Somboon Advance Technology
Somboon Advance Technology Company Update
Underperform (17E TP Bt16.00) Close Bt15.90
Automotive
Earnings upgrade/Earnings downgrade/Overview unchanged
February 22, 2017
Back to growth Fully valued; downgrade to UNDERPERFORM We expect SAT to resume earnings growth in 2017 after a three‐year skid thanks to the rebound of auto and non‐auto sales. Nevertheless, the 1Q17 rolling forecast from carmakers signals a soft start for the year, with clear recovery to be seen in 2H17E. With the recent share price rally, SAT is now traded at its long‐term average PER of 10x, which is fully valued in our view. We, thus, downgrade our rating to UNDERPERFORM.
Price Performance (%)
Auto output to grow 3% in 2017 SAT retains its cautious view on the recovery of auto output in 2017, with estimated growth of 3%YoY from 1.94mn units last year to 2.0mn units. The domestic market is expected to grow in the single digits in line with the growth pace of the economy and new models launched by carmakers. SAT voiced concern over the recovery of export markets, particularly in regard to pickup trucks for key export destinations, such as the Middle East, and Central and South America.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.545
1.814
KT ZMICO vs. consensus Share data
3.6%
‐2.4%
Reuters / Bloomberg
SAT.BK/SAT TB
Paid‐up Shares (m)
425.19
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/193.00
Foreign limit / actual (%)
49.00/17.74
52 week High / Low (Bt)
16.70/11.30
Avg. daily T/O (shares 000) NVDR (%)
783.00 4.37
Estimated free float (%)
53.83
Beta
0.71
URL
www.satpcl.co.th
CGR
Anti‐corruption
Level 4 (Certified)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
To beat industry’s top‐line growth backed by Kubota We estimate SAT’s total sales this year to grow above the industry average at 5%YoY thanks to the strong pickup in Kubota sales. The contribution from Kubota last year fell to 16% given the severe drought situation during the beginning of the year. This year, Kubota targets sales growth of 10% driven by demand recovery in the domestic market and expansion in overseas markets, especially Thailand’s fast‐growing neighboring countries. We estimate the contribution from Kubota to grow 9%YoY on the back of a 14% increase in sales volume to 67K units, vs. 59K units (‐10%YoY) in 2016. Immaterial change in earnings estimate Our 2017E earnings forecast is revised up insignificantly by 1% to Bt682mn, up 13%YoY. We keep sales growth unchanged at 5%YoY, but its 3% lower than the previous estimate after fine‐tuning with the lower sales base in 2016. Its GPM should manage to improve slightly (30bps) despite the trend of rising raw material prices thanks to its proven effective cost control. Lastly, shared profit from associates is revised up by 29%. With the new earnings estimate, our 2017E target price is adjusted to Bt16, pegged with long‐term average PER of 10x. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2015
2016
2017E
2018E
2019E
8,644 642 1.51 1.51 ‐1.47 0.60 13.01
8,299 608 1.43 1.43 ‐5.68 0.60 13.85
8,726 682 1.60 1.60 12.89 0.64 14.79
9,180 751 1.77 1.77 10.11 0.71 15.91
9,662 818 1.92 1.92 8.90 0.77 17.13
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015
2016
2017E
2018E
2019E
11.40 4.91 1.32 3.49 11.94 17.61
12.04 10.72 9.74 4.08 4.11 3.79 1.24 1.16 1.08 3.49 3.73 4.11 10.64 11.20 11.50 6.00 Net cash Net cash
8.94 3.22 1.00 4.47 11.64 Net cash
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Operating summary
Source: Bloomberg and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 2: Earnings revision Year ended Dec Total Revenue (Btmn) EBITDA (Btmn) Pre‐tax profi t (Btmn) Core profi t (Btm) Net profi t (Btmn) % growth EPS (Bt) Core EPS (Bt) Core EPS growth (%) Gros s ma rgi n (%) SG&A to s a l es (%)
Previous 8,968 1,658 742 674 674 10.9% 1.58 1.58 11.5% 15.2% 8.2%
2017E New 8,726 1,553 749 682 682 12.3% 1.60 1.60 12.9% 15.3% 8.2%
%chg ‐2.7% ‐6.3% 1.0% 1.2% 1.2% 1.3% 1.2% 1.2% 1.4% 0.1% 0.0%
Previous 9,665 1,777 831 755 755 12.0% 1.77 1.77 12.0% 15.5% 8.3%
2018E New 9,180 1,631 825 751 751 10.1% 1.77 1.77 10.1% 15.6% 8.3%
%chg ‐5.0% ‐8.2% ‐0.7% ‐0.5% ‐0.5% ‐1.9% ‐0.5% ‐0.5% ‐1.9% 0.1% 0.0%
Source: Bloomberg and KTZMICO Research
Figure 3: Peers comparison Stock
Price (Bt) AH 15.70 PCSGH 4.94 SAT 15.90 STANLY 207.00 SIMPLE AVERAGE
Mkt Cap (Btmn) 4,970 7,534 6,761 15,861
EPS Growth 2016E 2017E 36.8% 24.9% ‐31.4% 29.2% ‐5.7% 12.9% ‐12.9% 11.2%
PER (x) 2016E 2017E 11.83 9.47 20.58 15.94 9.31 9.91 13.98 12.57 13.92 11.97
Yield 2016E 2017E 3.4% 4.0% 5.4% 5.0% 4.5% 4.0% 2.4% 2.7% 4.0% 3.9%
ROE PEG 2016E 2017E 2016E 2017E 8.1% 8.8% 0.32 0.38 7.8% 9.9% nm 0.55 10.6% 11.2% nm 0.77 9.7% 10.1% nm 1.12 9.1% 10.0%
Source: Bloomberg and KTZMICO Research
Figure 4: PER and PBV band
Source: Bloomberg and KTZMICO Research
Financial summary REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Net profit Reported EPS Core net profit Core EPS Dividend (Bt)
2015 8,644 (7,392) 1,252 (680) 1,601 (858) 743 (116) 56 172 856 (43) 642 1.51 641 1.51 0.60
2016 8,299 (7,062) 1,237 (670) 1,472 (810) 662 (83) 73 95 747 (48) 608 1.43 608 1.42 0.60
2017E 8,726 (7,391) 1,335 (711) 1,553 (824) 729 (61) 80 106 854 (67) 682 1.60 682 1.60 0.64
2018E 9,180 (7,748) 1,432 (762) 1,631 (849) 782 (41) 84 112 937 (74) 751 1.77 751 1.77 0.71
2019E 9,662 (8,125) 1,536 (812) 1,741 (899) 842 (32) 89 118 1,016 (81) 818 1.92 818 1.92 0.77
2015 1,000 738 5,705 2,191 9,634 1 1,502 4,103 5,531 9,634
2016 1,071 625 5,410 2,315 9,421 1 1,007 3,534 5,887 9,421
2017E 1,051 771 5,028 2,344 9,194 0 773 2,906 6,288 9,194
2018E 1,014 736 5,180 2,538 9,467 0 538 2,701 6,766 9,467
2019E 1,355 844 5,081 2,607 9,887 0 304 2,603 7,284 9,887
2015 642 858 (33) 85 1,552 (360) (134) (493) (743) 0 (247) (44) (1,034) 25 1,192 2.80
2016 608 810 19 4 1,442 (508) (45) (554) (495) (0) (251) (70) (817) 71 933 2.19
2017E 682 824 (9) 20 1,517 (500) (2) (502) (235) 0 (281) (520) (1,035) (20) 1,017 2.39
2018E 751 849 (93) 20 1,526 (1,000) (56) (1,056) (234) 0 (273) (0) (507) (37) 526 1.24
2019E 818 899 (2) 20 1,735 (800) (59) (859) (234) 0 (300) (0) (535) 341 935 2.20
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2015 6.9 (2.7) (1.3) 14.5 18.5 6.6 7.4 7.4 6.3
2016 (4.0) (8.1) (5.3) 14.9 17.7 6.8 7.3 7.3 7.3
2017E 5.1 5.5 12.3 15.3 17.8 7.2 7.8 7.8 8.9
2018E 5.2 5.0 10.1 15.6 17.8 7.3 8.2 8.2 9.0
2019E 5.2 6.8 8.9 15.9 18.0 7.5 8.5 8.5 9.0
FINANCIAL QUALITY Total debt (Btm) Total debt to capital employed (x) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
2015 1,503 0.21 975 0.18 6.42
2016 1,008 0.14 353 0.06 7.97
2017E 773 0.10 (381) (0.06) 11.97
2018E 538 0.07 (578) (0.09) 18.89
2019E 304 0.04 (1,154) (0.16) 26.21
BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others 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)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. 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 5 of 5
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Underperform (17E TP Bt16.00) Close Bt15.90
Automotive
Earnings upgrade/Earnings downgrade/Overview unchanged
February 22, 2017
Back to growth Fully valued; downgrade to UNDERPERFORM We expect SAT to resume earnings growth in 2017 after a three‐year skid thanks to the rebound of auto and non‐auto sales. Nevertheless, the 1Q17 rolling forecast from carmakers signals a soft start for the year, with clear recovery to be seen in 2H17E. With the recent share price rally, SAT is now traded at its long‐term average PER of 10x, which is fully valued in our view. We, thus, downgrade our rating to UNDERPERFORM.
Price Performance (%)
Auto output to grow 3% in 2017 SAT retains its cautious view on the recovery of auto output in 2017, with estimated growth of 3%YoY from 1.94mn units last year to 2.0mn units. The domestic market is expected to grow in the single digits in line with the growth pace of the economy and new models launched by carmakers. SAT voiced concern over the recovery of export markets, particularly in regard to pickup trucks for key export destinations, such as the Middle East, and Central and South America.
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.545
1.814
KT ZMICO vs. consensus Share data
3.6%
‐2.4%
Reuters / Bloomberg
SAT.BK/SAT TB
Paid‐up Shares (m)
425.19
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/193.00
Foreign limit / actual (%)
49.00/17.74
52 week High / Low (Bt)
16.70/11.30
Avg. daily T/O (shares 000) NVDR (%)
783.00 4.37
Estimated free float (%)
53.83
Beta
0.71
URL
www.satpcl.co.th
CGR
Anti‐corruption
Level 4 (Certified)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
To beat industry’s top‐line growth backed by Kubota We estimate SAT’s total sales this year to grow above the industry average at 5%YoY thanks to the strong pickup in Kubota sales. The contribution from Kubota last year fell to 16% given the severe drought situation during the beginning of the year. This year, Kubota targets sales growth of 10% driven by demand recovery in the domestic market and expansion in overseas markets, especially Thailand’s fast‐growing neighboring countries. We estimate the contribution from Kubota to grow 9%YoY on the back of a 14% increase in sales volume to 67K units, vs. 59K units (‐10%YoY) in 2016. Immaterial change in earnings estimate Our 2017E earnings forecast is revised up insignificantly by 1% to Bt682mn, up 13%YoY. We keep sales growth unchanged at 5%YoY, but its 3% lower than the previous estimate after fine‐tuning with the lower sales base in 2016. Its GPM should manage to improve slightly (30bps) despite the trend of rising raw material prices thanks to its proven effective cost control. Lastly, shared profit from associates is revised up by 29%. With the new earnings estimate, our 2017E target price is adjusted to Bt16, pegged with long‐term average PER of 10x. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2015
2016
2017E
2018E
2019E
8,644 642 1.51 1.51 ‐1.47 0.60 13.01
8,299 608 1.43 1.43 ‐5.68 0.60 13.85
8,726 682 1.60 1.60 12.89 0.64 14.79
9,180 751 1.77 1.77 10.11 0.71 15.91
9,662 818 1.92 1.92 8.90 0.77 17.13
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015
2016
2017E
2018E
2019E
11.40 4.91 1.32 3.49 11.94 17.61
12.04 10.72 9.74 4.08 4.11 3.79 1.24 1.16 1.08 3.49 3.73 4.11 10.64 11.20 11.50 6.00 Net cash Net cash
8.94 3.22 1.00 4.47 11.64 Net cash
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Operating summary
Source: Bloomberg and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 2: Earnings revision Year ended Dec Total Revenue (Btmn) EBITDA (Btmn) Pre‐tax profi t (Btmn) Core profi t (Btm) Net profi t (Btmn) % growth EPS (Bt) Core EPS (Bt) Core EPS growth (%) Gros s ma rgi n (%) SG&A to s a l es (%)
Previous 8,968 1,658 742 674 674 10.9% 1.58 1.58 11.5% 15.2% 8.2%
2017E New 8,726 1,553 749 682 682 12.3% 1.60 1.60 12.9% 15.3% 8.2%
%chg ‐2.7% ‐6.3% 1.0% 1.2% 1.2% 1.3% 1.2% 1.2% 1.4% 0.1% 0.0%
Previous 9,665 1,777 831 755 755 12.0% 1.77 1.77 12.0% 15.5% 8.3%
2018E New 9,180 1,631 825 751 751 10.1% 1.77 1.77 10.1% 15.6% 8.3%
%chg ‐5.0% ‐8.2% ‐0.7% ‐0.5% ‐0.5% ‐1.9% ‐0.5% ‐0.5% ‐1.9% 0.1% 0.0%
Source: Bloomberg and KTZMICO Research
Figure 3: Peers comparison Stock
Price (Bt) AH 15.70 PCSGH 4.94 SAT 15.90 STANLY 207.00 SIMPLE AVERAGE
Mkt Cap (Btmn) 4,970 7,534 6,761 15,861
EPS Growth 2016E 2017E 36.8% 24.9% ‐31.4% 29.2% ‐5.7% 12.9% ‐12.9% 11.2%
PER (x) 2016E 2017E 11.83 9.47 20.58 15.94 9.31 9.91 13.98 12.57 13.92 11.97
Yield 2016E 2017E 3.4% 4.0% 5.4% 5.0% 4.5% 4.0% 2.4% 2.7% 4.0% 3.9%
ROE PEG 2016E 2017E 2016E 2017E 8.1% 8.8% 0.32 0.38 7.8% 9.9% nm 0.55 10.6% 11.2% nm 0.77 9.7% 10.1% nm 1.12 9.1% 10.0%
Source: Bloomberg and KTZMICO Research
Figure 4: PER and PBV band
Source: Bloomberg and KTZMICO Research
Financial summary REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Net profit Reported EPS Core net profit Core EPS Dividend (Bt)
2015 8,644 (7,392) 1,252 (680) 1,601 (858) 743 (116) 56 172 856 (43) 642 1.51 641 1.51 0.60
2016 8,299 (7,062) 1,237 (670) 1,472 (810) 662 (83) 73 95 747 (48) 608 1.43 608 1.42 0.60
2017E 8,726 (7,391) 1,335 (711) 1,553 (824) 729 (61) 80 106 854 (67) 682 1.60 682 1.60 0.64
2018E 9,180 (7,748) 1,432 (762) 1,631 (849) 782 (41) 84 112 937 (74) 751 1.77 751 1.77 0.71
2019E 9,662 (8,125) 1,536 (812) 1,741 (899) 842 (32) 89 118 1,016 (81) 818 1.92 818 1.92 0.77
2015 1,000 738 5,705 2,191 9,634 1 1,502 4,103 5,531 9,634
2016 1,071 625 5,410 2,315 9,421 1 1,007 3,534 5,887 9,421
2017E 1,051 771 5,028 2,344 9,194 0 773 2,906 6,288 9,194
2018E 1,014 736 5,180 2,538 9,467 0 538 2,701 6,766 9,467
2019E 1,355 844 5,081 2,607 9,887 0 304 2,603 7,284 9,887
2015 642 858 (33) 85 1,552 (360) (134) (493) (743) 0 (247) (44) (1,034) 25 1,192 2.80
2016 608 810 19 4 1,442 (508) (45) (554) (495) (0) (251) (70) (817) 71 933 2.19
2017E 682 824 (9) 20 1,517 (500) (2) (502) (235) 0 (281) (520) (1,035) (20) 1,017 2.39
2018E 751 849 (93) 20 1,526 (1,000) (56) (1,056) (234) 0 (273) (0) (507) (37) 526 1.24
2019E 818 899 (2) 20 1,735 (800) (59) (859) (234) 0 (300) (0) (535) 341 935 2.20
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2015 6.9 (2.7) (1.3) 14.5 18.5 6.6 7.4 7.4 6.3
2016 (4.0) (8.1) (5.3) 14.9 17.7 6.8 7.3 7.3 7.3
2017E 5.1 5.5 12.3 15.3 17.8 7.2 7.8 7.8 8.9
2018E 5.2 5.0 10.1 15.6 17.8 7.3 8.2 8.2 9.0
2019E 5.2 6.8 8.9 15.9 18.0 7.5 8.5 8.5 9.0
FINANCIAL QUALITY Total debt (Btm) Total debt to capital employed (x) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
2015 1,503 0.21 975 0.18 6.42
2016 1,008 0.14 353 0.06 7.97
2017E 773 0.10 (381) (0.06) 11.97
2018E 538 0.07 (578) (0.09) 18.89
2019E 304 0.04 (1,154) (0.16) 26.21
BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others 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)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. 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 5 of 5
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
