Hana Microelectronics
Hana Microelectronics Buy (17E TP Bt34.75)
Company Update
Close Bt30.00
Electronic Components
Earnings upgrade/Earnings downgrade/ Overview unchanged
September 2, 2016
Earnings to recover in 2H16 Price Performance (%)
Source: www.settrade.com Consensus EPS (Bt) KT ZMICO vs. consensus Share data
FY16
FY17
2.632
2.930
-15.7%
-8.5%
Reuters / Bloomberg
HANA.BK/HANA TB 804.88
Paid‐up Shares (m)
1.00
Par (Bt) Market cap (Bt bn / US$ m)
24.00/697.00
Foreign limit / actual (%)
100.00/75.46 39.75/25.25
52 week High / Low (Bt)
1,021.00
Avg. daily T/O (shares 000)
7.28
NVDR (%)
46.55
Estimated free float (%) Beta
0.26
URL
www.hanagroup.com
CGR Anti‐corruption
Level 4 (Certified)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273 Ruchanon Chiemkarnkit Assistant analyst
Upgrade to Buy from Outperform According to the analyst meeting yesterday, the management expects demand for laptops/touchpads to return to the normal level in 2H16 on seasonality (high season). However, the potential demand recovery may not be enough to drive the firm’s earnings to achieve our projection; we have thus revised down our earnings projections by 16% and 7.6% in 2016‐17E, respectively. We have also rolled over our target price to the 2017E target price at Bt34.75/share, which better reflects the firm’s full‐year earnings outlook. Finally, we upgrade the rating to “BUY”. 1H16 revenue pressured by sales of computers and industrial devices In the meeting yesterday, the management revealed that the firm’s 1H16 revenue amounted to US$268mn, down by 13%YoY. The decline was attributable to the outcome of inventory adjustment for laptops/touchpads, whose revenue dropped by 36%YoY (12% of total revenue), as well as the slowdown in new orders for industrial products, whose revenue fell by 63%YoY (6% of total revenue). The decline in the revenue of these products could not be offset by the revenue growth from RFID products and IC used in mobile phones, which continued to hold up pretty well following growing demand for multifunction applications as well as demand for RFID for supply chain development. 2H16 earnings likely to grow in all segments The firm’s 2H16 revenue is expected to improve, especially from laptops/touchpads, whose revenue already bottomed out in 1H16. Demand for these products is expected to recover seasonally in 2H. Meanwhile, the demand for industrial products is expected to pick up in 4Q16. We expect the demand RFID and IC in mobile phones to continue growing well, which should help drive earnings in the next few years, with expected CAGR of 17.5%. The revenue exposure of RFID is expected to increase to 20‐25% and that of sensors used in mobile phones should rise to 32‐35% in 2016‐17E. 2016‐17E earnings forecasts revised down We have revised down our 2016‐17E earnings forecasts by 16% and 7.6%, respectively, to reflect the weak sales of laptops/touchpads and devices for industrial uses. The firm’s 1H16 core profit accounts for 43% of our full‐year projection. We expect the firm’s business to recover thanks to the positive impact of the high season and development of Windows 10. Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Norm. profit (Bt mn) Norm. profit growth (%) Dividend (Bt) BV (Bt)
2014 21,227 3,405 4.23 48% 1,948 37.2% 2.00 22.82
2015 20,521 2,066 2.57 ‐39% 2,328 19.51% 2.00 24.13
2016E 19,249 1,787 2.22 ‐14% 1,787 ‐23.26% 1.51 24.84
2017E 21,636 2,159 2.68 21% 2,159 20.86% 1.82 25.70
2018E 23,367 2,467 3.06 14% 2,467 14.24% 2.08 26.68
FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 12.4 5.3 1.3 6.7% 11.1% ‐41%
2015 10.4 5.2 1.2 6.7% 12.3% ‐42%
2016E 13.5 6.0 1.2 5.0% 9.1% ‐44%
2017E 11.2 5.2 1.2 6.1% 10.6% ‐43%
2018E 9.8 4.6 1.1 6.9% 11.7% ‐44%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: HANA’s 2Q16 earnings results Profit and Loss (Btmn) Year‐end 31 Dec
2Q15
1Q16
2Q16
% YoY
% QoQ
6M16
% QoQ
2016E
% YoY
YTD(%2016E)
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates 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 (%)
5,119 615 640 (2) 112 (15) (42) 0 0 399 441 0.50 12.01 12.50 7.80 5.13 191.12 0.05 23.23 2.13
4,742 582 554 (2) 104 (4) 128 0 0 484 356 0.60 12.27 11.68 10.20 5.56 147.95 (0.44) 24.58 2.47
4,764 587 615 (2) 114 (25) 9 0 0 417 408 0.52 12.32 12.90 8.76 5.17 189.17 (0.44) 24.08 2.13
(6.9) (4.5) (3.9) (6.6) 1.5 60.0 (122.5) n.m. n.m. 4.5 (7.6) 4.5
0.4 0.8 10.9 (2.8) 9.1 459.1 (92.6) n.m. n.m. (13.8) 14.6 (13.8)
9,506 1,169 1,169 (3) 218 (29) 138 0 0 901 763 1.12 12.30 12.29 9.48 5.17 168.27 (0.44) 24.08 2.13
(6.0) (4.0) (8.2) (8.0) 4.0 (3.1) 199.4 n.m. n.m. (1.6) (12.3) (1.6)
19,249 2,504 2,637 (8) 451 (36) 0 0 0 1,787 1,787 2.22 13.01 13.70 9.28 5.32 172.76 (0.44) 24.84 9.07
(6.2) (17.4) (14.5) (0.1) (3.5) (22.8) n.m. n.m. n.m. (13.5) (23.3) (13.5)
49.4 46.7 44.3 43.0 48.3 79.4 n.m. n.m. n.m. 50.4 42.7 50.4
%Change
New
‐5.2% ‐7.6%
23,667 2,467
24,210 2,598
Source: KT ZMICO Research Figure 2: Key Assumption Change List
New 19,249 1,787
Revenue Core Net profit (Btmn)
2016E Old 21,604 2,131
%Change ‐10.9% ‐16.1%
2017E Old
New 21,636
22,813 2,337
2,159
2018E Old
%Change ‐2.2% ‐5.0%
Source: KT ZMICO Research Figure 3: PER (average 11.4x) and PBV band (average 1.3x) PBV(X)
PER(X) 20
2.5
+3.0 S.D.
18 16
+2.0 S.D.
14
+1.0 S.D.
12 10 8 6 4
+2.0 S.D.
2.0
+1.0 S.D. 1.5
Avg. -0.5 S.D. -1.0 S.D.
1.0
-2.0 S.D.
0.5
Avg. -1.0 S.D. -2.0 S.D.
2
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
0.0 Jan-11
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
0
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax FX Gain (loss) Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity
2014
2015
2016E
2017E
2018E
17,667 (15,683) 1,984 (905) 2,268 1,188 1,079 (9) 411 1,482 (62) (60) 942 ‐ 2,301 2.86 1,420 1.76 1.50
21,227 (18,358) 2,869 (993) 3,001 1,125 1,876 (8) 448 2,315 (367) 107 1,350 ‐ 3,405 4.23 1,948 2.42 2.00
20,521 (17,491) 3,030 (1,115) 3,084 1,168 1,916 (8) 468 2,375 (47) (262) ‐ ‐ 2,066 2.57 2,328 2.89 2.00
19,249 (16,745) 2,504 (1,124) 2,637 1,257 1,380 (8) 451 1,823 (36) ‐ ‐ ‐ 1,787 2.22 1,787 2.22 1.51
21,636 (18,650) 2,986 (1,252) 3,072 1,338 1,734 (7) 476 2,204 (44) ‐ ‐ ‐ 2,159 2.68 2,159 2.68 1.82
23,367 (19,998) 3,369 (1,347) 3,435 1,412 2,023 (6) 500 2,517 (50) ‐ ‐ ‐ 2,467 3.06 2,467 3.06 2.08
2013
2014
2015
2016E
2017E
2018E
6,710 3,241 3,172 ‐ 6,857 177 20,157 435 386 3,563 805 16,594 20,157
8,331 3,354 3,329 331 6,566 141 22,051 360 516 3,688 805 18,364 22,051
9,121 3,318 3,367 ‐ 7,075 243 23,123 347 534 3,699 805 19,424 23,123
9,549 3,286 3,166 ‐ 7,327 243 23,570 300 530 3,574 805 19,995 23,570
9,567 3,693 3,526 ‐ 7,389 243 24,417 260 460 3,731 805 20,686 24,417
9,987 3,988 3,780 ‐ 7,277 243 25,275 220 380 3,799 805 21,476 25,275
2013
2014
2015
2016E
2017E
2018E
2,399 (279) 1,188 (73) 3,236 (1,367) (239) (1,606) (8) ‐ (1,207) 660 (556) 1,075 1,630 2.03
3,772 (249) 1,125 (464) 4,184 (788) (480) (1,268) (16) ‐ (1,610) (9) (1,635) 1,282 2,917 3.62
2,114 (45) 1,168 (281) 2,956 (1,601) 97 (1,505) ‐ ‐ (1,610) 796 (814) 637 1,451 1.80
1,787 ‐ 1,257 160 3,204 (1,510) ‐ (1,510) (52) ‐ (1,215) ‐ (1,267) 428 1,694 2.11
2,159 ‐ 1,338 (501) 2,996 (1,400) ‐ (1,400) (110) ‐ (1,468) ‐ (1,578) 18 1,596 1.98
2,467 ‐ 1,412 (362) 3,517 (1,300) ‐ (1,300) (120) ‐ (1,678) ‐ (1,798) 420 2,217 2.75
2013
2014
2015
2016E
2017E
2018E
2.5% 19.4% 38.6% 11.2% 12.8% 6.1% 13.0% 8.0% 4.2%
20.2% 32.3% 48.0% 13.5% 14.1% 8.8% 16.0% 9.2% 15.8%
‐3.3% 2.8% ‐39.3% 14.8% 15.0% 9.3% 10.1% 11.3% 2.0%
‐6.2% ‐14.5% ‐13.5% 13.0% 13.7% 7.2% 9.3% 9.3% 2.0%
12.4% 16.5% 20.9% 13.8% 14.2% 8.0% 10.0% 10.0% 2.0%
8.0% 11.8% 14.2% 14.4% 14.7% 8.7% 10.6% 10.6% 2.0%
CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013
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, PACE, TPOLY, M‐CHAI, EARTH. KT ZMICO is a co‐underwriter of ALT, EKH, RJH, BCPG.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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th
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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 Bt30.00
Electronic Components
Earnings upgrade/Earnings downgrade/ Overview unchanged
September 2, 2016
Earnings to recover in 2H16 Price Performance (%)
Source: www.settrade.com Consensus EPS (Bt) KT ZMICO vs. consensus Share data
FY16
FY17
2.632
2.930
-15.7%
-8.5%
Reuters / Bloomberg
HANA.BK/HANA TB 804.88
Paid‐up Shares (m)
1.00
Par (Bt) Market cap (Bt bn / US$ m)
24.00/697.00
Foreign limit / actual (%)
100.00/75.46 39.75/25.25
52 week High / Low (Bt)
1,021.00
Avg. daily T/O (shares 000)
7.28
NVDR (%)
46.55
Estimated free float (%) Beta
0.26
URL
www.hanagroup.com
CGR Anti‐corruption
Level 4 (Certified)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273 Ruchanon Chiemkarnkit Assistant analyst
Upgrade to Buy from Outperform According to the analyst meeting yesterday, the management expects demand for laptops/touchpads to return to the normal level in 2H16 on seasonality (high season). However, the potential demand recovery may not be enough to drive the firm’s earnings to achieve our projection; we have thus revised down our earnings projections by 16% and 7.6% in 2016‐17E, respectively. We have also rolled over our target price to the 2017E target price at Bt34.75/share, which better reflects the firm’s full‐year earnings outlook. Finally, we upgrade the rating to “BUY”. 1H16 revenue pressured by sales of computers and industrial devices In the meeting yesterday, the management revealed that the firm’s 1H16 revenue amounted to US$268mn, down by 13%YoY. The decline was attributable to the outcome of inventory adjustment for laptops/touchpads, whose revenue dropped by 36%YoY (12% of total revenue), as well as the slowdown in new orders for industrial products, whose revenue fell by 63%YoY (6% of total revenue). The decline in the revenue of these products could not be offset by the revenue growth from RFID products and IC used in mobile phones, which continued to hold up pretty well following growing demand for multifunction applications as well as demand for RFID for supply chain development. 2H16 earnings likely to grow in all segments The firm’s 2H16 revenue is expected to improve, especially from laptops/touchpads, whose revenue already bottomed out in 1H16. Demand for these products is expected to recover seasonally in 2H. Meanwhile, the demand for industrial products is expected to pick up in 4Q16. We expect the demand RFID and IC in mobile phones to continue growing well, which should help drive earnings in the next few years, with expected CAGR of 17.5%. The revenue exposure of RFID is expected to increase to 20‐25% and that of sensors used in mobile phones should rise to 32‐35% in 2016‐17E. 2016‐17E earnings forecasts revised down We have revised down our 2016‐17E earnings forecasts by 16% and 7.6%, respectively, to reflect the weak sales of laptops/touchpads and devices for industrial uses. The firm’s 1H16 core profit accounts for 43% of our full‐year projection. We expect the firm’s business to recover thanks to the positive impact of the high season and development of Windows 10. Financials and Valuation FY Ended 31 Dec Revenues (Bt mn) Net profit (Bt mn) EPS (Bt) EPS growth (%) Norm. profit (Bt mn) Norm. profit growth (%) Dividend (Bt) BV (Bt)
2014 21,227 3,405 4.23 48% 1,948 37.2% 2.00 22.82
2015 20,521 2,066 2.57 ‐39% 2,328 19.51% 2.00 24.13
2016E 19,249 1,787 2.22 ‐14% 1,787 ‐23.26% 1.51 24.84
2017E 21,636 2,159 2.68 21% 2,159 20.86% 1.82 25.70
2018E 23,367 2,467 3.06 14% 2,467 14.24% 2.08 26.68
FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 12.4 5.3 1.3 6.7% 11.1% ‐41%
2015 10.4 5.2 1.2 6.7% 12.3% ‐42%
2016E 13.5 6.0 1.2 5.0% 9.1% ‐44%
2017E 11.2 5.2 1.2 6.1% 10.6% ‐43%
2018E 9.8 4.6 1.1 6.9% 11.7% ‐44%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: HANA’s 2Q16 earnings results Profit and Loss (Btmn) Year‐end 31 Dec
2Q15
1Q16
2Q16
% YoY
% QoQ
6M16
% QoQ
2016E
% YoY
YTD(%2016E)
Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates 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 (%)
5,119 615 640 (2) 112 (15) (42) 0 0 399 441 0.50 12.01 12.50 7.80 5.13 191.12 0.05 23.23 2.13
4,742 582 554 (2) 104 (4) 128 0 0 484 356 0.60 12.27 11.68 10.20 5.56 147.95 (0.44) 24.58 2.47
4,764 587 615 (2) 114 (25) 9 0 0 417 408 0.52 12.32 12.90 8.76 5.17 189.17 (0.44) 24.08 2.13
(6.9) (4.5) (3.9) (6.6) 1.5 60.0 (122.5) n.m. n.m. 4.5 (7.6) 4.5
0.4 0.8 10.9 (2.8) 9.1 459.1 (92.6) n.m. n.m. (13.8) 14.6 (13.8)
9,506 1,169 1,169 (3) 218 (29) 138 0 0 901 763 1.12 12.30 12.29 9.48 5.17 168.27 (0.44) 24.08 2.13
(6.0) (4.0) (8.2) (8.0) 4.0 (3.1) 199.4 n.m. n.m. (1.6) (12.3) (1.6)
19,249 2,504 2,637 (8) 451 (36) 0 0 0 1,787 1,787 2.22 13.01 13.70 9.28 5.32 172.76 (0.44) 24.84 9.07
(6.2) (17.4) (14.5) (0.1) (3.5) (22.8) n.m. n.m. n.m. (13.5) (23.3) (13.5)
49.4 46.7 44.3 43.0 48.3 79.4 n.m. n.m. n.m. 50.4 42.7 50.4
%Change
New
‐5.2% ‐7.6%
23,667 2,467
24,210 2,598
Source: KT ZMICO Research Figure 2: Key Assumption Change List
New 19,249 1,787
Revenue Core Net profit (Btmn)
2016E Old 21,604 2,131
%Change ‐10.9% ‐16.1%
2017E Old
New 21,636
22,813 2,337
2,159
2018E Old
%Change ‐2.2% ‐5.0%
Source: KT ZMICO Research Figure 3: PER (average 11.4x) and PBV band (average 1.3x) PBV(X)
PER(X) 20
2.5
+3.0 S.D.
18 16
+2.0 S.D.
14
+1.0 S.D.
12 10 8 6 4
+2.0 S.D.
2.0
+1.0 S.D. 1.5
Avg. -0.5 S.D. -1.0 S.D.
1.0
-2.0 S.D.
0.5
Avg. -1.0 S.D. -2.0 S.D.
2
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
0.0 Jan-11
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
0
FINANCIAL TABLE PROFIT & LOSS (Btmn) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax FX Gain (loss) Extra Items Non‐controlling Net profit Reported EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btmn) Cash and equivalents Accounts receivable Inventories Investment PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity
2014
2015
2016E
2017E
2018E
17,667 (15,683) 1,984 (905) 2,268 1,188 1,079 (9) 411 1,482 (62) (60) 942 ‐ 2,301 2.86 1,420 1.76 1.50
21,227 (18,358) 2,869 (993) 3,001 1,125 1,876 (8) 448 2,315 (367) 107 1,350 ‐ 3,405 4.23 1,948 2.42 2.00
20,521 (17,491) 3,030 (1,115) 3,084 1,168 1,916 (8) 468 2,375 (47) (262) ‐ ‐ 2,066 2.57 2,328 2.89 2.00
19,249 (16,745) 2,504 (1,124) 2,637 1,257 1,380 (8) 451 1,823 (36) ‐ ‐ ‐ 1,787 2.22 1,787 2.22 1.51
21,636 (18,650) 2,986 (1,252) 3,072 1,338 1,734 (7) 476 2,204 (44) ‐ ‐ ‐ 2,159 2.68 2,159 2.68 1.82
23,367 (19,998) 3,369 (1,347) 3,435 1,412 2,023 (6) 500 2,517 (50) ‐ ‐ ‐ 2,467 3.06 2,467 3.06 2.08
2013
2014
2015
2016E
2017E
2018E
6,710 3,241 3,172 ‐ 6,857 177 20,157 435 386 3,563 805 16,594 20,157
8,331 3,354 3,329 331 6,566 141 22,051 360 516 3,688 805 18,364 22,051
9,121 3,318 3,367 ‐ 7,075 243 23,123 347 534 3,699 805 19,424 23,123
9,549 3,286 3,166 ‐ 7,327 243 23,570 300 530 3,574 805 19,995 23,570
9,567 3,693 3,526 ‐ 7,389 243 24,417 260 460 3,731 805 20,686 24,417
9,987 3,988 3,780 ‐ 7,277 243 25,275 220 380 3,799 805 21,476 25,275
2013
2014
2015
2016E
2017E
2018E
2,399 (279) 1,188 (73) 3,236 (1,367) (239) (1,606) (8) ‐ (1,207) 660 (556) 1,075 1,630 2.03
3,772 (249) 1,125 (464) 4,184 (788) (480) (1,268) (16) ‐ (1,610) (9) (1,635) 1,282 2,917 3.62
2,114 (45) 1,168 (281) 2,956 (1,601) 97 (1,505) ‐ ‐ (1,610) 796 (814) 637 1,451 1.80
1,787 ‐ 1,257 160 3,204 (1,510) ‐ (1,510) (52) ‐ (1,215) ‐ (1,267) 428 1,694 2.11
2,159 ‐ 1,338 (501) 2,996 (1,400) ‐ (1,400) (110) ‐ (1,468) ‐ (1,578) 18 1,596 1.98
2,467 ‐ 1,412 (362) 3,517 (1,300) ‐ (1,300) (120) ‐ (1,678) ‐ (1,798) 420 2,217 2.75
2013
2014
2015
2016E
2017E
2018E
2.5% 19.4% 38.6% 11.2% 12.8% 6.1% 13.0% 8.0% 4.2%
20.2% 32.3% 48.0% 13.5% 14.1% 8.8% 16.0% 9.2% 15.8%
‐3.3% 2.8% ‐39.3% 14.8% 15.0% 9.3% 10.1% 11.3% 2.0%
‐6.2% ‐14.5% ‐13.5% 13.0% 13.7% 7.2% 9.3% 9.3% 2.0%
12.4% 16.5% 20.9% 13.8% 14.2% 8.0% 10.0% 10.0% 2.0%
8.0% 11.8% 14.2% 14.4% 14.7% 8.7% 10.6% 10.6% 2.0%
CASH FLOW (Btmn) Net income Non‐cash adjustment Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013
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, PACE, TPOLY, M‐CHAI, EARTH. KT ZMICO is a co‐underwriter of ALT, EKH, RJH, BCPG.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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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.
