Singer Thailand
Singer Thailand Outperform (15E TP Bt15.20)
Company Update
Close Bt14.60
Commerce June 8, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Major shareholders changed
FY15
FY16
Consensus EPS (Bt)
1.030
1.157
KT ZMICO vs. consensus Share data
‐7.8%
‐5.8%
Reuters / Bloomberg
SINGER.BK/SINGER TB
Paid‐up Shares (m)
270.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
4.00/116.00
Foreign limit / actual (%)
49.00/1.83
52 week High / Low (Bt)
21.40/11.70
Avg. daily T/O (shares 000)
1,407.00
NVDR (%)
1.04
Estimated free float (%)
59.97
Beta
0.58
URL
www.singerthai.co.th
CGR
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Rating cut on limited upside We expect that SINGER’s share price will react positively to the news concerning the recent change in the major shareholder. We anticipate that JMART can build synergy with SINGER and do not expect a dramatic near‐term change to its business model. Even though we don’t have a negative view on the acquisition, the limited upside to our target price leads us to lower the rating to OUTPERFORM. Major shareholder disposed entire stake Singer Thailand B.V., subsidiary of Retail Holdings N.V. (RHDGF), has divested its entire lot of 108mn shares, equivalent to a 40% stake in SINGER at Bt14 apiece, approximately Bt1.5bn in total value. Its relatively low stake holding in SINGER (figure 1) together with SINGER’s direct sales business model, which is different from the retail and wholesale business model employed elsewhere, are the reasons behind the disposition. SINGER, however, will continue to have a royalty bearing license from the RHDGF group, enabling it to use the Singer brand. JMART becomes new largest shareholder with nearly a 25% stake JMART, a mobile handset distributor, disclosed through the SET that it has acquired nearly a 25% stake in SINGER for Bt945mn. The purchasers of the remaining 15% stake were not disclosed. The strategic business direction under the new acquirers will be announced soon. At this stage, we do not expect dramatic changes to its business model. In our view, JMART will help SINGER widen its product offerings and broaden the scope of financial services. Given its strong team with outstanding local market knowledge, SINGER will in turn help JMART expand its businesses rapidly through its distribution channel nationwide. 2015E‐2016E earnings forecasts unchanged In our talk with SINGER before being acquired, they signaled a rebound in sales momentum in early 2Q15, particularly for seasonal products such as air conditioners and freezers. Next month, the company will launch its pilot project on small petrol trucks to supply petrol to its vending machines in a bid to gain recurring service revenue. We currently leave our 2015E‐2016E earnings estimates unchanged until the new business direction has been determined. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 2,951 226 0.84 59% 0.30 4.42 2012 19.93 14.15 3.78 1.8% 20.8% 47.9%
2013 3,627 321 1.19 42% 0.45 5.30 2013 15.50 12.71 3.47 2.4% 24.4% 65.9%
2014 3,427 241 0.89 ‐25% 0.53 5.84 2014 14.20 11.12 2.17 4.2% 16.0% 48.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
2015E 3,634 257 0.95 6% 0.57 6.26 2015E 15.37 10.97 2.33 3.9% 15.7% 27.6%
2016E 3,959 293 1.09 14% 0.65 6.78 2016E 13.44 9.52 2.15 4.5% 16.7% 15.0%
Figure 1: Singer Asia’s investment portfolio Name Country of incorporation
Singer Asia’s economic interest 75.0% 75.0% 70.3% 86.1% 58.3% 83.6% 69.2% 40.0%
Value of holding (USDmn) Singer Bangladesh Limited Bangladesh 122.10 Singer India Limited India 17.45 Singer Pakistan Limited Pakistan 6.20 Singer Sri Lanka PLC Sri Lanka 104.02 Regnis PLC Sri Lanka 6.28 Singer Industries (Ceylon) PLC Sri Lanka 4.50 Singer Finance (Lanka) PLC* Sri Lanka 20.14 Singer Thailand PCL Thailand 44.80** Total 325.49 Note: Singer Asia is wholly owned by Sewko Holdings Limited, the subsidiary of Retail Holdings, which holds a 54.1% stake *owned by Singer Sri Lanka **the value of the disposition Source: Retail Holdings, Bloomberg and KT Zmico Research
Figure 2: PER and PBV band
PER (x)
30.00 25.00
+2.0SD
5.0
20.00 15.00
PBV (x)
6.0
+1.0SD
4.0
+3 S.D. +2 S.D.
10.00 5.00
3.0
+1 S.D.
2.0
Average
‐0.5SD
‐ (5.00)
1.0
(10.00)
‐0.5SD
0.0 Jan‐02 Aug‐02 Apr‐03 Nov‐03 Jul‐04 Feb‐05 Oct‐05 Jun‐06 Feb‐07 Sep‐07 May‐08 Mar‐09 Oct‐09 Jun‐10 Jan‐11 Sep‐11 Apr‐12 Nov‐12 Jul‐13 Feb‐14 Oct‐14 Jun‐15
Jan‐02 Aug‐02 Apr‐03 Nov‐03 Jul‐04 Feb‐05 Oct‐05 Jun‐06 Feb‐07 Sep‐07 May‐08 Mar‐09 Oct‐09 Jun‐10 Jan‐11 Sep‐11 Apr‐12 Nov‐12 Jul‐13 Feb‐14 Oct‐14 Jun‐15
(15.00)
Source: Bloomberg and KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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 OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 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. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index 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 3 of 3
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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
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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.
Company Update
Close Bt14.60
Commerce June 8, 2015
Earnings upgrade/Earnings downgrade/Overview unchanged
Major shareholders changed
FY15
FY16
Consensus EPS (Bt)
1.030
1.157
KT ZMICO vs. consensus Share data
‐7.8%
‐5.8%
Reuters / Bloomberg
SINGER.BK/SINGER TB
Paid‐up Shares (m)
270.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
4.00/116.00
Foreign limit / actual (%)
49.00/1.83
52 week High / Low (Bt)
21.40/11.70
Avg. daily T/O (shares 000)
1,407.00
NVDR (%)
1.04
Estimated free float (%)
59.97
Beta
0.58
URL
www.singerthai.co.th
CGR
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Rating cut on limited upside We expect that SINGER’s share price will react positively to the news concerning the recent change in the major shareholder. We anticipate that JMART can build synergy with SINGER and do not expect a dramatic near‐term change to its business model. Even though we don’t have a negative view on the acquisition, the limited upside to our target price leads us to lower the rating to OUTPERFORM. Major shareholder disposed entire stake Singer Thailand B.V., subsidiary of Retail Holdings N.V. (RHDGF), has divested its entire lot of 108mn shares, equivalent to a 40% stake in SINGER at Bt14 apiece, approximately Bt1.5bn in total value. Its relatively low stake holding in SINGER (figure 1) together with SINGER’s direct sales business model, which is different from the retail and wholesale business model employed elsewhere, are the reasons behind the disposition. SINGER, however, will continue to have a royalty bearing license from the RHDGF group, enabling it to use the Singer brand. JMART becomes new largest shareholder with nearly a 25% stake JMART, a mobile handset distributor, disclosed through the SET that it has acquired nearly a 25% stake in SINGER for Bt945mn. The purchasers of the remaining 15% stake were not disclosed. The strategic business direction under the new acquirers will be announced soon. At this stage, we do not expect dramatic changes to its business model. In our view, JMART will help SINGER widen its product offerings and broaden the scope of financial services. Given its strong team with outstanding local market knowledge, SINGER will in turn help JMART expand its businesses rapidly through its distribution channel nationwide. 2015E‐2016E earnings forecasts unchanged In our talk with SINGER before being acquired, they signaled a rebound in sales momentum in early 2Q15, particularly for seasonal products such as air conditioners and freezers. Next month, the company will launch its pilot project on small petrol trucks to supply petrol to its vending machines in a bid to gain recurring service revenue. We currently leave our 2015E‐2016E earnings estimates unchanged until the new business direction has been determined. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2012 2,951 226 0.84 59% 0.30 4.42 2012 19.93 14.15 3.78 1.8% 20.8% 47.9%
2013 3,627 321 1.19 42% 0.45 5.30 2013 15.50 12.71 3.47 2.4% 24.4% 65.9%
2014 3,427 241 0.89 ‐25% 0.53 5.84 2014 14.20 11.12 2.17 4.2% 16.0% 48.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 3
2015E 3,634 257 0.95 6% 0.57 6.26 2015E 15.37 10.97 2.33 3.9% 15.7% 27.6%
2016E 3,959 293 1.09 14% 0.65 6.78 2016E 13.44 9.52 2.15 4.5% 16.7% 15.0%
Figure 1: Singer Asia’s investment portfolio Name Country of incorporation
Singer Asia’s economic interest 75.0% 75.0% 70.3% 86.1% 58.3% 83.6% 69.2% 40.0%
Value of holding (USDmn) Singer Bangladesh Limited Bangladesh 122.10 Singer India Limited India 17.45 Singer Pakistan Limited Pakistan 6.20 Singer Sri Lanka PLC Sri Lanka 104.02 Regnis PLC Sri Lanka 6.28 Singer Industries (Ceylon) PLC Sri Lanka 4.50 Singer Finance (Lanka) PLC* Sri Lanka 20.14 Singer Thailand PCL Thailand 44.80** Total 325.49 Note: Singer Asia is wholly owned by Sewko Holdings Limited, the subsidiary of Retail Holdings, which holds a 54.1% stake *owned by Singer Sri Lanka **the value of the disposition Source: Retail Holdings, Bloomberg and KT Zmico Research
Figure 2: PER and PBV band
PER (x)
30.00 25.00
+2.0SD
5.0
20.00 15.00
PBV (x)
6.0
+1.0SD
4.0
+3 S.D. +2 S.D.
10.00 5.00
3.0
+1 S.D.
2.0
Average
‐0.5SD
‐ (5.00)
1.0
(10.00)
‐0.5SD
0.0 Jan‐02 Aug‐02 Apr‐03 Nov‐03 Jul‐04 Feb‐05 Oct‐05 Jun‐06 Feb‐07 Sep‐07 May‐08 Mar‐09 Oct‐09 Jun‐10 Jan‐11 Sep‐11 Apr‐12 Nov‐12 Jul‐13 Feb‐14 Oct‐14 Jun‐15
Jan‐02 Aug‐02 Apr‐03 Nov‐03 Jul‐04 Feb‐05 Oct‐05 Jun‐06 Feb‐07 Sep‐07 May‐08 Mar‐09 Oct‐09 Jun‐10 Jan‐11 Sep‐11 Apr‐12 Nov‐12 Jul‐13 Feb‐14 Oct‐14 Jun‐15
(15.00)
Source: Bloomberg and KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 3
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 OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market return over six months period because of specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to below market return over six months period because of specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 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. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index 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 3 of 3
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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
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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.
