Kce Electronics
Kce Electronics Underperform (17E TP Bt112.00)
Company Update
Close Bt93.50
Electronic Components
Earnings upgrade/Earnings downgrade/ Overview unchanged
July 11, 2017
2Q17E earnings to have been pressured by rising copper prices Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
5.793
6.851
KT ZMICO vs. consensus Share data
0.3%
4.2%
Reuters / Bloomberg
KCE.BK/KCE TB
Paid‐up Shares (m)
586.40
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
55.00/1,641.00
Foreign limit / actual (%)
49.00/29.92
52 week High / Low (Bt)
130.00/87.00
Avg. daily T/O (shares 000)
2,889.00
NVDR (%)
10.44
Estimated free float (%)
62.15
Beta
1.12
URL
www.kcethai.in.th
CGR
Anti‐corruption
Level 4 (Certified)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
2017E earnings will be pressured by increasing copper prices and appreciation of the baht KCE’s share price fell by over 6% yesterday, which may have been attributable to concerns over weak 2Q17E earnings pressured by rising copper prices. The firm’s earnings may have also been impacted by baht appreciation, which is expected to persist during the rest of the year. This issue may post downside risk to our 2017E earnings forecast by 15‐17%. Therefore, we maintain an UNDERPERFORM rating. 2Q17E earnings are likely to have fallen given the appreciation of the baht and rising copper prices We expect KCE’s 2Q17E earnings to have weakened YoY given rising copper prices and the continued appreciation of the baht since the beginning of the year. We estimate that the baht appreciation and the rising copper price may have impacted KCE’s 2Q17E profit margin by 270‐350 bps. The copper price averaged at US$5,692 per ton in 2Q17, up by 20%YoY (‐3%QoQ) given growing demand for batteries used in electronic cars. Meanwhile, the baht strengthened by 3%YoY and 2%QoQ to an average of Bt34.30/US$ in 2Q17. The second half may not be as bright as expected In 2H17, the firm will expand its production capacity (phase III) by 700,000 square feet to support clients’ orders during the 3Q17 high season and to create economies of scale. However, the positive outcome of this expansion project may be unable to offset the cost pressure given sustained high copper prices (July’s copper prices as of 24 July averaged at US$5,911 per ton, up 4% from the average in 2Q17). Our preliminary estimate calls for KCE’s 2H17E gross profit margin to possibly move downward by around 200‐ 300bps. If the copper price continues to increase, it will post downside risk to our 2017E earnings forecast by 15‐17%. Downside risk to 2017E earnings given rising copper prices Our 2017E earnings forecast tilts toward downside risk given the likelihood of sustained high copper prices. The firm has not decided to renegotiate a hike in selling prices to reflect higher costs due to the rising copper price. Therefore, we do not see a clear solution to the problem. We will revise our projections after the announcement of 2Q17E earnings. We maintain an “Underperform” rating. 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) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 11,284 2,110 3.67 58% 1,798 71.0% 1.10 11.25 2014 25.5 23.6 8.3 1.2% 37.5% 85%
2015 12,449 2,240 3.83 4% 2,192 21.9% 1.50 14.05 2015 24.4 18.7 6.7 1.6% 31.1% 70%
2016 13,797 3,039 5.18 35% 2,913 32.9% 2.10 17.05 2016 18.0 14.5 5.5 2.2% 34.3% 36%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 16,115 3,403 5.81 12% 3,403 16.8% 2.03 20.55 2017E 16.1 13.2 4.5 2.2% 31.7% 18%
2018E 18,820 4,187 7.14 23% 4,187 23.0% 2.50 25.14 2018E 13.1 11.2 3.7 2.7% 32.1% 3%
Figure 1: One‐year copper spot price
Figure 2: LME copper price 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1/2/2013
1/2/2014
1/2/2015
1/2/2016
1/2/2017
Last Price
Source: KITCO, KT ZMICO Research
Source: Bloomberg, KT ZMICO Research
Figure 3: PER (average 13.0x) and PBV band (average 1.60x) PBV(X)
PER(X)
60
6.0
2008 earnings is loss
50
+3.0 S.D.
5.0
+2.0 S.D. +1.5.0 S.D. +1.0 S.D. +0.5 S.D. Avg. -0.5 S.D. -1.0 S.D. -1.5.0 S.D. -2.0 S.D.
0.0
-1.0 S.D.
-1.0
-2.0 S.D.
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
-2.0
Jan-12
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
-20
Jan-07
Avg.
1.0
Jan-11
0 -10
2.0
Jan-10
10
Jan-09
20
+1.0 S.D.
3.0
Jan-08
30
+2.0 S.D.
4.0
Jan-07
40
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 Gain (loss) from affiliates 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 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
2014
2015
2016
2017E
2018E
9,294 (6,843) 2,451 (1,275) 1,705 529 1,177 (171) 57 1,063 (16) 13 33 (8) 1,174 2.53 1,052 2.08 0.75
11,284 (7,718) 3,567 (1,683) 2,459 575 1,884 (119) 58 1,824 (46) 34 216 (13) 2,110 3.89 1,798 3.13 1.10
12,449 (8,535) 3,914 (1,520) 3,109 716 2,393 (153) 35 2,274 (91) 21 ‐ (12) 2,240 3.93 2,192 3.75 1.50
13,797 (8,985) 4,813 (1,695) 4,000 882 3,118 (171) 55 3,001 (98) 28 ‐ (18) 3,039 5.23 2,913 4.97 2.10
16,115 (10,620) 5,496 (1,957) 4,391 852 3,539 (141) 74 3,472 (104) 35 ‐ ‐ 3,403 5.81 3,403 5.81 2.03
18,820 (12,179) 6,642 (2,335) 5,185 879 4,306 (113) 87 4,280 (128) 35 ‐ ‐ 4,187 7.14 4,187 7.14 2.50
2013
2014
2015
2016
2017E
2018E
405 3,216 1,345 99 5,619 600 11,284 4,069 783 7,174 480 4,110 11,284
467 3,632 1,470 77 9,291 224 15,160 3,061 2,849 8,772 566 6,388 15,160
676 4,540 1,684 105 9,688 137 16,830 2,758 3,554 8,730 575 8,100 16,830
892 4,080 2,265 318 9,584 189 17,328 2,373 2,155 7,300 586 10,028 17,328
2,555 5,298 2,328 318 9,812 189 20,500 3,104 1,600 8,418 586 12,082 20,500
3,072 6,239 2,669 318 10,033 189 22,520 2,224 1,300 7,746 586 14,774 22,520
2013
2014
2015
2016
2017E
2018E
1,182 823 529 (403) 2,131 (1,617) 1 (1,616) (349) 118 (278) ‐ (509) 5 514 1.07
2,123 273 575 (1) 2,971 (3,778) (149) (3,928) 928 593 (509) 7 1,018 61 (957) (1.69)
2,253 408 716 (786) 2,590 (1,818) 10 (1,808) 0 110 (695) 12 (572) 210 782 1.36
3,057 315 882 120 4,374 (1,046) 14 (1,032) (2,038) 86 (1,171) 0 (3,123) 219 3,342 5.70
3,403 ‐ 852 (339) 3,916 (1,080) ‐ (1,080) 175 ‐ (1,348) ‐ (1,173) 1,663 2,836 4.84
4,187 ‐ 879 (774) 4,291 (1,100) ‐ (1,100) (1,180) ‐ (1,495) ‐ (2,675) 517 3,191 5.44
2013
2014 21.4% 44.2% 53.8% 31.6% 21.8% 16.7% 18.7% 15.9% 2.5%
2015 10.3% 26.4% 1.0% 31.4% 25.0% 19.2% 18.0% 17.6% 4.0%
2016 10.8% 28.6% 33.0% 34.9% 29.0% 22.6% 22.0% 21.1% 3.3%
2017E 16.8% 9.8% 11.0% 34.1% 27.2% 22.0% 21.1% 21.1% 3.0%
43.5% 159.1% 63.6% 26.4% 18.3% 12.7% 12.6% 11.3% 1.5%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2018E 16.8% 18.1% 23.0% 35.3% 27.6% 22.9% 22.2% 22.2% 3.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Company Update
Close Bt93.50
Electronic Components
Earnings upgrade/Earnings downgrade/ Overview unchanged
July 11, 2017
2Q17E earnings to have been pressured by rising copper prices Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
5.793
6.851
KT ZMICO vs. consensus Share data
0.3%
4.2%
Reuters / Bloomberg
KCE.BK/KCE TB
Paid‐up Shares (m)
586.40
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
55.00/1,641.00
Foreign limit / actual (%)
49.00/29.92
52 week High / Low (Bt)
130.00/87.00
Avg. daily T/O (shares 000)
2,889.00
NVDR (%)
10.44
Estimated free float (%)
62.15
Beta
1.12
URL
www.kcethai.in.th
CGR
Anti‐corruption
Level 4 (Certified)
Ruchanon Chiemkarnkit Analyst, no. 057859 [email protected] 66 (0) 2624‐6268
2017E earnings will be pressured by increasing copper prices and appreciation of the baht KCE’s share price fell by over 6% yesterday, which may have been attributable to concerns over weak 2Q17E earnings pressured by rising copper prices. The firm’s earnings may have also been impacted by baht appreciation, which is expected to persist during the rest of the year. This issue may post downside risk to our 2017E earnings forecast by 15‐17%. Therefore, we maintain an UNDERPERFORM rating. 2Q17E earnings are likely to have fallen given the appreciation of the baht and rising copper prices We expect KCE’s 2Q17E earnings to have weakened YoY given rising copper prices and the continued appreciation of the baht since the beginning of the year. We estimate that the baht appreciation and the rising copper price may have impacted KCE’s 2Q17E profit margin by 270‐350 bps. The copper price averaged at US$5,692 per ton in 2Q17, up by 20%YoY (‐3%QoQ) given growing demand for batteries used in electronic cars. Meanwhile, the baht strengthened by 3%YoY and 2%QoQ to an average of Bt34.30/US$ in 2Q17. The second half may not be as bright as expected In 2H17, the firm will expand its production capacity (phase III) by 700,000 square feet to support clients’ orders during the 3Q17 high season and to create economies of scale. However, the positive outcome of this expansion project may be unable to offset the cost pressure given sustained high copper prices (July’s copper prices as of 24 July averaged at US$5,911 per ton, up 4% from the average in 2Q17). Our preliminary estimate calls for KCE’s 2H17E gross profit margin to possibly move downward by around 200‐ 300bps. If the copper price continues to increase, it will post downside risk to our 2017E earnings forecast by 15‐17%. Downside risk to 2017E earnings given rising copper prices Our 2017E earnings forecast tilts toward downside risk given the likelihood of sustained high copper prices. The firm has not decided to renegotiate a hike in selling prices to reflect higher costs due to the rising copper price. Therefore, we do not see a clear solution to the problem. We will revise our projections after the announcement of 2Q17E earnings. We maintain an “Underperform” rating. 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) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net Gearing (%)
2014 11,284 2,110 3.67 58% 1,798 71.0% 1.10 11.25 2014 25.5 23.6 8.3 1.2% 37.5% 85%
2015 12,449 2,240 3.83 4% 2,192 21.9% 1.50 14.05 2015 24.4 18.7 6.7 1.6% 31.1% 70%
2016 13,797 3,039 5.18 35% 2,913 32.9% 2.10 17.05 2016 18.0 14.5 5.5 2.2% 34.3% 36%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 16,115 3,403 5.81 12% 3,403 16.8% 2.03 20.55 2017E 16.1 13.2 4.5 2.2% 31.7% 18%
2018E 18,820 4,187 7.14 23% 4,187 23.0% 2.50 25.14 2018E 13.1 11.2 3.7 2.7% 32.1% 3%
Figure 1: One‐year copper spot price
Figure 2: LME copper price 9,000 8,000 7,000 6,000 5,000 4,000 3,000 2,000 1,000 0 1/2/2013
1/2/2014
1/2/2015
1/2/2016
1/2/2017
Last Price
Source: KITCO, KT ZMICO Research
Source: Bloomberg, KT ZMICO Research
Figure 3: PER (average 13.0x) and PBV band (average 1.60x) PBV(X)
PER(X)
60
6.0
2008 earnings is loss
50
+3.0 S.D.
5.0
+2.0 S.D. +1.5.0 S.D. +1.0 S.D. +0.5 S.D. Avg. -0.5 S.D. -1.0 S.D. -1.5.0 S.D. -2.0 S.D.
0.0
-1.0 S.D.
-1.0
-2.0 S.D.
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
-2.0
Jan-12
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
-20
Jan-07
Avg.
1.0
Jan-11
0 -10
2.0
Jan-10
10
Jan-09
20
+1.0 S.D.
3.0
Jan-08
30
+2.0 S.D.
4.0
Jan-07
40
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 Gain (loss) from affiliates 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 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
2014
2015
2016
2017E
2018E
9,294 (6,843) 2,451 (1,275) 1,705 529 1,177 (171) 57 1,063 (16) 13 33 (8) 1,174 2.53 1,052 2.08 0.75
11,284 (7,718) 3,567 (1,683) 2,459 575 1,884 (119) 58 1,824 (46) 34 216 (13) 2,110 3.89 1,798 3.13 1.10
12,449 (8,535) 3,914 (1,520) 3,109 716 2,393 (153) 35 2,274 (91) 21 ‐ (12) 2,240 3.93 2,192 3.75 1.50
13,797 (8,985) 4,813 (1,695) 4,000 882 3,118 (171) 55 3,001 (98) 28 ‐ (18) 3,039 5.23 2,913 4.97 2.10
16,115 (10,620) 5,496 (1,957) 4,391 852 3,539 (141) 74 3,472 (104) 35 ‐ ‐ 3,403 5.81 3,403 5.81 2.03
18,820 (12,179) 6,642 (2,335) 5,185 879 4,306 (113) 87 4,280 (128) 35 ‐ ‐ 4,187 7.14 4,187 7.14 2.50
2013
2014
2015
2016
2017E
2018E
405 3,216 1,345 99 5,619 600 11,284 4,069 783 7,174 480 4,110 11,284
467 3,632 1,470 77 9,291 224 15,160 3,061 2,849 8,772 566 6,388 15,160
676 4,540 1,684 105 9,688 137 16,830 2,758 3,554 8,730 575 8,100 16,830
892 4,080 2,265 318 9,584 189 17,328 2,373 2,155 7,300 586 10,028 17,328
2,555 5,298 2,328 318 9,812 189 20,500 3,104 1,600 8,418 586 12,082 20,500
3,072 6,239 2,669 318 10,033 189 22,520 2,224 1,300 7,746 586 14,774 22,520
2013
2014
2015
2016
2017E
2018E
1,182 823 529 (403) 2,131 (1,617) 1 (1,616) (349) 118 (278) ‐ (509) 5 514 1.07
2,123 273 575 (1) 2,971 (3,778) (149) (3,928) 928 593 (509) 7 1,018 61 (957) (1.69)
2,253 408 716 (786) 2,590 (1,818) 10 (1,808) 0 110 (695) 12 (572) 210 782 1.36
3,057 315 882 120 4,374 (1,046) 14 (1,032) (2,038) 86 (1,171) 0 (3,123) 219 3,342 5.70
3,403 ‐ 852 (339) 3,916 (1,080) ‐ (1,080) 175 ‐ (1,348) ‐ (1,173) 1,663 2,836 4.84
4,187 ‐ 879 (774) 4,291 (1,100) ‐ (1,100) (1,180) ‐ (1,495) ‐ (2,675) 517 3,191 5.44
2013
2014 21.4% 44.2% 53.8% 31.6% 21.8% 16.7% 18.7% 15.9% 2.5%
2015 10.3% 26.4% 1.0% 31.4% 25.0% 19.2% 18.0% 17.6% 4.0%
2016 10.8% 28.6% 33.0% 34.9% 29.0% 22.6% 22.0% 21.1% 3.3%
2017E 16.8% 9.8% 11.0% 34.1% 27.2% 22.0% 21.1% 21.1% 3.0%
43.5% 159.1% 63.6% 26.4% 18.3% 12.7% 12.6% 11.3% 1.5%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2018E 16.8% 18.1% 23.0% 35.3% 27.6% 22.9% 22.2% 22.2% 3.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
