2,413
2,176
(9.8)
Core net profit (loss)
288
310
283
(1.8)
(8.7)
2,413
2,161
(10.4)
Reported EPS (THB)
0.20
0.21
0.19
(2.3)
(9.1)
1.64
1.47
(9.8)
Core EPS (THB)
0.20
0.21
0.19
(1.8)
(8.7)
1.64
1.46
(10.4)
Gross margin – project sales (%)
31.5
31.7
30.9
31.1
31.3
Revenue from project sales Total revenue Gross profit
Gross margin ‐ overall (%)
31.7
31.9
30.8
31.0
31.2
EBITDA margin (%)
14.0
16.4
14.4
19.0
19.0
Net margin (%)
8.9
12.6
11.0
14.5
14.9
Current ratio (x)
3.1
3.4
3.4
3.1
3.4
Interest coverage (x)
330.9
266.1
172.1
277.3
474.7
Debt / equity (x)
0.7
0.5
0.5
0.7
0.5
BVPS (Bt)
7.85
8.22
8.41
7.85
8.41
ROE (%)
21.1
17.9
18.1
22.0
18.1
Source: LPN, KT ZMICO Research Figure 2: Quarterly presales
Figure 3: Condo completion schedule Btmn 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 ‐
Btmn
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000
2016
2015
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
‐
Source: LPN, KT ZMICO Research
1Q17
2Q17
3Q17
Source: LPN, KT ZMICO Research
Figure 4: Major forecast revisions
Old 2017
New 2017E
% Change
Residential sales
12,547
10,865
(13.4)
12,865 12,865
0.0
Net profit
1,847
1,633
(11.6)
1,953
0.0
Btmn
Old 2018E
New 2018E
1,953
% Change
Remark Declines along with 2017E transfer rate decrease
Source: LPN, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
4Q17
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 Forex gain (loss) Extra Items Gain (loss) from affiliates Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Forex and other extraordinary adjustments 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 12,867 (8,704) 4,163 (1,679) 2,600 39 2,561 (21) 78 2,555 (534) 0 0 0 2,021 1.37 1.37 2,021 1.37 0.80
2015 16,627 (11,476) 5,151 (2,066) 3,167 47 3,120 (11) 35 3,121 (707) 0 0 0 2,413 1.64 1.64 2,413 1.64 0.90
2016 14,602 (10,041) 4,560 (1,867) 2,772 51 2,721 (6) 27 2,737 (561) 0 15 0 2,176 1.47 1.47 2,161 1.46 0.90
2017E 11,665 (8,211) 3,454 (1,403) 2,120 48 2,073 (15) 21 2,068 (434) 0 0 0 1,633 1.11 1.11 1,633 1.11 0.55
2018E 13,705 (9,584) 4,121 (1,665) 2,532 50 2,482 (20) 26 2,472 (519) 0 0 0 1,953 1.32 1.32 1,953 1.32 0.66
2014 1,113 232 4,957 1,702 11,522 19,784 4,986 1,583 9,375 1,476 10,408 19,784
2015 758 140 5,589 2,003 10,703 19,625 2,934 2,209 8,044 1,476 11,581 19,625
2016 621 226 8,511 1,980 6,645 18,558 3,183 1,126 6,147 1,476 12,411 18,558
2017E 500 163 6,299 2,088 12,022 21,382 4,204 2,286 8,669 1,476 12,713 21,382
2018E 500 192 6,565 2,129 13,457 23,184 5,179 1,624 9,334 1,476 13,850 23,184
2014 2,021 (279) 39 (1,847) (66) (52) (66) (118) 1,279 0 (1,239) 0 40 (144) 12 0.01
2015 2,413 (191) 47 379 2,647 (322) 66 (256) (1,444) 0 (1,240) 0 (2,684) (292) 2,556 1.73
2016 2,176 (330) 51 313 2,210 (181) (30) (212) (837) 0 (1,328) 0 (2,165) (167) 2,521 1.71
2017E 1,633 23 48 (2,854) (1,149) (49) 30 (19) 1,774 0 (1,328) 631 1,077 (91) (1,220) (0.83)
2018E 1,953 23 50 (1,433) 593 (49) 0 (49) 699 0 (817) (426) (544) 0 522 0.35
2014 (10.3) (13.0) (13.2) 32.4 20.2 19.9 15.7 15.7 20.9
2015 29.2 21.8 19.4 31.0 19.0 18.8 14.5 14.5 22.7
2016 (12.2) (12.5) (9.8) 31.2 19.0 18.6 14.9 14.8 20.5
2017E (20.1) (23.5) (24.9) 29.6 18.2 17.8 14.0 14.0 21.0
2018E 17.5 19.4 19.6 30.1 18.5 18.1 14.2 14.2 21.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, CRANE. 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 Bt12.40
Property Development February 10, 2017
Earnings upgrade /Earnings downgrade/Overview unchanged
4Q16 and 2016 earnings lower than expected Price Performance (%) Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.106
1.354
KT ZMICO vs. consensus Share data
0.4%
‐2.5%
Reuters / Bloomberg
LPN.BK/ LPN TB
Paid‐up Shares (m)
1,475.70
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
18.00/523.00
Foreign limit / actual (%)
39.00/25.55
52 week High / Low (Bt)
14.50/9.80
Avg. daily T/O (shares 000) NVDR (%)
8,194.00 6.49
Estimated free float (%)
75.51
Beta
0.80
URL
www.lpn.co.th
CGR
Anti‐corruption
Worarat Powpaka Analyst, no. 17992 [email protected] 66 (0) 2624‐6248
Level 2 (Declared)
Maintain Sell with the new 17E TP at Bt9 We maintain sell on LPN with the new 17E TP at Bt9 after we revised down the 2017E net profit by 11.6%. Although the new 2017E launches will drive 2017E presales, inventory and condos to be finished in 2017E worth Bt14bn, which are in the low‐end segment, will remain a burden as its target group is still experiencing a financial source problem. LPN’s near‐term catalyst to support its share price is the 2H16 dividend yield of 4.8%. 4Q16 earnings declined both YoY and QoQ LPN reported 4Q16 net profit at Bt281mn (‐2.3% YoY, ‐9.1% QoQ), 36% below our forecast, mainly due to lower‐than‐expected transfers. 4Q16 transfers were Bt2.35bn (‐22.7% YoY, ‐3.4% QoQ), 23% lower than our estimate. The average GPM was in line at 30.9% and SG&A to revenue was 17.3%, higher than our estimate on the lower transfer base. 2016 net profit declined 9.8% YoY LPN's 2016 net earnings amounted to Bt2.18bn (‐9.8% YoY), 6.7% below our estimate due to lower‐than‐expected transfers. 2016 transfers were Bt13.86bn (‐13.3% YoY), 4.9% below our estimate. The average GPM was in line at 31.3%. The SG&A expense‐to‐revenue ratio was 12.8%, higher than our estimate of 12.2%. Hence, 2016 net earnings were lower than expected. Announced 2H16 DPS at Bt0.6, implying a yield of 4.8% LPN announced its 2H16 DPS at Bt0.60, implying a yield of 4.8%. It will go XD on February 21 and the dividend will be paid on April 11, 2017. Revise down 2017E net profit by 11.6% but maintain 2018E We revised down our 2017E net profit by 11.6%. The downward revision was mainly from lower transfers in 2017E by 13.4% to Bt10.87bn, in line with LPN’s transfer target, along with the presales and transfer trends of existing projects in 2016, which were slower than our previous expectation. Meanwhile, we maintain our 2018E net profit because LPN will have 7‐8 condo launches in 2017E worth Bt13bn, which will be realized in late 2018E and likely support our 2018E transfer forecast. Third project sold 25% of project units LPN launched a third project, namely, Lumpini Ville Ratburana Riverview 2, on Feb 6, 2017. It launched 330 units (50% of total units) and sold 170 units or 25% of the total units. Meanwhile, Lumpini Phetchaburi‐ Makkasan is now 70% sold after including foreign buyers’ value. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Core EPS (Bt) Core EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) Normalized PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 12,867 2,021 1.37 (13.2) 1.37 (13.2) 0.80 7.05 2014 9.1 9.1 9.1 1.8 6.5 20.2 52.4
2015 16,627 2,413 1.64 19.4 1.64 19.4 0.90 7.85 2015 7.6 7.6 7.2 1.6 7.3 22.0 37.9
2016 14,602 2,176 1.47 (9.8) 1.46 (10.4) 0.90 8.41 2016 8.4 8.5 7.9 1.5 7.3 18.1 29.7
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 11,665 1,633 1.11 (24.9) 1.11 (24.4) 0.55 8.62 2017E 11.2 11.2 11.5 1.4 4.5 13.0 47.1
2018E 13,705 1,953 1.32 19.6 1.32 19.6 0.66 9.39 2018E 9.4 9.4 9.7 1.3 5.3 14.7 45.5
Figure 1: Quarterly earnings review Profit and Loss (Btmn) FY Ended 31 Dec 4Q15
3Q16
4Q16
% YoY
% QoQ
2015
2016
% YoY
3,042 3,223 1,021
2,272 2,465 785
2,350 2,550 784
(22.7) (20.9) (23.2)
3.4 3.4 (0.2)
15,981 16,627 5,151
13,855 14,602 4,560
(13.3) (12.2) (11.5)
EBITDA
451
405
368
(18.5)
(9.3)
3,167
2,772
(12.5)
Interest expense
(1)
(1)
(2)
55.7
38.8
(11)
(6)
(49.1)
Other income
9
5
10
5.5
91.5
35
27
(21.9)
Income tax
(149)
(82)
(71)
(52.4)
(13.8)
(707)
(561)
(20.7)
Net profit (loss)
288
310
281
(2.3)
(9.1)
2,413
2,176
(9.8)
Core net profit (loss)
288
310
283
(1.8)
(8.7)
2,413
2,161
(10.4)
Reported EPS (THB)
0.20
0.21
0.19
(2.3)
(9.1)
1.64
1.47
(9.8)
Core EPS (THB)
0.20
0.21
0.19
(1.8)
(8.7)
1.64
1.46
(10.4)
Gross margin – project sales (%)
31.5
31.7
30.9
31.1
31.3
Revenue from project sales Total revenue Gross profit
Gross margin ‐ overall (%)
31.7
31.9
30.8
31.0
31.2
EBITDA margin (%)
14.0
16.4
14.4
19.0
19.0
Net margin (%)
8.9
12.6
11.0
14.5
14.9
Current ratio (x)
3.1
3.4
3.4
3.1
3.4
Interest coverage (x)
330.9
266.1
172.1
277.3
474.7
Debt / equity (x)
0.7
0.5
0.5
0.7
0.5
BVPS (Bt)
7.85
8.22
8.41
7.85
8.41
ROE (%)
21.1
17.9
18.1
22.0
18.1
Source: LPN, KT ZMICO Research Figure 2: Quarterly presales
Figure 3: Condo completion schedule Btmn 4,500 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 ‐
Btmn
16,000 14,000 12,000 10,000 8,000 6,000 4,000 2,000
2016
2015
4Q16
3Q16
2Q16
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
‐
Source: LPN, KT ZMICO Research
1Q17
2Q17
3Q17
Source: LPN, KT ZMICO Research
Figure 4: Major forecast revisions
Old 2017
New 2017E
% Change
Residential sales
12,547
10,865
(13.4)
12,865 12,865
0.0
Net profit
1,847
1,633
(11.6)
1,953
0.0
Btmn
Old 2018E
New 2018E
1,953
% Change
Remark Declines along with 2017E transfer rate decrease
Source: LPN, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
4Q17
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 Forex gain (loss) Extra Items Gain (loss) from affiliates Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity CASH FLOW (Btmn) Net income Forex and other extraordinary adjustments 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 12,867 (8,704) 4,163 (1,679) 2,600 39 2,561 (21) 78 2,555 (534) 0 0 0 2,021 1.37 1.37 2,021 1.37 0.80
2015 16,627 (11,476) 5,151 (2,066) 3,167 47 3,120 (11) 35 3,121 (707) 0 0 0 2,413 1.64 1.64 2,413 1.64 0.90
2016 14,602 (10,041) 4,560 (1,867) 2,772 51 2,721 (6) 27 2,737 (561) 0 15 0 2,176 1.47 1.47 2,161 1.46 0.90
2017E 11,665 (8,211) 3,454 (1,403) 2,120 48 2,073 (15) 21 2,068 (434) 0 0 0 1,633 1.11 1.11 1,633 1.11 0.55
2018E 13,705 (9,584) 4,121 (1,665) 2,532 50 2,482 (20) 26 2,472 (519) 0 0 0 1,953 1.32 1.32 1,953 1.32 0.66
2014 1,113 232 4,957 1,702 11,522 19,784 4,986 1,583 9,375 1,476 10,408 19,784
2015 758 140 5,589 2,003 10,703 19,625 2,934 2,209 8,044 1,476 11,581 19,625
2016 621 226 8,511 1,980 6,645 18,558 3,183 1,126 6,147 1,476 12,411 18,558
2017E 500 163 6,299 2,088 12,022 21,382 4,204 2,286 8,669 1,476 12,713 21,382
2018E 500 192 6,565 2,129 13,457 23,184 5,179 1,624 9,334 1,476 13,850 23,184
2014 2,021 (279) 39 (1,847) (66) (52) (66) (118) 1,279 0 (1,239) 0 40 (144) 12 0.01
2015 2,413 (191) 47 379 2,647 (322) 66 (256) (1,444) 0 (1,240) 0 (2,684) (292) 2,556 1.73
2016 2,176 (330) 51 313 2,210 (181) (30) (212) (837) 0 (1,328) 0 (2,165) (167) 2,521 1.71
2017E 1,633 23 48 (2,854) (1,149) (49) 30 (19) 1,774 0 (1,328) 631 1,077 (91) (1,220) (0.83)
2018E 1,953 23 50 (1,433) 593 (49) 0 (49) 699 0 (817) (426) (544) 0 522 0.35
2014 (10.3) (13.0) (13.2) 32.4 20.2 19.9 15.7 15.7 20.9
2015 29.2 21.8 19.4 31.0 19.0 18.8 14.5 14.5 22.7
2016 (12.2) (12.5) (9.8) 31.2 19.0 18.6 14.9 14.8 20.5
2017E (20.1) (23.5) (24.9) 29.6 18.2 17.8 14.0 14.0 21.0
2018E 17.5 19.4 19.6 30.1 18.5 18.1 14.2 14.2 21.0
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, CRANE. 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
