Somboon Advance Technology
Somboon Advance Technology Outperform (15E TP Bt19.20)
Company Update
Close Bt16.80
Automotive August 13, 2015
Earnings upgrade/Earnings downgrade/ Overview unchanged
The worst performance this year has passed Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
1.798
2.008
KT ZMICO vs. consensus Share data
‐9.3%
‐6.9%
Reuters / Bloomberg
SAT.BK/SAT TB
Paid‐up Shares (m)
425.19
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/202.00
Foreign limit / actual (%)
49.00/24.29
52 week High / Low (Bt)
25.00/15.80
Avg. daily T/O (shares 000) NVDR (%)
621.00 4.87
Estimated free float (%)
55.44
Beta
0.77
URL
www.satpcl.co.th
CGR
Earnings have bottomed out this year SAT’s 2Q15 earnings results were weak as expected and should have bottomed out for this year. However, the weaker results in 1H15 lead us to revise down this year’s earnings by 12%. Given that its earnings should see an upturn in 2H15 thanks to more orders from new models, we leave our OUTPERFORM rating unchanged with the new target price of Bt19.20 pegged with PER 12x (+1SD). 2Q15 earnings results in line SAT reported a net profit of Bt65mn (EPS: Bt0.15) in 2Q15, in line with our forecast but 39% below the consensus forecast. Its earnings decreased 49%YoY and 66%QoQ, which was due to lower sales (‐3%YoY and ‐25%QoQ) on declining volume in line with overall auto output. With high fixed costs owing to capacity expansion, the lower top line squeezed the gross margin to only 11.8% from 17% last year. This pushed down the net margin to 3.6% from the 5‐year average of 8% despite SG&A expenses being kept closely in check. With its strong cash flow, a DPS of Bt0.20 was announced (XD 21 August) based on a 33% payout ratio. Robust rebound in 2H15E We view that overall auto output will bounce back in 2H15E on the back of new models launched and the expectation of inflating car prices due to the upcoming new excise tax on vehicles. SAT guided that its sales will rebound strongly in 2H15E given the rolling orders seen from Toyota, its key client. We anticipate 2H15E sales to increase 14%HoH thanks to the full delivery of Toyota’s new pickup, Rivo, and new orders from both clients’ new models and big trucks. Trim 2015E‐2016E earnings forecasts SAT’s 2015E top line growth is revised up by 3% to factor in the impact of one client’s accounting policy change on shine part sales. Nevertheless, with a weaker‐than‐expected gross margin (GPM) in 1H15, our earnings forecast is revised down by 12% to Bt692mn (+6%YoY). Our 2016E earnings estimate is also downgraded by 10% on a GPM adjustment. Financials and Valuation FY Ended 31 Dec
2012
2013
2014
2015E
2016E
Revenues (Btmn)
9,410
8,973
8,084
9,093
9,866
Net profit (Btmn)
804
966
650
692
797
EPS (Bt)
2.36
2.27
1.53
1.63
1.87
Norm. EPS (Bt)
2.30
1.91
1.53
1.63
1.87
EPS growth (%)
80.08
(17.02)
(19.88)
6.55
15.01
Dividend (Bt)
0.97
0.75
0.60
0.65
0.75
12.21
11.47
12.27
13.27
14.49
FY Ended 31 Dec
2012
2013
2014
2015E
2016E
PER (x)
13.26
7.55
10.60
10.31
8.97
BV (Bt)
Waraporn Wiboonkanarak Analyst, no. 2482
EV/EBITDA (x)
7.38
4.64
5.28
5.11
4.41
[email protected] 66 (0) 2624‐6273
PBV (x)
2.50
1.26
1.32
1.27
1.16
Dividend yield (%) ROE (%) Net gearing (%)
3.18
5.21
3.70
3.87
4.46
19.29 55.76
21.42 45.17
12.88 34.47
12.74 23.87
13.50 12.87
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Earnings review Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. 2Q14 Revenue 1,881 Gross profit 327 SG&A (207) EBITDA 372 Interest expense (35) Other income 40 Income tax (11) 9 Gain (Loss) from affiliates Net profit (loss) 128 Normalized profit (loss) 127 Reported EPS (Bt) 0.30 Gross margin 17.4% EBITDA margin 19.8% Net margin 6.8% Current ratio (x) 1.41 Interest coverage (x) 4.67 Debt to equity (x) 0.99 BVPS 11.65 ROE 14.3%
1Q15 2,429 377 (177) 447 (33) 27 (13) 10 194 192 0.46 15.5% 18.4% 8.0% 1.45 6.99 0.89 12.73 12.9%
2Q15 1,820 215 (169) 321 (31) 46 (10) 13 65 66 0.15 11.8% 17.7% 3.6% 1.44 3.01 0.81 12.50 12.0%
%QoQ ‐25.1% ‐43.1% ‐4.3% ‐28.2% ‐3.5% 73.2% ‐21.9% 30.2% ‐66.3% ‐65.5% ‐66.3% ‐3.7% ‐0.8% ‐4.4%
‐1.8%
%YoY ‐3.3% ‐34.3% ‐18.3% ‐13.5% ‐10.7% 14.8% ‐8.0% 49.6% ‐49.0% ‐47.8% ‐49.0% ‐5.6% ‐2.1% ‐3.2%
1H15 4,249 592 (346) 769 (64) 73 (23) 23 259 258 0.61 13.9% 18.1% 6.1% 1.37 5.04 0.81 7.3% 12.50 12.0%
%YoY 6.6% ‐15.8% ‐12.2% ‐1.9% ‐16.2% 20.8% ‐29.3% ‐19.5% ‐12.7% ‐12.1% ‐12.7% ‐3.7% ‐1.6% ‐1.3%
2015E 9,093 1,464 (759) 1,661 (132) 142 (86) 63 692 693 1.63 16.1% 18.3% 7.6% 1.44 6.42 0.72 7.3% 13.27 12.7%
YTD %YoY (%2015E) 12.5% 46.7% 3.3% 40.4% 7.7% 45.5% 0.9% 46.3% ‐10.1% 48.4% 56.1% 51.4% 23.6% 26.3% 7.0% 35.9% 6.4% 37.4% 6.5% 37.3% 6.4% 37.4%
8.1%
Source: Bloomberg and KTZMICO Research Figure 2: Operating summary
SAT's sales breakdown by products
Capacity Utilization
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
14% 13% 15% 16% 14% 18% 13% 23% 14% 15% 16% 14% 16% 12% 19% 19% 9% 8% 8% 9% 7% 8% 8% 8% 8% 7% 7% 8% 6% 7% 8% 9% 8% 8% 9% 9% 9% 9% 7% 11% 15% 15% 16% 15% 15% 16% 9% 6%
120%
18% 23%
Others
14%
Casting/Machining
19% 7% 6% 5% 7% 6%
Coil spring
100%
2%
21% 19%
37% 31% 33% 30% 29% 31% 28% 28% 27% 27%
80%
Stabilizer bar
60%
Leaf spring
40%
Disc & Drum brake
20%
Axle shaft
0%
0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15
1Q132Q133Q134Q131Q142Q143Q144Q141Q152Q15
SAT's sales breakdown by customers 100% 90% 80% 70% 60% 50% 40%
Units: '000
10% 12% 12% 12% 7% 8%
7% 6%
5% 5%
14% 15% 16%
16%
8% 7%
12% 12% 11% 11% 15% 20% 4% 4% 7% 4% 4% 6% 6% 8% 7% 7% 5% 7% 14% 15% 17% 17% 17% 19%
28%
30% 31% 29%
28%
31%
28% 28%
20% 10%
25 Others
20
Nissan Honda
15
Isuzu
10
26% 26%
30%
Kubota: Production
Kubota
5 Toyota
30% 25% 27% 29%
30% 25% 31% 31% 28% 20%
0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Mitsubishi
‐ 1Q122Q12 3Q12 4Q121Q13 2Q13 3Q134Q13 1Q14 2Q143Q14 4Q14 1Q152Q15
Tractor
Combine
Source: SAT, Bloomberg and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: Earnings revision Year ended Dec Total Revenue (Btmn) EBITDA (Btmn) Pre‐tax profit (Btmn) Core profit (Btm) Net profit (Btmn) % growth EPS (Bt) Core EPS (Bt) Core EPS growth (%) Gross margin (%) SG&A to sales (%)
Previous 8,843 1,784 889 791 790 21.5% 1.86 1.86 21.6% 18.1% 8.5%
2015E New 9,093 1,661 778 693 692 6.4% 1.63 1.63 6.5% 16.1% 8.4%
%chg 2.8% ‐6.9% ‐12.4% ‐12.4% ‐12.4% ‐15.1% ‐12.4% ‐12.4% ‐15.1% ‐2.0% ‐0.1%
Previous 9,471 1,926 996 886 885 12.1% 2.08 2.08 12.1% 18.4% 8.3%
2016E New 9,866 1,801 895 797 797 15.2% 1.87 1.87 15.0% 16.7% 8.3%
%chg 4.2% ‐6.5% ‐10.1% ‐10.1% ‐10.0% 3.1% ‐10.0% ‐10.1% 2.9% ‐1.7% 0.0%
Source: KTZMICO Research
Figure 4: PER and PBV band
PER (x)
25
PBV (x)
3.5 3.0
20 2.5
+2 S.D.
+1 S.D.
15
2.0 +1 S.D.
10
1.5 Average
Average
1.0 0.5
‐1 S.D.
-1 S.D.
0.0 Jan‐05 Sep‐05 Apr‐06 Dec‐06 Aug‐07 Mar‐08 Oct‐08 Jun‐09 Jan‐10 Sep‐10 Apr‐11 Nov‐11 Jul‐12 Feb‐13 Sep‐13 May‐14 Dec‐14 Aug‐15
0
Jan‐05 Sep‐05 Apr‐06 Dec‐06 Aug‐07 Mar‐08 Oct‐08 Jun‐09 Jan‐10 Sep‐10 Apr‐11 Nov‐11 Jul‐12 Feb‐13 Sep‐13 May‐14 Dec‐14 Aug‐15
5
Source: Bloomberg and KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial Summary 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)
2012 9,410 (7,926) 1,484 (641) 1,722 (720) 1,002 (160) 11 159 1,011 (70) 804 2.36 810 2.30 0.97
2013 8,973 (7,404) 1,569 (721) 1,793 (769) 1,024 (157) 29 173 1,069 (85) 966 2.27 802 1.91 0.75
2014 8,084 (6,667) 1,417 (705) 1,646 (839) 807 (147) 59 91 810 (69) 650 1.53 650 1.53 0.60
2015E 9,093 (7,629) 1,464 (759) 1,661 (814) 847 (132) 63 142 921 (86) 692 1.63 692 1.63 0.65
2016E 9,866 (8,218) 1,648 (821) 1,801 (847) 954 (132) 73 127 1,023 (99) 797 1.87 797 1.87 0.75
2012 815 670 5,739 2,197 9,421 23 2,574 5,272 4,149 9,421
2013 1,041 638 6,392 1,853 9,923 3 2,701 5,050 4,873 9,923
2014 975 625 6,125 2,088 9,814 1 2,246 4,596 5,217 9,814
2015E 770 731 5,913 2,274 9,689 9 1,669 4,060 5,641 9,701
2016E 742 821 5,567 2,358 9,488 4 1,092 3,355 6,161 9,516
2012 804 720 90 154 1,768 (904) (192) (1,096) (48) 0 (136) (141) (324) 347 863 2.54
2013 966 769 67 25 1,827 (1,427) 108 (1,319) 106 86 (249) (226) (283) 226 401 0.94
2014 650 839 (97) 86 1,477 (576) (149) (724) (457) 4 (306) (59) (818) (65) 902 2.12
2015E 692 814 (180) 8 1,334 (600) (12) (612) (569) 0 (268) (90) (927) (205) 734 1.73
2016E 797 847 (275) 4 1,373 (500) (42) (542) (582) 0 (277) 0 (858) (28) 873 2.05
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2012 46.5 44.9 96.9 15.8 18.3 9.0 8.5 8.3 8.3
2013 (4.6) 4.1 (3.8) 17.5 20.0 9.5 10.8 9.0 9.5
2014 (9.9) (8.2) (32.8) 17.5 20.4 8.8 8.0 8.0 9.6
2015E 12.5 0.9 6.4 16.1 18.3 7.8 7.6 7.6 11.0
2016E 8.5 8.4 15.2 16.7 18.3 8.4 8.1 8.1 11.0
FINANCIAL QUALITY Total debt (Btm) Total debt to capital employed (x) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
2,597 0.38 2,342 0.56 6.26
2,703 0.35 2,203 0.45 6.51
2,246 0.29 1,801 0.35 5.50
1,678 0.22 1,347 0.24 6.42
1,096 0.15 793 0.13 7.24
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
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 5 of 5
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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
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Company Update
Close Bt16.80
Automotive August 13, 2015
Earnings upgrade/Earnings downgrade/ Overview unchanged
The worst performance this year has passed Price Performance (%)
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
1.798
2.008
KT ZMICO vs. consensus Share data
‐9.3%
‐6.9%
Reuters / Bloomberg
SAT.BK/SAT TB
Paid‐up Shares (m)
425.19
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
7.00/202.00
Foreign limit / actual (%)
49.00/24.29
52 week High / Low (Bt)
25.00/15.80
Avg. daily T/O (shares 000) NVDR (%)
621.00 4.87
Estimated free float (%)
55.44
Beta
0.77
URL
www.satpcl.co.th
CGR
Earnings have bottomed out this year SAT’s 2Q15 earnings results were weak as expected and should have bottomed out for this year. However, the weaker results in 1H15 lead us to revise down this year’s earnings by 12%. Given that its earnings should see an upturn in 2H15 thanks to more orders from new models, we leave our OUTPERFORM rating unchanged with the new target price of Bt19.20 pegged with PER 12x (+1SD). 2Q15 earnings results in line SAT reported a net profit of Bt65mn (EPS: Bt0.15) in 2Q15, in line with our forecast but 39% below the consensus forecast. Its earnings decreased 49%YoY and 66%QoQ, which was due to lower sales (‐3%YoY and ‐25%QoQ) on declining volume in line with overall auto output. With high fixed costs owing to capacity expansion, the lower top line squeezed the gross margin to only 11.8% from 17% last year. This pushed down the net margin to 3.6% from the 5‐year average of 8% despite SG&A expenses being kept closely in check. With its strong cash flow, a DPS of Bt0.20 was announced (XD 21 August) based on a 33% payout ratio. Robust rebound in 2H15E We view that overall auto output will bounce back in 2H15E on the back of new models launched and the expectation of inflating car prices due to the upcoming new excise tax on vehicles. SAT guided that its sales will rebound strongly in 2H15E given the rolling orders seen from Toyota, its key client. We anticipate 2H15E sales to increase 14%HoH thanks to the full delivery of Toyota’s new pickup, Rivo, and new orders from both clients’ new models and big trucks. Trim 2015E‐2016E earnings forecasts SAT’s 2015E top line growth is revised up by 3% to factor in the impact of one client’s accounting policy change on shine part sales. Nevertheless, with a weaker‐than‐expected gross margin (GPM) in 1H15, our earnings forecast is revised down by 12% to Bt692mn (+6%YoY). Our 2016E earnings estimate is also downgraded by 10% on a GPM adjustment. Financials and Valuation FY Ended 31 Dec
2012
2013
2014
2015E
2016E
Revenues (Btmn)
9,410
8,973
8,084
9,093
9,866
Net profit (Btmn)
804
966
650
692
797
EPS (Bt)
2.36
2.27
1.53
1.63
1.87
Norm. EPS (Bt)
2.30
1.91
1.53
1.63
1.87
EPS growth (%)
80.08
(17.02)
(19.88)
6.55
15.01
Dividend (Bt)
0.97
0.75
0.60
0.65
0.75
12.21
11.47
12.27
13.27
14.49
FY Ended 31 Dec
2012
2013
2014
2015E
2016E
PER (x)
13.26
7.55
10.60
10.31
8.97
BV (Bt)
Waraporn Wiboonkanarak Analyst, no. 2482
EV/EBITDA (x)
7.38
4.64
5.28
5.11
4.41
[email protected] 66 (0) 2624‐6273
PBV (x)
2.50
1.26
1.32
1.27
1.16
Dividend yield (%) ROE (%) Net gearing (%)
3.18
5.21
3.70
3.87
4.46
19.29 55.76
21.42 45.17
12.88 34.47
12.74 23.87
13.50 12.87
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
Figure 1: Earnings review Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. 2Q14 Revenue 1,881 Gross profit 327 SG&A (207) EBITDA 372 Interest expense (35) Other income 40 Income tax (11) 9 Gain (Loss) from affiliates Net profit (loss) 128 Normalized profit (loss) 127 Reported EPS (Bt) 0.30 Gross margin 17.4% EBITDA margin 19.8% Net margin 6.8% Current ratio (x) 1.41 Interest coverage (x) 4.67 Debt to equity (x) 0.99 BVPS 11.65 ROE 14.3%
1Q15 2,429 377 (177) 447 (33) 27 (13) 10 194 192 0.46 15.5% 18.4% 8.0% 1.45 6.99 0.89 12.73 12.9%
2Q15 1,820 215 (169) 321 (31) 46 (10) 13 65 66 0.15 11.8% 17.7% 3.6% 1.44 3.01 0.81 12.50 12.0%
%QoQ ‐25.1% ‐43.1% ‐4.3% ‐28.2% ‐3.5% 73.2% ‐21.9% 30.2% ‐66.3% ‐65.5% ‐66.3% ‐3.7% ‐0.8% ‐4.4%
‐1.8%
%YoY ‐3.3% ‐34.3% ‐18.3% ‐13.5% ‐10.7% 14.8% ‐8.0% 49.6% ‐49.0% ‐47.8% ‐49.0% ‐5.6% ‐2.1% ‐3.2%
1H15 4,249 592 (346) 769 (64) 73 (23) 23 259 258 0.61 13.9% 18.1% 6.1% 1.37 5.04 0.81 7.3% 12.50 12.0%
%YoY 6.6% ‐15.8% ‐12.2% ‐1.9% ‐16.2% 20.8% ‐29.3% ‐19.5% ‐12.7% ‐12.1% ‐12.7% ‐3.7% ‐1.6% ‐1.3%
2015E 9,093 1,464 (759) 1,661 (132) 142 (86) 63 692 693 1.63 16.1% 18.3% 7.6% 1.44 6.42 0.72 7.3% 13.27 12.7%
YTD %YoY (%2015E) 12.5% 46.7% 3.3% 40.4% 7.7% 45.5% 0.9% 46.3% ‐10.1% 48.4% 56.1% 51.4% 23.6% 26.3% 7.0% 35.9% 6.4% 37.4% 6.5% 37.3% 6.4% 37.4%
8.1%
Source: Bloomberg and KTZMICO Research Figure 2: Operating summary
SAT's sales breakdown by products
Capacity Utilization
100% 90% 80% 70% 60% 50% 40% 30% 20% 10%
14% 13% 15% 16% 14% 18% 13% 23% 14% 15% 16% 14% 16% 12% 19% 19% 9% 8% 8% 9% 7% 8% 8% 8% 8% 7% 7% 8% 6% 7% 8% 9% 8% 8% 9% 9% 9% 9% 7% 11% 15% 15% 16% 15% 15% 16% 9% 6%
120%
18% 23%
Others
14%
Casting/Machining
19% 7% 6% 5% 7% 6%
Coil spring
100%
2%
21% 19%
37% 31% 33% 30% 29% 31% 28% 28% 27% 27%
80%
Stabilizer bar
60%
Leaf spring
40%
Disc & Drum brake
20%
Axle shaft
0%
0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15
1Q132Q133Q134Q131Q142Q143Q144Q141Q152Q15
SAT's sales breakdown by customers 100% 90% 80% 70% 60% 50% 40%
Units: '000
10% 12% 12% 12% 7% 8%
7% 6%
5% 5%
14% 15% 16%
16%
8% 7%
12% 12% 11% 11% 15% 20% 4% 4% 7% 4% 4% 6% 6% 8% 7% 7% 5% 7% 14% 15% 17% 17% 17% 19%
28%
30% 31% 29%
28%
31%
28% 28%
20% 10%
25 Others
20
Nissan Honda
15
Isuzu
10
26% 26%
30%
Kubota: Production
Kubota
5 Toyota
30% 25% 27% 29%
30% 25% 31% 31% 28% 20%
0% 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15
Mitsubishi
‐ 1Q122Q12 3Q12 4Q121Q13 2Q13 3Q134Q13 1Q14 2Q143Q14 4Q14 1Q152Q15
Tractor
Combine
Source: SAT, Bloomberg and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 3: Earnings revision Year ended Dec Total Revenue (Btmn) EBITDA (Btmn) Pre‐tax profit (Btmn) Core profit (Btm) Net profit (Btmn) % growth EPS (Bt) Core EPS (Bt) Core EPS growth (%) Gross margin (%) SG&A to sales (%)
Previous 8,843 1,784 889 791 790 21.5% 1.86 1.86 21.6% 18.1% 8.5%
2015E New 9,093 1,661 778 693 692 6.4% 1.63 1.63 6.5% 16.1% 8.4%
%chg 2.8% ‐6.9% ‐12.4% ‐12.4% ‐12.4% ‐15.1% ‐12.4% ‐12.4% ‐15.1% ‐2.0% ‐0.1%
Previous 9,471 1,926 996 886 885 12.1% 2.08 2.08 12.1% 18.4% 8.3%
2016E New 9,866 1,801 895 797 797 15.2% 1.87 1.87 15.0% 16.7% 8.3%
%chg 4.2% ‐6.5% ‐10.1% ‐10.1% ‐10.0% 3.1% ‐10.0% ‐10.1% 2.9% ‐1.7% 0.0%
Source: KTZMICO Research
Figure 4: PER and PBV band
PER (x)
25
PBV (x)
3.5 3.0
20 2.5
+2 S.D.
+1 S.D.
15
2.0 +1 S.D.
10
1.5 Average
Average
1.0 0.5
‐1 S.D.
-1 S.D.
0.0 Jan‐05 Sep‐05 Apr‐06 Dec‐06 Aug‐07 Mar‐08 Oct‐08 Jun‐09 Jan‐10 Sep‐10 Apr‐11 Nov‐11 Jul‐12 Feb‐13 Sep‐13 May‐14 Dec‐14 Aug‐15
0
Jan‐05 Sep‐05 Apr‐06 Dec‐06 Aug‐07 Mar‐08 Oct‐08 Jun‐09 Jan‐10 Sep‐10 Apr‐11 Nov‐11 Jul‐12 Feb‐13 Sep‐13 May‐14 Dec‐14 Aug‐15
5
Source: Bloomberg and KTZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial Summary 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)
2012 9,410 (7,926) 1,484 (641) 1,722 (720) 1,002 (160) 11 159 1,011 (70) 804 2.36 810 2.30 0.97
2013 8,973 (7,404) 1,569 (721) 1,793 (769) 1,024 (157) 29 173 1,069 (85) 966 2.27 802 1.91 0.75
2014 8,084 (6,667) 1,417 (705) 1,646 (839) 807 (147) 59 91 810 (69) 650 1.53 650 1.53 0.60
2015E 9,093 (7,629) 1,464 (759) 1,661 (814) 847 (132) 63 142 921 (86) 692 1.63 692 1.63 0.65
2016E 9,866 (8,218) 1,648 (821) 1,801 (847) 954 (132) 73 127 1,023 (99) 797 1.87 797 1.87 0.75
2012 815 670 5,739 2,197 9,421 23 2,574 5,272 4,149 9,421
2013 1,041 638 6,392 1,853 9,923 3 2,701 5,050 4,873 9,923
2014 975 625 6,125 2,088 9,814 1 2,246 4,596 5,217 9,814
2015E 770 731 5,913 2,274 9,689 9 1,669 4,060 5,641 9,701
2016E 742 821 5,567 2,358 9,488 4 1,092 3,355 6,161 9,516
2012 804 720 90 154 1,768 (904) (192) (1,096) (48) 0 (136) (141) (324) 347 863 2.54
2013 966 769 67 25 1,827 (1,427) 108 (1,319) 106 86 (249) (226) (283) 226 401 0.94
2014 650 839 (97) 86 1,477 (576) (149) (724) (457) 4 (306) (59) (818) (65) 902 2.12
2015E 692 814 (180) 8 1,334 (600) (12) (612) (569) 0 (268) (90) (927) (205) 734 1.73
2016E 797 847 (275) 4 1,373 (500) (42) (542) (582) 0 (277) 0 (858) (28) 873 2.05
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2012 46.5 44.9 96.9 15.8 18.3 9.0 8.5 8.3 8.3
2013 (4.6) 4.1 (3.8) 17.5 20.0 9.5 10.8 9.0 9.5
2014 (9.9) (8.2) (32.8) 17.5 20.4 8.8 8.0 8.0 9.6
2015E 12.5 0.9 6.4 16.1 18.3 7.8 7.6 7.6 11.0
2016E 8.5 8.4 15.2 16.7 18.3 8.4 8.1 8.1 11.0
FINANCIAL QUALITY Total debt (Btm) Total debt to capital employed (x) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
2,597 0.38 2,342 0.56 6.26
2,703 0.35 2,203 0.45 6.51
2,246 0.29 1,801 0.35 5.50
1,678 0.22 1,347 0.24 6.42
1,096 0.15 793 0.13 7.24
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
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 5 of 5
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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
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
