Soaring 2Q17 core profit
Electricity Generating Company Update
Outperform (18E TP Bt245.00) Close Bt223.00
Energy & Utilities August 10, 2017
Earnings upgrade / Earnings downgrade / Overview unchanged
Soaring 2Q17 core profit Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
18.797
19.939
KT ZMICO vs. consensus Share data
‐3.4%
‐4.1%
Reuters / Bloomberg
EGCO.BK/EGCO TB
Paid‐up Shares (m)
526.47
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
117.00/3,531.00
Foreign limit / actual (%)
44.82/34.41
52 week High / Low (Bt)
227.00/188.00
Avg. daily T/O (shares 000)
550.00
NVDR (%)
15.16
Estimated free float (%)
42.92
Beta
0.24
URL
www.egco.com
CGR Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Solid earnings; capacity growth on the upside Given the company’s solid earnings secured by committed projects in the pipeline (with projected core profit growth at 10% CAGR in 2017‐18E and a core profit contribution of Bt2.3mn/MW in 2017‐18E, in the upper bound range vs. domestic peers at the average of Bt1.9‐2.0mn/MW during the period), with the potential for capacity additions as a windfall (i.e., Nam Theun 1 in Lao PDR and the potential expansion block of BLCP), we still rate Outperform on EGCO with the rolled‐over SOTP‐based 2018E TP of Bt245. Upbeat 2Q17 NP at Bt3.53bn EGCO marked soaring NP of Bt3.53bn in 2Q17 (+72% YoY, +19% QoQ), beating the street forecast by 31%. Stripping out Bt406mn forex gain, it delivered soaring core profit of Bt3.12bn (+48% YoY, +86% QoQ), with the better performance stemming from higher power generation and lower expenses. A stronger profit contribution was seen at NTPC (given higher power generation in line with the higher water level and lower interest expenses), Khanom Unit 4 (due to its smooth operation compared with the negligible contribution in 2Q16 after its commencement in mid‐June, 2016, and the 20‐day maintenance shutdown in 1Q17), Quezon (following the higher power generation with no unplanned outage as in 2Q16 and lower financing costs from repricing of loan interest), Masin‐ AES (from a higher holding stake to 49% since early‐July, 2016, along with lower selling and administrative expenses as well as interest expenses), BLCP (given the higher power generation against 2Q16 with an unplanned outage on Unit 2), and GPG (thanks to a higher availability payment in line with the seasonally high weight factor). 2017‐18E earnings estimates slightly fine‐tuned We make a negligible earnings revision of the company’s 2017E NP, with the higher profit contribution from geothermal projects in Indonesia due to the recent acquisition of 20% stakes in both Salak and Darajat to be mostly offset by a lower profit contribution from Khanom Unit 4 on its maintenance shutdown in 1Q17. The 1H17 core profit represents 50% of our full‐year forecast, while earnings acceleration is expected in 2H17 following the contribution kickoff of the three new SPP projects, as well as the new geothermal projects – Salak and Darajat. We slightly fine‐tune its 2018E NP by +3% to reflect the first full‐year contribution from Salak and Darajat (netting off the higher interest expenses from the new loans for funding the acquisition). We also roll over its 2018E SOTP‐based TP to Bt245/share. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 15,914 7,825 4,319 8.20 (43.68) 6.25 146.72 2015 27.20 33.40 1.52 2.8% 5.7% 101.7%
2016 22,794 8,264 8,321 15.81 92.74 6.50 155.70 2016 14.11 27.92 1.43 2.9% 10.5% 111.7%
2017E 32,849 9,563 9,563 18.16 14.93 6.50 167.37 2017E 12.28 20.42 1.33 2.9% 11.2% 105.2%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 39,034 10,066 10,066 19.12 5.26 6.75 179.99 2018E 11.66 18.05 1.24 3.0% 11.0% 93.3%
2019E 39,164 10,367 10,367 19.69 3.00 7.00 192.93 2019E 11.32 17.48 1.16 3.1% 10.6% 80.8%
Figure 1: EGCO’s 2Q17 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates
Minority interests 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 (%)
2Q16
1Q17
2Q17
4,456 1,865 1,614 (792) 587 (309) (62) ‐ 1,636 (27) 2,048 2,109 3.89 41.85 36.22 45.95 1.52 1.28 1.20 151.18 10.30
6,286 1,605 1,703 (972) 497 (96) 1,279 ‐ 1,229 (8) 2,963 1,685 5.63 25.54 27.10 47.15 1.55 1.07 1.21 158.61 14.33
7,151 2,204 2,276 (982) 593 (241) 406 ‐ 2,153 (8) 3,530 3,124 6.70 30.82 31.84 49.37 1.98 1.64 1.22 161.63 16.75
% YoY 60.5 18.2 41.0 24.0 1.0 (22.0) nm nm 31.6 (70.0) 72.4 48.1 72.2
% QoQ 13.8 37.3 33.6 1.0 19.5 150.0 (68.2) nm 75.1 (5.4) 19.1 85.5 19.0
1H16
1H17
8,580 3,254 3,054 (1,653) 993 (400) 879 (196) 3,165 (46) 4,637 3,955 8.81 37.93 35.59 54.05 1.52 1.15 1.20 151.18 11.65
13,436 3,809 3,980 (1,955) 1,090 (337) 1,685 ‐ 3,382 (16) 6,494 4,809 12.33 28.35 29.62 48.33 1.98 1.35 1.22 161.63 15.26
% YoY 56.6 17.1 30.3 18.2 9.7 (15.8) 91.8 (100) 6.8 (64.0) 40.0 21.6 40.0
YTD 2016
2017E
22,794 7,954 7,479 (3,684) 1,888 (1,040) 253 (196) 6,062 (60) 8,321 8,264 15.81 34.90 32.81 36.50 1.49 1.38 1.23 155.70 10.45
32,849 8,853 10,283 (3,588) 1,907 (1,127) ‐ ‐ 7,791 (478) 9,563 9,563 18.16 26.95 31.30 29.11 1.07 1.41 1.15 167.37 11.25
Source: KT Zmico Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
% YoY 44.11 11.29 37.48 (2.61) 1.04 8.35 (100) (100) 28.51 692.9 14.93 15.72 14.93
(%17E)
40.9 43.0 38.7 54.5 57.1 29.9 nm nm 43.4 3.4 67.9 50.3 67.9
Financial tables PROFIT & LOSS (Btm) 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 Minority interests Profit from discontinued operation Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2014 16,897 (10,227) 6,670 (2,944) 5,941 2,214 3,726 (2,093) 1,849 3,483 (751) (557) 0 5,461 (140) 171 7,667 14.56 14.56 8,224 15.62 6.25
2015 15,914 (9,934) 5,980 (2,376) 5,864 2,259 3,604 (2,898) 1,893 2,600 (750) (4,102) 596 5,948 (87) 115 4,319 8.20 8.20 7,825 14.86 6.25
2016 22,794 (14,840) 7,954 (2,855) 7,479 2,380 5,099 (3,684) 1,888 3,303 (1,040) 253 (196) 6,062 (60) 0 8,321 15.81 15.81 8,264 15.70 6.50
2017E 32,849 (23,996) 8,853 (3,794) 10,283 5,224 5,058 (3,588) 1,907 3,378 (1,127) 0 0 7,791 (478) 0 9,563 18.16 18.16 9,563 18.16 6.50
2018E 39,034 (28,219) 10,815 (5,149) 11,395 5,729 5,666 (3,932) 1,907 3,642 (1,148) 0 0 8,051 (480) 0 10,066 19.12 19.12 10,066 19.12 6.75
2019E 39,164 (28,350) 10,814 (5,168) 11,400 5,754 5,646 (3,540) 2,213 4,319 (1,169) 0 0 7,701 (485) 0 10,367 19.69 19.69 10,367 19.69 7.00
BALANCE SHEET (Btm) 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 Minority interests Total liab. & shareholder equity
2014 8,653 2,534 2,069 56,257 91,173 160,687 15,681 59,686 86,468 5,265 73,264 955 160,687
2015 10,888 2,468 1,908 72,976 91,573 179,812 11,015 78,314 102,063 5,265 77,242 508 179,813
2016 9,301 3,758 2,300 62,869 119,026 197,255 7,974 92,715 114,657 5,265 81,973 625 197,255
2017E 8,404 2,700 2,630 60,896 130,790 205,420 9,954 90,987 116,203 5,265 88,114 1,103 205,420
2018E 7,686 3,208 3,092 59,170 135,136 208,292 12,840 83,077 111,952 5,265 94,758 1,583 208,292
2019E 7,111 3,219 3,107 56,960 138,491 208,888 13,784 75,168 105,248 5,265 101,572 2,067 208,888
CASH FLOW (Btm) 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)
2014 7,667 557 2,214 1,397 11,835 (35,866)
2015 4,319 4,102 2,259 (4,752) 5,928 (23,381)
2016 8,321 (253) 2,380 (7,472) 2,976 3,793
2017E 9,563 0 5,224 (4,700) 10,088 (20,357)
2018E 10,066 0 5,729 (7,270) 8,525 (11,296)
2019E 10,367 0 5,754 (6,554) 9,567 (9,169)
(35,866) 26,139 4,348 (3,159) (2,565) 24,764 732 (24,031) (45.65)
(23,381) 13,961 5,419 (3,290) 3,597 19,687 2,234 (17,453) (33.15)
3,793 11,361 5,759 (3,290) (22,185) (8,356) (1,587) 6,769 12.86
(20,357) 252 7,313 (3,422) 5,229 9,372 (897) (10,269) (19.51)
(11,296) (5,024) 7,572 (3,422) 2,927 2,053 (718) (2,771) (5.26)
(9,169) (6,966) 7,217 (3,554) 2,330 (972) (574) 398 0.76
2014 (3.2) 0.1 7.0 39.5 35.2 22.1 45.4 48.7 9.1
2015 (5.8) (1.3) (43.7) 37.6 36.8 22.6 27.1 49.2 9.6
2016 43.2 27.6 92.7 34.9 32.8 22.4 36.5 36.3 12.6
2017E 44.1 37.5 14.9 26.9 31.3 15.4 29.1 29.1 11.8
2018E 18.8 10.8 5.3 27.7 29.2 14.5 25.8 25.8 11.4
2019E 0.3 0.0 3.0 27.6 29.1 14.4 26.5 26.5 11.3
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. 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
Outperform (18E TP Bt245.00) Close Bt223.00
Energy & Utilities August 10, 2017
Earnings upgrade / Earnings downgrade / Overview unchanged
Soaring 2Q17 core profit Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
18.797
19.939
KT ZMICO vs. consensus Share data
‐3.4%
‐4.1%
Reuters / Bloomberg
EGCO.BK/EGCO TB
Paid‐up Shares (m)
526.47
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
117.00/3,531.00
Foreign limit / actual (%)
44.82/34.41
52 week High / Low (Bt)
227.00/188.00
Avg. daily T/O (shares 000)
550.00
NVDR (%)
15.16
Estimated free float (%)
42.92
Beta
0.24
URL
www.egco.com
CGR Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
Solid earnings; capacity growth on the upside Given the company’s solid earnings secured by committed projects in the pipeline (with projected core profit growth at 10% CAGR in 2017‐18E and a core profit contribution of Bt2.3mn/MW in 2017‐18E, in the upper bound range vs. domestic peers at the average of Bt1.9‐2.0mn/MW during the period), with the potential for capacity additions as a windfall (i.e., Nam Theun 1 in Lao PDR and the potential expansion block of BLCP), we still rate Outperform on EGCO with the rolled‐over SOTP‐based 2018E TP of Bt245. Upbeat 2Q17 NP at Bt3.53bn EGCO marked soaring NP of Bt3.53bn in 2Q17 (+72% YoY, +19% QoQ), beating the street forecast by 31%. Stripping out Bt406mn forex gain, it delivered soaring core profit of Bt3.12bn (+48% YoY, +86% QoQ), with the better performance stemming from higher power generation and lower expenses. A stronger profit contribution was seen at NTPC (given higher power generation in line with the higher water level and lower interest expenses), Khanom Unit 4 (due to its smooth operation compared with the negligible contribution in 2Q16 after its commencement in mid‐June, 2016, and the 20‐day maintenance shutdown in 1Q17), Quezon (following the higher power generation with no unplanned outage as in 2Q16 and lower financing costs from repricing of loan interest), Masin‐ AES (from a higher holding stake to 49% since early‐July, 2016, along with lower selling and administrative expenses as well as interest expenses), BLCP (given the higher power generation against 2Q16 with an unplanned outage on Unit 2), and GPG (thanks to a higher availability payment in line with the seasonally high weight factor). 2017‐18E earnings estimates slightly fine‐tuned We make a negligible earnings revision of the company’s 2017E NP, with the higher profit contribution from geothermal projects in Indonesia due to the recent acquisition of 20% stakes in both Salak and Darajat to be mostly offset by a lower profit contribution from Khanom Unit 4 on its maintenance shutdown in 1Q17. The 1H17 core profit represents 50% of our full‐year forecast, while earnings acceleration is expected in 2H17 following the contribution kickoff of the three new SPP projects, as well as the new geothermal projects – Salak and Darajat. We slightly fine‐tune its 2018E NP by +3% to reflect the first full‐year contribution from Salak and Darajat (netting off the higher interest expenses from the new loans for funding the acquisition). We also roll over its 2018E SOTP‐based TP to Bt245/share. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 15,914 7,825 4,319 8.20 (43.68) 6.25 146.72 2015 27.20 33.40 1.52 2.8% 5.7% 101.7%
2016 22,794 8,264 8,321 15.81 92.74 6.50 155.70 2016 14.11 27.92 1.43 2.9% 10.5% 111.7%
2017E 32,849 9,563 9,563 18.16 14.93 6.50 167.37 2017E 12.28 20.42 1.33 2.9% 11.2% 105.2%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 39,034 10,066 10,066 19.12 5.26 6.75 179.99 2018E 11.66 18.05 1.24 3.0% 11.0% 93.3%
2019E 39,164 10,367 10,367 19.69 3.00 7.00 192.93 2019E 11.32 17.48 1.16 3.1% 10.6% 80.8%
Figure 1: EGCO’s 2Q17 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates
Minority interests 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 (%)
2Q16
1Q17
2Q17
4,456 1,865 1,614 (792) 587 (309) (62) ‐ 1,636 (27) 2,048 2,109 3.89 41.85 36.22 45.95 1.52 1.28 1.20 151.18 10.30
6,286 1,605 1,703 (972) 497 (96) 1,279 ‐ 1,229 (8) 2,963 1,685 5.63 25.54 27.10 47.15 1.55 1.07 1.21 158.61 14.33
7,151 2,204 2,276 (982) 593 (241) 406 ‐ 2,153 (8) 3,530 3,124 6.70 30.82 31.84 49.37 1.98 1.64 1.22 161.63 16.75
% YoY 60.5 18.2 41.0 24.0 1.0 (22.0) nm nm 31.6 (70.0) 72.4 48.1 72.2
% QoQ 13.8 37.3 33.6 1.0 19.5 150.0 (68.2) nm 75.1 (5.4) 19.1 85.5 19.0
1H16
1H17
8,580 3,254 3,054 (1,653) 993 (400) 879 (196) 3,165 (46) 4,637 3,955 8.81 37.93 35.59 54.05 1.52 1.15 1.20 151.18 11.65
13,436 3,809 3,980 (1,955) 1,090 (337) 1,685 ‐ 3,382 (16) 6,494 4,809 12.33 28.35 29.62 48.33 1.98 1.35 1.22 161.63 15.26
% YoY 56.6 17.1 30.3 18.2 9.7 (15.8) 91.8 (100) 6.8 (64.0) 40.0 21.6 40.0
YTD 2016
2017E
22,794 7,954 7,479 (3,684) 1,888 (1,040) 253 (196) 6,062 (60) 8,321 8,264 15.81 34.90 32.81 36.50 1.49 1.38 1.23 155.70 10.45
32,849 8,853 10,283 (3,588) 1,907 (1,127) ‐ ‐ 7,791 (478) 9,563 9,563 18.16 26.95 31.30 29.11 1.07 1.41 1.15 167.37 11.25
Source: KT Zmico Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
% YoY 44.11 11.29 37.48 (2.61) 1.04 8.35 (100) (100) 28.51 692.9 14.93 15.72 14.93
(%17E)
40.9 43.0 38.7 54.5 57.1 29.9 nm nm 43.4 3.4 67.9 50.3 67.9
Financial tables PROFIT & LOSS (Btm) 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 Minority interests Profit from discontinued operation Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2014 16,897 (10,227) 6,670 (2,944) 5,941 2,214 3,726 (2,093) 1,849 3,483 (751) (557) 0 5,461 (140) 171 7,667 14.56 14.56 8,224 15.62 6.25
2015 15,914 (9,934) 5,980 (2,376) 5,864 2,259 3,604 (2,898) 1,893 2,600 (750) (4,102) 596 5,948 (87) 115 4,319 8.20 8.20 7,825 14.86 6.25
2016 22,794 (14,840) 7,954 (2,855) 7,479 2,380 5,099 (3,684) 1,888 3,303 (1,040) 253 (196) 6,062 (60) 0 8,321 15.81 15.81 8,264 15.70 6.50
2017E 32,849 (23,996) 8,853 (3,794) 10,283 5,224 5,058 (3,588) 1,907 3,378 (1,127) 0 0 7,791 (478) 0 9,563 18.16 18.16 9,563 18.16 6.50
2018E 39,034 (28,219) 10,815 (5,149) 11,395 5,729 5,666 (3,932) 1,907 3,642 (1,148) 0 0 8,051 (480) 0 10,066 19.12 19.12 10,066 19.12 6.75
2019E 39,164 (28,350) 10,814 (5,168) 11,400 5,754 5,646 (3,540) 2,213 4,319 (1,169) 0 0 7,701 (485) 0 10,367 19.69 19.69 10,367 19.69 7.00
BALANCE SHEET (Btm) 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 Minority interests Total liab. & shareholder equity
2014 8,653 2,534 2,069 56,257 91,173 160,687 15,681 59,686 86,468 5,265 73,264 955 160,687
2015 10,888 2,468 1,908 72,976 91,573 179,812 11,015 78,314 102,063 5,265 77,242 508 179,813
2016 9,301 3,758 2,300 62,869 119,026 197,255 7,974 92,715 114,657 5,265 81,973 625 197,255
2017E 8,404 2,700 2,630 60,896 130,790 205,420 9,954 90,987 116,203 5,265 88,114 1,103 205,420
2018E 7,686 3,208 3,092 59,170 135,136 208,292 12,840 83,077 111,952 5,265 94,758 1,583 208,292
2019E 7,111 3,219 3,107 56,960 138,491 208,888 13,784 75,168 105,248 5,265 101,572 2,067 208,888
CASH FLOW (Btm) 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)
2014 7,667 557 2,214 1,397 11,835 (35,866)
2015 4,319 4,102 2,259 (4,752) 5,928 (23,381)
2016 8,321 (253) 2,380 (7,472) 2,976 3,793
2017E 9,563 0 5,224 (4,700) 10,088 (20,357)
2018E 10,066 0 5,729 (7,270) 8,525 (11,296)
2019E 10,367 0 5,754 (6,554) 9,567 (9,169)
(35,866) 26,139 4,348 (3,159) (2,565) 24,764 732 (24,031) (45.65)
(23,381) 13,961 5,419 (3,290) 3,597 19,687 2,234 (17,453) (33.15)
3,793 11,361 5,759 (3,290) (22,185) (8,356) (1,587) 6,769 12.86
(20,357) 252 7,313 (3,422) 5,229 9,372 (897) (10,269) (19.51)
(11,296) (5,024) 7,572 (3,422) 2,927 2,053 (718) (2,771) (5.26)
(9,169) (6,966) 7,217 (3,554) 2,330 (972) (574) 398 0.76
2014 (3.2) 0.1 7.0 39.5 35.2 22.1 45.4 48.7 9.1
2015 (5.8) (1.3) (43.7) 37.6 36.8 22.6 27.1 49.2 9.6
2016 43.2 27.6 92.7 34.9 32.8 22.4 36.5 36.3 12.6
2017E 44.1 37.5 14.9 26.9 31.3 15.4 29.1 29.1 11.8
2018E 18.8 10.8 5.3 27.7 29.2 14.5 25.8 25.8 11.4
2019E 0.3 0.0 3.0 27.6 29.1 14.4 26.5 26.5 11.3
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. 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
