KCE Electronics
KCE Electronics Outperform (16E TP Bt75.00) Close Bt78.00
Earnings Review
Electronic Components
Beat forecast/Below forecast/In line
May 11, 2016
1Q16 NP hit a new high Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
5.178
5.941
KT ZMICO vs. consensus Share data
‐2.3%
‐6.7%
Reuters / Bloomberg
KCE.BK/KCE TB
Paid‐up Shares (m)
576.26
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
45.00/1,275.00
Foreign limit / actual (%)
49.00/25.08
52 week High / Low (Bt)
86.00/48.50
Avg. daily T/O (shares 000) NVDR (%)
1,504.00 6.32
Estimated free float (%)
56.77
Beta
0.66
URL
www.kcethai.in.th
CGR
Anti‐corruption
Level 4 (Certified)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273 Ruchanon Chiemkarnkit Assistant analyst [email protected] 66 (0) 2624‐6268
2016E earnings on an uptrend; Outperform maintained KCE’s 1Q16 earnings hit a new high, reflecting the capacity acceleration of the new plant following growing demand for electronic parts used in the automotive industry. We believe 2016E earnings will continue to grow strongly. While the firm’s bright earnings prospects have already been priced in, there is potential upside gain from the renovation of its old plant and the likelihood of a better‐than‐expected gross profit margin. We thus maintain our Outperform rating as well as the DCF‐based target price of Bt75/share. 1Q16 grew well as expected KCE posted 1Q16 net profit of Bt751mn, up 13%QoQ and 47%YoY. Exclusive of expected extra gain amounting to Bt23mn, KCE’s core profit increased by 59%YoY and 15%QoQ thanks largely to economies of scale at the new plant (Phase I) whose utilization rate accelerated to 85% vs. 74% in 4Q15. This pushed up the firm’s overall gross profit margin to a new high at 34% vs. 33.8% in 4Q15 and 28.9% in 1Q15. Meanwhile, its revenue grew by 22%YoY and 10%QoQ for the quarter following increasing orders placed by clients in the automotive sector. Finally, the SG&A expenses to sales ratio remained flat YoY at 12%. Demand for PCB to drive capacity We expect KCE’s net profit to continue hitting new highs during 2Q‐4Q16 as the firm has managed to establish a presence in the supply chain for electronic parts used in the automotive industry where demand is growing. Hence, the firm’s earnings are expected to increase alongside growing utilization rates in Phase I and II of the new plant, which are expected to reach 100% by 2Q16. Also, Phase III of its new plant will also commence operations in 3Q16 onwards. We preliminarily expect Phase III to report a utilization rate at around 30% in 2016. Therefore, KCE’s net profit is projected to grow strongly by 36%YoY. Upside from the renovation plan We will likely revise up our earnings projections once we gain further information about the utilization rate at the closed plant that will be renovated. According to our preliminary estimate, if the newly‐renovated plant shows the same utilization rate as existing plants, our 2016 target price will be raised by 11%, providing upside to the earnings projections. 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
2015
2016E
2017E
2018E
11,284 2,110 3.67 58% 1,798 71.0% 1.10 11.25 2014 21.2 20.5 6.9 1.4% 37.5% 85%
12,449 2,240 3.81 4% 2,192 21.9% 1.14 13.74 2015 20.5 16.2 5.7 1.5% 31.4% 70%
15,232 2,973 5.06 33% 2,973 35.6% 1.52 17.23 2016E 15.4 12.7 4.5 1.9% 33.7% 44%
16,342 3,251 5.54 9% 3,251 9.4% 1.66 21.11 2017E 14.1 12.1 3.7 2.1% 29.7% 24%
17,140 3,521 5.99 8% 3,521 8.3% 1.80 25.51 2018E 13.0 11.3 3.1 2.3% 26.5% 6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: KCE’s 1Q16 earnings results Profit and Loss (Btmn) Year‐end 31 Dec
1Q15
4Q15
1Q16E
% YoY
% 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 (%)
2,882 832 631 (21) 9 (17) 54 0 3 511 457 0.90 28.86 21.89 17.73 1.05 22.69 0.73 12.20 6.89
3,218 1,087 895 (48) 9 (18) 35 0 2 665 631 1.16 33.78 27.82 20.67 1.38 14.30 0.70 14.16 8.16
3,529 1,198 986 (46) 9 (10) 23 0 6 751 728 1.31 33.95 27.94 21.28 1.52 16.68 0.54 15.52 8.60
22.4 44.0 56.3 116.4 3.8 (42.4) (57.0) n.m. 113.5 46.9 59.2 44.7
9.7 10.2 10.2 (3.3) (3.4) (43.5) (33.1) n.m. 174.1 12.9 15.4 12.4
15,232 5,109 3,980 (180) 69 (91) 0 0 30 2,973 2,973 5.06 33.54 26.13 19.52 1.24 17.46 0.44 17.23 32.68
22.4 30.5 28.0 17.5 98.6 0.0 (100.0) n.m. 41.6 32.7 35.6 29.0
23.2 23.4 24.8 25.8 13.3 10.9 n.m. n.m. 19.6 25.3 24.5 25.8
Source: KT ZMICO Research Figure 2: Global auto sales in 1Q16 Car maker BMW Group Volkswagen Group Daimler Group Ford motor GM motor FCA Group
1Q15 1Q16 525,885 557,605 2,487,700 2,508,300 641,600 683,900
%YoY EU growth American growth Asian growth Chinese growth 5.9% 9.5% ‐8.6% 10.0% 10.5% 0.8% 3.3% ‐12.9% 4.3% 6.4% 6.6% 14.2% ‐12.5% 15.3% 24.0%
1,568,000 1,720,000 9.70% 2,399,000 2,374,000 ‐1.0% 1,093,000 1,086,000 ‐0.6%
5.20% 6.50% 10%
12.60% ‐4% 8.0%
8.70% ‐0.50% ‐10%
7.30% 6.00% 1.00%
Source: 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
-1.0 S.D. -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
-2.0
Jan-13
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
-20
0.0 -1.0
Jan-12
-10
Avg.
1.0
Jan-11
0
2.0
Jan-10
10
+1.0 S.D.
3.0
Jan-09
20
+2.0 S.D.
4.0
Jan-08
30
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.
Jan-07
40
+3.0 S.D.
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
2016E
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 3.92 2,192 3.73 1.14
15,232 (10,123) 5,109 (1,964) 3,980 835 3,145 (180) 69 3,034 (91) 30 ‐ ‐ 2,973 5.06 2,973 5.06 1.52
16,342 (10,830) 5,512 (2,130) 4,183 801 3,382 (141) 75 3,316 (99) 35 ‐ ‐ 3,251 5.54 3,251 5.54 1.66
17,140 (11,331) 5,809 (2,181) 4,455 828 3,628 (113) 79 3,594 (108) 35 ‐ ‐ 3,521 5.99 3,521 5.99 1.80
2013
2014
2015
2016E
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
1,497 4,882 2,080 105 11,001 137 19,703 3,604 2,400 9,423 587 10,147 19,570
1,730 5,373 2,374 105 11,280 137 20,999 3,104 1,600 8,437 587 12,429 20,866
2,603 5,682 2,484 105 11,553 137 22,564 2,224 1,300 7,420 587 15,010 22,430
2013
2014
2015
2016E
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) ‐ (584) 198 782 1.36
2,973 ‐ 835 263 4,070 (2,148) ‐ (2,148) (309) ‐ (793) ‐ (1,102) 821 1,922 3.27
3,251 ‐ 801 (470) 3,582 (1,080) ‐ (1,080) (1,300) ‐ (969) ‐ (2,269) 233 2,502 4.26
3,521 ‐ 828 (256) 4,093 (1,100) ‐ (1,100) (1,180) ‐ (940) ‐ (2,120) 873 2,993 5.09
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% 0.8% 31.4% 25.0% 19.2% 18.0% 17.6% 4.0%
2016E 22.4% 28.0% 29.0% 33.5% 26.1% 20.6% 19.5% 19.5% 3.0%
2017E 7.3% 5.1% 9.4% 33.7% 25.6% 20.7% 19.9% 19.9% 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 4.9% 6.5% 8.3% 33.9% 26.0% 21.2% 20.5% 20.5% 3.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investment in the securities of KTB and ZMICO, investor should consider 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, PLE, TPOLY, BIGC, BJC. KT ZMICO is a co‐underwriter of TPBI.
Anti‐corruption Progress Indicator
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 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 returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to 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 4 of 4
th
th
th
th
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
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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
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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.
Earnings Review
Electronic Components
Beat forecast/Below forecast/In line
May 11, 2016
1Q16 NP hit a new high Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
5.178
5.941
KT ZMICO vs. consensus Share data
‐2.3%
‐6.7%
Reuters / Bloomberg
KCE.BK/KCE TB
Paid‐up Shares (m)
576.26
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
45.00/1,275.00
Foreign limit / actual (%)
49.00/25.08
52 week High / Low (Bt)
86.00/48.50
Avg. daily T/O (shares 000) NVDR (%)
1,504.00 6.32
Estimated free float (%)
56.77
Beta
0.66
URL
www.kcethai.in.th
CGR
Anti‐corruption
Level 4 (Certified)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273 Ruchanon Chiemkarnkit Assistant analyst [email protected] 66 (0) 2624‐6268
2016E earnings on an uptrend; Outperform maintained KCE’s 1Q16 earnings hit a new high, reflecting the capacity acceleration of the new plant following growing demand for electronic parts used in the automotive industry. We believe 2016E earnings will continue to grow strongly. While the firm’s bright earnings prospects have already been priced in, there is potential upside gain from the renovation of its old plant and the likelihood of a better‐than‐expected gross profit margin. We thus maintain our Outperform rating as well as the DCF‐based target price of Bt75/share. 1Q16 grew well as expected KCE posted 1Q16 net profit of Bt751mn, up 13%QoQ and 47%YoY. Exclusive of expected extra gain amounting to Bt23mn, KCE’s core profit increased by 59%YoY and 15%QoQ thanks largely to economies of scale at the new plant (Phase I) whose utilization rate accelerated to 85% vs. 74% in 4Q15. This pushed up the firm’s overall gross profit margin to a new high at 34% vs. 33.8% in 4Q15 and 28.9% in 1Q15. Meanwhile, its revenue grew by 22%YoY and 10%QoQ for the quarter following increasing orders placed by clients in the automotive sector. Finally, the SG&A expenses to sales ratio remained flat YoY at 12%. Demand for PCB to drive capacity We expect KCE’s net profit to continue hitting new highs during 2Q‐4Q16 as the firm has managed to establish a presence in the supply chain for electronic parts used in the automotive industry where demand is growing. Hence, the firm’s earnings are expected to increase alongside growing utilization rates in Phase I and II of the new plant, which are expected to reach 100% by 2Q16. Also, Phase III of its new plant will also commence operations in 3Q16 onwards. We preliminarily expect Phase III to report a utilization rate at around 30% in 2016. Therefore, KCE’s net profit is projected to grow strongly by 36%YoY. Upside from the renovation plan We will likely revise up our earnings projections once we gain further information about the utilization rate at the closed plant that will be renovated. According to our preliminary estimate, if the newly‐renovated plant shows the same utilization rate as existing plants, our 2016 target price will be raised by 11%, providing upside to the earnings projections. 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
2015
2016E
2017E
2018E
11,284 2,110 3.67 58% 1,798 71.0% 1.10 11.25 2014 21.2 20.5 6.9 1.4% 37.5% 85%
12,449 2,240 3.81 4% 2,192 21.9% 1.14 13.74 2015 20.5 16.2 5.7 1.5% 31.4% 70%
15,232 2,973 5.06 33% 2,973 35.6% 1.52 17.23 2016E 15.4 12.7 4.5 1.9% 33.7% 44%
16,342 3,251 5.54 9% 3,251 9.4% 1.66 21.11 2017E 14.1 12.1 3.7 2.1% 29.7% 24%
17,140 3,521 5.99 8% 3,521 8.3% 1.80 25.51 2018E 13.0 11.3 3.1 2.3% 26.5% 6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: KCE’s 1Q16 earnings results Profit and Loss (Btmn) Year‐end 31 Dec
1Q15
4Q15
1Q16E
% YoY
% 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 (%)
2,882 832 631 (21) 9 (17) 54 0 3 511 457 0.90 28.86 21.89 17.73 1.05 22.69 0.73 12.20 6.89
3,218 1,087 895 (48) 9 (18) 35 0 2 665 631 1.16 33.78 27.82 20.67 1.38 14.30 0.70 14.16 8.16
3,529 1,198 986 (46) 9 (10) 23 0 6 751 728 1.31 33.95 27.94 21.28 1.52 16.68 0.54 15.52 8.60
22.4 44.0 56.3 116.4 3.8 (42.4) (57.0) n.m. 113.5 46.9 59.2 44.7
9.7 10.2 10.2 (3.3) (3.4) (43.5) (33.1) n.m. 174.1 12.9 15.4 12.4
15,232 5,109 3,980 (180) 69 (91) 0 0 30 2,973 2,973 5.06 33.54 26.13 19.52 1.24 17.46 0.44 17.23 32.68
22.4 30.5 28.0 17.5 98.6 0.0 (100.0) n.m. 41.6 32.7 35.6 29.0
23.2 23.4 24.8 25.8 13.3 10.9 n.m. n.m. 19.6 25.3 24.5 25.8
Source: KT ZMICO Research Figure 2: Global auto sales in 1Q16 Car maker BMW Group Volkswagen Group Daimler Group Ford motor GM motor FCA Group
1Q15 1Q16 525,885 557,605 2,487,700 2,508,300 641,600 683,900
%YoY EU growth American growth Asian growth Chinese growth 5.9% 9.5% ‐8.6% 10.0% 10.5% 0.8% 3.3% ‐12.9% 4.3% 6.4% 6.6% 14.2% ‐12.5% 15.3% 24.0%
1,568,000 1,720,000 9.70% 2,399,000 2,374,000 ‐1.0% 1,093,000 1,086,000 ‐0.6%
5.20% 6.50% 10%
12.60% ‐4% 8.0%
8.70% ‐0.50% ‐10%
7.30% 6.00% 1.00%
Source: 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
-1.0 S.D. -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
-2.0
Jan-13
Jan-16
Jan-15
Jan-14
Jan-13
Jan-12
Jan-11
Jan-10
Jan-09
Jan-08
Jan-07
-20
0.0 -1.0
Jan-12
-10
Avg.
1.0
Jan-11
0
2.0
Jan-10
10
+1.0 S.D.
3.0
Jan-09
20
+2.0 S.D.
4.0
Jan-08
30
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.
Jan-07
40
+3.0 S.D.
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
2016E
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 3.92 2,192 3.73 1.14
15,232 (10,123) 5,109 (1,964) 3,980 835 3,145 (180) 69 3,034 (91) 30 ‐ ‐ 2,973 5.06 2,973 5.06 1.52
16,342 (10,830) 5,512 (2,130) 4,183 801 3,382 (141) 75 3,316 (99) 35 ‐ ‐ 3,251 5.54 3,251 5.54 1.66
17,140 (11,331) 5,809 (2,181) 4,455 828 3,628 (113) 79 3,594 (108) 35 ‐ ‐ 3,521 5.99 3,521 5.99 1.80
2013
2014
2015
2016E
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
1,497 4,882 2,080 105 11,001 137 19,703 3,604 2,400 9,423 587 10,147 19,570
1,730 5,373 2,374 105 11,280 137 20,999 3,104 1,600 8,437 587 12,429 20,866
2,603 5,682 2,484 105 11,553 137 22,564 2,224 1,300 7,420 587 15,010 22,430
2013
2014
2015
2016E
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) ‐ (584) 198 782 1.36
2,973 ‐ 835 263 4,070 (2,148) ‐ (2,148) (309) ‐ (793) ‐ (1,102) 821 1,922 3.27
3,251 ‐ 801 (470) 3,582 (1,080) ‐ (1,080) (1,300) ‐ (969) ‐ (2,269) 233 2,502 4.26
3,521 ‐ 828 (256) 4,093 (1,100) ‐ (1,100) (1,180) ‐ (940) ‐ (2,120) 873 2,993 5.09
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% 0.8% 31.4% 25.0% 19.2% 18.0% 17.6% 4.0%
2016E 22.4% 28.0% 29.0% 33.5% 26.1% 20.6% 19.5% 19.5% 3.0%
2017E 7.3% 5.1% 9.4% 33.7% 25.6% 20.7% 19.9% 19.9% 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 4.9% 6.5% 8.3% 33.9% 26.0% 21.2% 20.5% 20.5% 3.0%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investment in the securities of KTB and ZMICO, investor should consider 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, PLE, TPOLY, BIGC, BJC. KT ZMICO is a co‐underwriter of TPBI.
Anti‐corruption Progress Indicator
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 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 returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to 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 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.
