Outperform (16E TP Bt335.00)
PTT Outperform (16E TP Bt335.00)
Company Update
Close Bt312.00
Energy & Utilities June 30, 2016
Earnings upgrade/ Earnings downgrade / Overview unchanged
Upcoming story‐driven Price Performance (%)
Source: SET Smart Consensus EPS (Bt)
FY16
FY17
28.103
30.629
1.1%
7.9%
KT ZMICO vs. consensus Share data Reuters / Bloomberg
PTT.BK/PTT TB
Paid‐up Shares (m)
2,856.30
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
891.00/25,332.00
Foreign limit / actual (%)
30.00/15.20
52 week High / Low (Bt)
365.00/197.00
Avg. daily T/O (shares 000) NVDR (%)
7,519.00 5.83
Estimated free float (%)
48.87
Beta
1.89
URL
www.pttplc.com
CGR
Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
ST and LT catalysts Despite the short‐term pressure from the stronger USD on commodity prices and oil‐linked stocks, PTT’s gas business is highlighted as the growth catalyst for its 2016E earnings and also the long‐term growth driver in line with the country’s major dependence on gas; meanwhile, the targeted spinoff of its oil business and the upcoming 21st petroleum bidding with PTTEP’s involvement will be price catalysts in 2017E. Thus, we maintain an “Outperform” rating. 2016E capital expenditures cut by 15% to Bt43.3bn PTT has reviewed its investment plan and cut its 2016E capital expenditures by 15% to Bt43.3bn (from Bt50.8bn earlier), with delayed expenditures (including the offshore compressor of the gas pipeline and the GSP studying project) and cuts (i.e., GSP capacity expansion), which are mainly in the natural gas business and infrastructure business. Meanwhile, the oil business, with the spinoff targeted for conclusion in late 2016E, has upside on the expenditures budget (~Bt24bn during 2016‐20E) for non‐oil business expansion. This includes the existing legacy Café Amazon (with a 50% revenue contribution of the non‐oil business currently), with a target to expand by 200 branches to 1,700 branches by this yearend, and the new budget hotel business. Oil business value likely to be unlocked soon Given our earlier slightly upward revision on its 65%‐owned PTTEP and PTT’s 2016E capital expenditures cut, we negligibly revise up our 2016E SOTP‐ based TP for PTT to Bt335/share (vs. Bt330 earlier). Our current valuation suggests its oil business valuation of Bt36/share by means of DCF (~11% of its 2016E TP), implying 7.3x 2016E EV/EBITDA. Given its target for spinoff in 2017E, its oil business value is likely to be unlocked with upside risk of Bt23‐ 28/share on top if pegged at the 12‐13x regional EV/EBITDA of the retail business (see Fig. 2). Budget hotel as a new gimmick Given its target to focus on the non‐oil business due to a higher‐margin contribution than the oil retail business, PTT is in talks with leading hotel chains in regard to stepping into the budget hotel business. The business model is expected to be more concrete in late 2016E. With 1,400 petrol stations at current, PTT sees some potential for building budget hotels on land nearby with a target of 50 hotels (~70‐room size/hotel) within the next 5‐year horizon. Based on our first‐glance subjective assumption (i.e., occupancy rate, room rate, EBITDA margin, investment cost, see Fig. 4), we expect the project IRR to vary in the range of 8‐12% with the higher bound to make the project more viable. Despite its negligible contribution to PTT’s consolidated line, this budget hotel business would be a gimmick related to the spinoff of the oil business. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 2,605,062 82,066 58,678 20.34 (37.45) 11.00 239.22 2014 15.34 5.02 1.30 3.5% 8.6% 60.5%
2015 2,026,912 96,251 19,812 6.73 (66.91) 10.00 244.07 2015 46.36 4.42 1.28 3.2% 2.9% 44.9%
2016E 2,104,737 79,090 81,127 28.42 322.27 10.90 260.28 2016E 10.98 4.11 1.20 3.5% 11.3% 47.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2017E 2,773,340 93,547 94,353 33.05 16.30 12.56 281.59 2017E 9.44 3.50 1.11 4.0% 12.2% 31.9%
2018E 3,401,621 102,238 102,415 35.88 8.54 12.56 304.88 2018E 8.70 3.11 1.02 4.0% 12.2% 18.4%
Figure 1: PTT’s capital expenditures plan during 2016‐20E
Source: PTT, KT ZMICO Research
Figure 2: Oil business valuation Oil business Our 2016E valuation (DCF) EBITDA FCF Enterprise value Value/PTT share (1) Implied EV/EBITDA
If pegged at EV/EBITDA of retail business Implied value/PTT share (2) Difference in value (2)‐ (1)
14,706 7,295 102,833 36 7.3
12 59 23
13 64 28
Btmn/year (during 2016‐20E) Btmn/year (during 2016‐20E) Btmn Bt/share times
times of regional EV/EBITDA Bt/share ‐ based on 2016E EBITDA of Bt14bn Bt/share
Source: KT ZMICO Research
Figure 3: Retail business ‐ regional 2016‐17E EV/EBITDA
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 4: Sensitivity study on project IRR of new budget hotel business EBITDA contribution (Btmn/hotel*/yr)
Occupancy 60% 70% 80% 90%
Occupancy 60% 70% 80% 90%
Room rate Project IRR
3.1 3.8 4.6 5.4
3.6 4.5 5.4 6.3
4.1 5.1 6.1 7.2
4.6 5.7 6.9 8.0
400 per night 500 per night 600 per night 700 per night
1% 3% 5% 7%
2% 5% 7% 9%
4% 6% 8% 11%
5% 7% 10% 12%
*each 70‐room size hotel Other key assumption ‐ Assume EBITDA margin of 50%, on par with HOP Inn ‐ Assume investment cost of Bt70mn / 70‐room size (~Bt1mn/room), with no additional cost of land given the available land sites near stations (vs. HOP Inn of Bt115‐120mn / 75‐room size) ‐ Assume contribution to kick‐off in 2018E
Source: KT ZMICO Research
Figure 5: PTT’s PBV band
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments 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 (%)
2014 2,605,062 (2,384,840) 220,222 (95,753) 260,033 135,563 124,469 (33,033) 36,926 128,361 (38,006) 11,610 (34,999) 860 (9,149) 58,678 20.34 20.34 82,066 28.73 11.00
2015 2,026,912 (1,809,930) 216,982 (87,986) 272,757 143,761 128,996 (30,089) 28,361 127,267 (24,855) (6,038) (71,811) 6,032 (10,783) 19,812 6.73 6.73 96,251 33.70 10.00
2016E 2,104,737 (1,860,893) 243,845 (89,933) 301,813 147,902 153,912 (24,322) 14,455 144,045 (32,563) 2,037 0 0 (32,392) 81,127 28.42 28.42 79,090 27.69 10.90
2017E 2,773,340 (2,479,794) 293,546 (113,934) 328,359 148,747 179,612 (21,483) 14,251 172,379 (40,497) 806 0 0 (38,336) 94,353 33.05 33.05 93,547 32.75 12.56
2018E 3,401,621 (3,071,996) 329,625 (139,795) 337,916 148,086 189,829 (18,964) 12,908 183,774 (40,968) 177 0 0 (40,567) 102,415 35.88 35.88 102,238 35.79 12.56
2014 316,757 220,142 147,930 1,111,484 454,038 2,250,351 137,118 592,982 1,195,657 28,563 683,287 371,408 2,250,351
2015 346,725 195,484 115,729 1,124,965 391,093 2,173,996 81,094 578,753 1,086,309 28,563 697,147 390,540 2,173,996
2016E 225,832 218,864 135,230 1,182,310 392,423 2,154,658 98,834 476,368 988,285 28,563 743,441 422,932 2,154,658
2017E 270,154 259,246 161,405 1,153,937 395,584 2,240,327 116,991 409,990 974,767 28,563 804,292 461,268 2,240,327
2018E 308,225 281,206 188,088 1,121,201 400,855 2,299,575 136,172 332,016 926,902 28,563 870,838 501,835 2,299,575
2014 58,678 (11,610) 135,563 (86,852) 95,779 (344,007)
2015 19,812 6,038 143,761 18,163 187,775 (130,431)
2016E 81,127 (2,037) 147,902 (28,045) 198,948 (205,247)
2017E 94,353 (806) 148,747 183 242,477 (120,375)
2018E 102,415 (177) 148,086 (5,477) 244,848 (115,350)
(344,007) 243,751 (31,715) (34,276) 226,855 404,615 156,387 (248,228) (86.95)
(130,431) (70,253) 19,289 (29,991) 53,580 (27,375) 29,968 57,343 20.09
(205,247) (84,645) (37,378) (29,846) 37,275 (114,594) (120,894) (6,299) (2.21)
(120,375) (48,221) (38,336) (33,502) 42,278 (77,780) 44,322 122,102 42.77
(115,350) (58,793) (40,567) (35,870) 43,803 (91,427) 38,071 129,498 45.36
2014 (8.4) 19.3 (37.5) 8.5 10.0 4.8 2.3 3.2 29.6
2015 (22.2) 4.9 (66.9) 10.7 13.5 6.4 1.0 4.7 19.5
2016E 3.8 10.7 322.3 11.6 14.3 7.3 3.9 3.8 22.6
2017E 31.8 8.8 16.3 10.6 11.8 6.5 3.4 3.4 23.5
2018E 22.7 2.9 8.5 9.7 9.9 5.6 3.0 3.0 22.3
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY. KT ZMICO is a co‐underwriter of ALT.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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
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 Bt312.00
Energy & Utilities June 30, 2016
Earnings upgrade/ Earnings downgrade / Overview unchanged
Upcoming story‐driven Price Performance (%)
Source: SET Smart Consensus EPS (Bt)
FY16
FY17
28.103
30.629
1.1%
7.9%
KT ZMICO vs. consensus Share data Reuters / Bloomberg
PTT.BK/PTT TB
Paid‐up Shares (m)
2,856.30
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
891.00/25,332.00
Foreign limit / actual (%)
30.00/15.20
52 week High / Low (Bt)
365.00/197.00
Avg. daily T/O (shares 000) NVDR (%)
7,519.00 5.83
Estimated free float (%)
48.87
Beta
1.89
URL
www.pttplc.com
CGR
Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
ST and LT catalysts Despite the short‐term pressure from the stronger USD on commodity prices and oil‐linked stocks, PTT’s gas business is highlighted as the growth catalyst for its 2016E earnings and also the long‐term growth driver in line with the country’s major dependence on gas; meanwhile, the targeted spinoff of its oil business and the upcoming 21st petroleum bidding with PTTEP’s involvement will be price catalysts in 2017E. Thus, we maintain an “Outperform” rating. 2016E capital expenditures cut by 15% to Bt43.3bn PTT has reviewed its investment plan and cut its 2016E capital expenditures by 15% to Bt43.3bn (from Bt50.8bn earlier), with delayed expenditures (including the offshore compressor of the gas pipeline and the GSP studying project) and cuts (i.e., GSP capacity expansion), which are mainly in the natural gas business and infrastructure business. Meanwhile, the oil business, with the spinoff targeted for conclusion in late 2016E, has upside on the expenditures budget (~Bt24bn during 2016‐20E) for non‐oil business expansion. This includes the existing legacy Café Amazon (with a 50% revenue contribution of the non‐oil business currently), with a target to expand by 200 branches to 1,700 branches by this yearend, and the new budget hotel business. Oil business value likely to be unlocked soon Given our earlier slightly upward revision on its 65%‐owned PTTEP and PTT’s 2016E capital expenditures cut, we negligibly revise up our 2016E SOTP‐ based TP for PTT to Bt335/share (vs. Bt330 earlier). Our current valuation suggests its oil business valuation of Bt36/share by means of DCF (~11% of its 2016E TP), implying 7.3x 2016E EV/EBITDA. Given its target for spinoff in 2017E, its oil business value is likely to be unlocked with upside risk of Bt23‐ 28/share on top if pegged at the 12‐13x regional EV/EBITDA of the retail business (see Fig. 2). Budget hotel as a new gimmick Given its target to focus on the non‐oil business due to a higher‐margin contribution than the oil retail business, PTT is in talks with leading hotel chains in regard to stepping into the budget hotel business. The business model is expected to be more concrete in late 2016E. With 1,400 petrol stations at current, PTT sees some potential for building budget hotels on land nearby with a target of 50 hotels (~70‐room size/hotel) within the next 5‐year horizon. Based on our first‐glance subjective assumption (i.e., occupancy rate, room rate, EBITDA margin, investment cost, see Fig. 4), we expect the project IRR to vary in the range of 8‐12% with the higher bound to make the project more viable. Despite its negligible contribution to PTT’s consolidated line, this budget hotel business would be a gimmick related to the spinoff of the oil business. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Core profit (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 2,605,062 82,066 58,678 20.34 (37.45) 11.00 239.22 2014 15.34 5.02 1.30 3.5% 8.6% 60.5%
2015 2,026,912 96,251 19,812 6.73 (66.91) 10.00 244.07 2015 46.36 4.42 1.28 3.2% 2.9% 44.9%
2016E 2,104,737 79,090 81,127 28.42 322.27 10.90 260.28 2016E 10.98 4.11 1.20 3.5% 11.3% 47.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 5
2017E 2,773,340 93,547 94,353 33.05 16.30 12.56 281.59 2017E 9.44 3.50 1.11 4.0% 12.2% 31.9%
2018E 3,401,621 102,238 102,415 35.88 8.54 12.56 304.88 2018E 8.70 3.11 1.02 4.0% 12.2% 18.4%
Figure 1: PTT’s capital expenditures plan during 2016‐20E
Source: PTT, KT ZMICO Research
Figure 2: Oil business valuation Oil business Our 2016E valuation (DCF) EBITDA FCF Enterprise value Value/PTT share (1) Implied EV/EBITDA
If pegged at EV/EBITDA of retail business Implied value/PTT share (2) Difference in value (2)‐ (1)
14,706 7,295 102,833 36 7.3
12 59 23
13 64 28
Btmn/year (during 2016‐20E) Btmn/year (during 2016‐20E) Btmn Bt/share times
times of regional EV/EBITDA Bt/share ‐ based on 2016E EBITDA of Bt14bn Bt/share
Source: KT ZMICO Research
Figure 3: Retail business ‐ regional 2016‐17E EV/EBITDA
Source: Bloomberg, KT ZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 5
Figure 4: Sensitivity study on project IRR of new budget hotel business EBITDA contribution (Btmn/hotel*/yr)
Occupancy 60% 70% 80% 90%
Occupancy 60% 70% 80% 90%
Room rate Project IRR
3.1 3.8 4.6 5.4
3.6 4.5 5.4 6.3
4.1 5.1 6.1 7.2
4.6 5.7 6.9 8.0
400 per night 500 per night 600 per night 700 per night
1% 3% 5% 7%
2% 5% 7% 9%
4% 6% 8% 11%
5% 7% 10% 12%
*each 70‐room size hotel Other key assumption ‐ Assume EBITDA margin of 50%, on par with HOP Inn ‐ Assume investment cost of Bt70mn / 70‐room size (~Bt1mn/room), with no additional cost of land given the available land sites near stations (vs. HOP Inn of Bt115‐120mn / 75‐room size) ‐ Assume contribution to kick‐off in 2018E
Source: KT ZMICO Research
Figure 5: PTT’s PBV band
Source: Bloomberg, KT ZMICO Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 5
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments 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 (%)
2014 2,605,062 (2,384,840) 220,222 (95,753) 260,033 135,563 124,469 (33,033) 36,926 128,361 (38,006) 11,610 (34,999) 860 (9,149) 58,678 20.34 20.34 82,066 28.73 11.00
2015 2,026,912 (1,809,930) 216,982 (87,986) 272,757 143,761 128,996 (30,089) 28,361 127,267 (24,855) (6,038) (71,811) 6,032 (10,783) 19,812 6.73 6.73 96,251 33.70 10.00
2016E 2,104,737 (1,860,893) 243,845 (89,933) 301,813 147,902 153,912 (24,322) 14,455 144,045 (32,563) 2,037 0 0 (32,392) 81,127 28.42 28.42 79,090 27.69 10.90
2017E 2,773,340 (2,479,794) 293,546 (113,934) 328,359 148,747 179,612 (21,483) 14,251 172,379 (40,497) 806 0 0 (38,336) 94,353 33.05 33.05 93,547 32.75 12.56
2018E 3,401,621 (3,071,996) 329,625 (139,795) 337,916 148,086 189,829 (18,964) 12,908 183,774 (40,968) 177 0 0 (40,567) 102,415 35.88 35.88 102,238 35.79 12.56
2014 316,757 220,142 147,930 1,111,484 454,038 2,250,351 137,118 592,982 1,195,657 28,563 683,287 371,408 2,250,351
2015 346,725 195,484 115,729 1,124,965 391,093 2,173,996 81,094 578,753 1,086,309 28,563 697,147 390,540 2,173,996
2016E 225,832 218,864 135,230 1,182,310 392,423 2,154,658 98,834 476,368 988,285 28,563 743,441 422,932 2,154,658
2017E 270,154 259,246 161,405 1,153,937 395,584 2,240,327 116,991 409,990 974,767 28,563 804,292 461,268 2,240,327
2018E 308,225 281,206 188,088 1,121,201 400,855 2,299,575 136,172 332,016 926,902 28,563 870,838 501,835 2,299,575
2014 58,678 (11,610) 135,563 (86,852) 95,779 (344,007)
2015 19,812 6,038 143,761 18,163 187,775 (130,431)
2016E 81,127 (2,037) 147,902 (28,045) 198,948 (205,247)
2017E 94,353 (806) 148,747 183 242,477 (120,375)
2018E 102,415 (177) 148,086 (5,477) 244,848 (115,350)
(344,007) 243,751 (31,715) (34,276) 226,855 404,615 156,387 (248,228) (86.95)
(130,431) (70,253) 19,289 (29,991) 53,580 (27,375) 29,968 57,343 20.09
(205,247) (84,645) (37,378) (29,846) 37,275 (114,594) (120,894) (6,299) (2.21)
(120,375) (48,221) (38,336) (33,502) 42,278 (77,780) 44,322 122,102 42.77
(115,350) (58,793) (40,567) (35,870) 43,803 (91,427) 38,071 129,498 45.36
2014 (8.4) 19.3 (37.5) 8.5 10.0 4.8 2.3 3.2 29.6
2015 (22.2) 4.9 (66.9) 10.7 13.5 6.4 1.0 4.7 19.5
2016E 3.8 10.7 322.3 11.6 14.3 7.3 3.9 3.8 22.6
2017E 31.8 8.8 16.3 10.6 11.8 6.5 3.4 3.4 23.5
2018E 22.7 2.9 8.5 9.7 9.9 5.6 3.0 3.0 22.3
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 5
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY. KT ZMICO is a co‐underwriter of ALT.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 5 of 5
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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
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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.
