Outperform (17E TP Bt19.60) - Global Alliance Partners
TPC Power Holding Outperform (17E TP Bt19.60)
Company Update
Close Bt18.70
Mai ‐ Resources November 11, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Profit rose on capacity expansion Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.572
0.990
KT ZMICO vs. consensus Share data
‐14.3%
6.1%
Reuters / Bloomberg
TPCH.BK/TPCH TB
Paid‐up Shares (m)
401.20
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
8.00/214.00
Foreign limit / actual (%)
49.00/0.03
52 week High / Low (Bt)
20.90/13.60
Avg. daily T/O (shares 000)
3,417.00
NVDR (%)
1.84
Estimated free float (%)
41.71
Beta
1.28
URL
www.tpcpower.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6289
Net profit in 4Q16 is set for a new high The bottom line was reported at Bt49.5mn, surging 837%YoY as capacity expanded three fold. However, it was flat QoQ since TPCH booked an extra benefit last quarter from the change of a PPA from Adder to Fit. Without this item, we should also see QoQ growth. Net profit in 4Q16 is set for a new high as the fourth power plant started operations since 3 October. We estimate 4Q16E net profit at Bt67mn, +95%YoY and 35%QoQ. Excellent utilization rate Revenue increased 174%YoY to Bt155mn. Comparing QoQ, it was flat as no new power plant started operating in 3Q16. CRB power plants operated at an 87% utilization rate, better than 86% in 3Q15 and 84% in 2Q16. MWE (operated since 4Q15) saw its utilization rate dip from 90% to 87%. The MGP power plant (TPCH booked as share of profit) improved from a 42% utilization rate last quarter to 78% in this quarter. However, the bottom line is still not impressive with the share of profit plunging from Bt18mn last quarter to Bt6mn in this quarter. Improving margins The gross and EBITDA margin have kept improving. The GPM expanded 11%YoY and 7%QoQ to 57% while the EBITDA margin grew 21%YoY and 10%QoQ. This was in line with the operating leverage story the company has planned since the beginning. The fourth power plant’s COD The fourth power plant, TSG, started operation on 3 Oct, delayed from our assumption of 15 Aug. We factor in the delay and it results in a slight earnings cut by 3% this year. There is no impact to our 17E TP. Recommend Outperform…wait and see for MSW power plant TPCH is constructing two 9.9MW power plants and expects to see development of a SPP power plant in the three southern border provinces soon. These projects will deliver net profit growth of 65% during 17E – 19E. The current share price is trading at 38x 16E PER and will continue to decline to 10.89x in 18E. Even though our 17E TP provides upside of only 5%, we think it’s worth waiting and seeing the potential of the MSW projects. We therefore revise down our recommendation from Buy to Outperform. Financials and Valuation FY Ended 31 Dec Revenues (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 258 29 0.09 80.0% 0.00 4.87 2014 207.8 76.18 3.84 0.0% 2.5% ‐24%
2015 305 47 0.12 29.2% 0.01 5.33 2015 160.8 66.63 3.51 0.1% 2.7% 11%
2016E 655 198 0.49 324.6% 0.10 5.88 2016E 37.88 22.92 3.18 0.5% 10.7% 108%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 1,378 422 1.05 113.2% 0.32 7.24 2017E 17.77 9.70 2.58 1.7% 21.0% 150%
2018E 2,517 689 1.72 63.1% 0.69 8.21 2018E 10.89 5.53 2.28 3.7% 31.1% 118%
Figure 1: TPCH’s 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax 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 (%)
3Q15 56.7 20.5 16.9 (5.1) 4.4 1.0 (0.8) 5.3 5.3 0.0 36.1 29.9 9.3 5.3 1.8 0.1 4.3 0.3
2Q16 150.9 65.9 61.8 (9.8) 3.2 0.0 18.4 50.2 50.2 0.1 43.7 41.0 33.3 2.9 4.9 0.2 4.6 2.7
3Q16 155.2 88.5 79.6 (9.7) 3.6 0.0 6.4 49.5 49.5 0.1 57.0 51.3 31.9 2.2 6.8 0.3 4.7 2.6
%YoY 173.5 331.8 369.9 87.9 (17.1) n.m. (876.6) 837.1 837.1 837.1
%QoQ 2.8 34.3 28.9 (1.3) 12.0 n.m. (65.4) (1.3) (1.3) (1.3)
9M16 438.2 215.3 202.0 (30.2) 11.9 0.0 24.1 131.0 131.0 0.3 49.1 46.1 29.9 2.2 5.3 0.3 4.7 2.6
%YoY 146.3 229.7 324.8 80.0 (5.9) n.m. (1,315.8 974.8 974.8 973.3
2016E 654.5 323.0 321.0 (68.3) 12.0 0.0 42.4 198.1 198.1 0.5 49.3 49.1 30.3 2.7 3.8 1.1 5.9 10.7
%YoY 114.7 161.3 190.7 152.6 (31.9) n.m. (1,854.5 324.9 324.9 324.6
YTD 67.0 66.6 62.9 44.2 98.9 n.m. 56.8 66.1 66.1 66.1
Sources: TPCH, KT Zmico Research
Figure 2: TPCH’s projects in the pipeline TPCH1,2,5
160 140
109 109
SGP
100
PGP
TSG MGP
MWE
60 40 20
10
0
7
20
20
16
16
40
30
40
27
20
142
132 132
PTG1
120
80
SP
PTG2
MW
27
50
33
60
38
60
60
38
83
83
53
53
60
38
38
70
85
70
90
85
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Equity MW
Consolidated
Source: TPCH, KT Zmico Research
Figure 3: TPCH’s PER band
Figure 4: TPCH’s PBV band
(X)
(X)
300
5.5
+2.0 S.D.
250
+3.0 S.D.
5.0 +2.0 S.D. 4.5
+1.0 S.D.
150
+1.0 S.D.
4.0
0
3.5 3.0
-1.0 S.D.
2.5
-2.0 S.D.
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Sep-16
Nov-16
Jul-16
Source: Bloomberg, KT Zmico Research
Aug-16
Jun-16
Apr-16
May-16
Jan-16
Mar-16
Dec-15
Oct-15
Nov-15
Sep-15
Jul-15
Jan-15
Sep-16
Nov-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Jan-16
Mar-16
Dec-15
Oct-15
Nov-15
Sep-15
Jul-15
2.0
Aug-15
Apr-15
Mar-15
Jan-15
Feb-15
May-15
-2.0 S.D.
-50
Apr-15
-1.0 S.D.
May-15
50
Avg.
Mar-15
Avg.
Feb-15
100
Aug-15
200
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 Accounts payable 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 180 (117) 64 (41) 44 (22) 23 (23) 16 16 (0) 0 0 (6) 10 0.05 10 0.05 0.00
2014 258 (146) 112 (42) 97 (27) 69 (28) 4 45 7 (2) 0 (21) 29 0.09 29 0.09 0.00
2015 305 (181) 124 (47) 110 (34) 76 (27) 18 67 4 (2) 0 (22) 47 0.12 47 0.12 0.01
2016E 655 (332) 323 (62) 321 (60) 261 (68) 12 205 0 42 0 (49) 198 0.49 198 0.49 0.10
2013 279 14 0 0 718 172 1,183 74 20 413 525 311 658 1,183
2014 1,365 45 0 58 1,256 241 2,966 174 24 730 1,019 400 1,948 2,966
2015 754 95 0 107 1,847 491 3,294 137 43 859 1,157 401 2,137 3,294
2016E 591 108 0 149 4,654 172 5,674 162 46 2,987 3,314 401 2,360 5,674
2013 24 16 22 (26) 36 (131) (6) (136) 48 381 0 (60) 369 268 (100) (0.36)
2014 50 5 27 (0) 82 (844) (46) (891) 526 1,140 0 197 1,864 1,055 (809) (2.60)
2015 68 2 34 (91) 14 (730) (615) (1,345) 89 4 0 66 159 (1,172) (1,331) (3.32)
2016E 247 (42) 60 310 575 (2,867) 0 (2,867) 2,153 0 (40) 16 2,129 (163) (2,292) (5.71)
2013 0.0% 14137%
2014 43.3% 118.5% 80.0% 43.3% 37.4% 26.9% 11.1% 11.1% ‐14.7%
2015 18.1% 14.3% 29.2% 40.5% 36.2% 25.0% 15.3% 15.3% ‐6.0%
2016E 114.7% 190.7% 324.6% 49.3% 49.1% 39.9% 30.3% 30.3% 0.0%
2017E 1,378 (667) 711 (71) 759 (118) 640 (96) 0 544 0 65 0 (186) 422 1.05 422 1.05 0.32
2017E 820 227 0 189 6,885 172 8,294 329 93 4,849 5,389 401 2,905 8,294
2018E 901 414 0 209 6,690 172 8,386 708 183 4,083 5,092 401 3,294 8,386
2017E 608 (65) 118 (73) 590 (2,350) 24 (2,326) 2,029 0 (74) 10 1,965 229 (1,736) (4.33)
35.2% 24.5% 12.6% 5.4% 5.4% 1.7%
2018E 2,517 (1,303) 1,214 (77) 1,332 (195) 1,137 (149) 0 987 0 59 0 (357) 689 1.72 689 1.72 0.69
2018E 1,046 (59) 195 (97) 1,085 0 40 40 (387) 0 (300) (357) (1,044) 81 1,125 2.80
2017E 110.6% 136.3% 113.2% 51.6% 55.0% 46.5% 30.6% 30.6% 0.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2018E 82.6% 75.5% 63.1% 48.2% 52.9% 45.2% 27.4% 27.4% 0.0%
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, PACE, TPOLY, M‐CHAI, TFD, SUTHA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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 Bt18.70
Mai ‐ Resources November 11, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Profit rose on capacity expansion Price Performance (%) Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.572
0.990
KT ZMICO vs. consensus Share data
‐14.3%
6.1%
Reuters / Bloomberg
TPCH.BK/TPCH TB
Paid‐up Shares (m)
401.20
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
8.00/214.00
Foreign limit / actual (%)
49.00/0.03
52 week High / Low (Bt)
20.90/13.60
Avg. daily T/O (shares 000)
3,417.00
NVDR (%)
1.84
Estimated free float (%)
41.71
Beta
1.28
URL
www.tpcpower.co.th
CGR
Anti‐corruption
n.a.
Anapat Wanuschaiyapruk Analyst, no 57076 [email protected] 66 (0) 2-624‐6289
Net profit in 4Q16 is set for a new high The bottom line was reported at Bt49.5mn, surging 837%YoY as capacity expanded three fold. However, it was flat QoQ since TPCH booked an extra benefit last quarter from the change of a PPA from Adder to Fit. Without this item, we should also see QoQ growth. Net profit in 4Q16 is set for a new high as the fourth power plant started operations since 3 October. We estimate 4Q16E net profit at Bt67mn, +95%YoY and 35%QoQ. Excellent utilization rate Revenue increased 174%YoY to Bt155mn. Comparing QoQ, it was flat as no new power plant started operating in 3Q16. CRB power plants operated at an 87% utilization rate, better than 86% in 3Q15 and 84% in 2Q16. MWE (operated since 4Q15) saw its utilization rate dip from 90% to 87%. The MGP power plant (TPCH booked as share of profit) improved from a 42% utilization rate last quarter to 78% in this quarter. However, the bottom line is still not impressive with the share of profit plunging from Bt18mn last quarter to Bt6mn in this quarter. Improving margins The gross and EBITDA margin have kept improving. The GPM expanded 11%YoY and 7%QoQ to 57% while the EBITDA margin grew 21%YoY and 10%QoQ. This was in line with the operating leverage story the company has planned since the beginning. The fourth power plant’s COD The fourth power plant, TSG, started operation on 3 Oct, delayed from our assumption of 15 Aug. We factor in the delay and it results in a slight earnings cut by 3% this year. There is no impact to our 17E TP. Recommend Outperform…wait and see for MSW power plant TPCH is constructing two 9.9MW power plants and expects to see development of a SPP power plant in the three southern border provinces soon. These projects will deliver net profit growth of 65% during 17E – 19E. The current share price is trading at 38x 16E PER and will continue to decline to 10.89x in 18E. Even though our 17E TP provides upside of only 5%, we think it’s worth waiting and seeing the potential of the MSW projects. We therefore revise down our recommendation from Buy to Outperform. Financials and Valuation FY Ended 31 Dec Revenues (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 258 29 0.09 80.0% 0.00 4.87 2014 207.8 76.18 3.84 0.0% 2.5% ‐24%
2015 305 47 0.12 29.2% 0.01 5.33 2015 160.8 66.63 3.51 0.1% 2.7% 11%
2016E 655 198 0.49 324.6% 0.10 5.88 2016E 37.88 22.92 3.18 0.5% 10.7% 108%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 1,378 422 1.05 113.2% 0.32 7.24 2017E 17.77 9.70 2.58 1.7% 21.0% 150%
2018E 2,517 689 1.72 63.1% 0.69 8.21 2018E 10.89 5.53 2.28 3.7% 31.1% 118%
Figure 1: TPCH’s 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax 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 (%)
3Q15 56.7 20.5 16.9 (5.1) 4.4 1.0 (0.8) 5.3 5.3 0.0 36.1 29.9 9.3 5.3 1.8 0.1 4.3 0.3
2Q16 150.9 65.9 61.8 (9.8) 3.2 0.0 18.4 50.2 50.2 0.1 43.7 41.0 33.3 2.9 4.9 0.2 4.6 2.7
3Q16 155.2 88.5 79.6 (9.7) 3.6 0.0 6.4 49.5 49.5 0.1 57.0 51.3 31.9 2.2 6.8 0.3 4.7 2.6
%YoY 173.5 331.8 369.9 87.9 (17.1) n.m. (876.6) 837.1 837.1 837.1
%QoQ 2.8 34.3 28.9 (1.3) 12.0 n.m. (65.4) (1.3) (1.3) (1.3)
9M16 438.2 215.3 202.0 (30.2) 11.9 0.0 24.1 131.0 131.0 0.3 49.1 46.1 29.9 2.2 5.3 0.3 4.7 2.6
%YoY 146.3 229.7 324.8 80.0 (5.9) n.m. (1,315.8 974.8 974.8 973.3
2016E 654.5 323.0 321.0 (68.3) 12.0 0.0 42.4 198.1 198.1 0.5 49.3 49.1 30.3 2.7 3.8 1.1 5.9 10.7
%YoY 114.7 161.3 190.7 152.6 (31.9) n.m. (1,854.5 324.9 324.9 324.6
YTD 67.0 66.6 62.9 44.2 98.9 n.m. 56.8 66.1 66.1 66.1
Sources: TPCH, KT Zmico Research
Figure 2: TPCH’s projects in the pipeline TPCH1,2,5
160 140
109 109
SGP
100
PGP
TSG MGP
MWE
60 40 20
10
0
7
20
20
16
16
40
30
40
27
20
142
132 132
PTG1
120
80
SP
PTG2
MW
27
50
33
60
38
60
60
38
83
83
53
53
60
38
38
70
85
70
90
85
3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17 3Q17 4Q17 1Q18 2Q18 3Q18 4Q18 1Q19 2Q19 3Q19 4Q19 Equity MW
Consolidated
Source: TPCH, KT Zmico Research
Figure 3: TPCH’s PER band
Figure 4: TPCH’s PBV band
(X)
(X)
300
5.5
+2.0 S.D.
250
+3.0 S.D.
5.0 +2.0 S.D. 4.5
+1.0 S.D.
150
+1.0 S.D.
4.0
0
3.5 3.0
-1.0 S.D.
2.5
-2.0 S.D.
Source: Bloomberg, KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Sep-16
Nov-16
Jul-16
Source: Bloomberg, KT Zmico Research
Aug-16
Jun-16
Apr-16
May-16
Jan-16
Mar-16
Dec-15
Oct-15
Nov-15
Sep-15
Jul-15
Jan-15
Sep-16
Nov-16
Jul-16
Aug-16
Jun-16
Apr-16
May-16
Jan-16
Mar-16
Dec-15
Oct-15
Nov-15
Sep-15
Jul-15
2.0
Aug-15
Apr-15
Mar-15
Jan-15
Feb-15
May-15
-2.0 S.D.
-50
Apr-15
-1.0 S.D.
May-15
50
Avg.
Mar-15
Avg.
Feb-15
100
Aug-15
200
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 Accounts payable 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 180 (117) 64 (41) 44 (22) 23 (23) 16 16 (0) 0 0 (6) 10 0.05 10 0.05 0.00
2014 258 (146) 112 (42) 97 (27) 69 (28) 4 45 7 (2) 0 (21) 29 0.09 29 0.09 0.00
2015 305 (181) 124 (47) 110 (34) 76 (27) 18 67 4 (2) 0 (22) 47 0.12 47 0.12 0.01
2016E 655 (332) 323 (62) 321 (60) 261 (68) 12 205 0 42 0 (49) 198 0.49 198 0.49 0.10
2013 279 14 0 0 718 172 1,183 74 20 413 525 311 658 1,183
2014 1,365 45 0 58 1,256 241 2,966 174 24 730 1,019 400 1,948 2,966
2015 754 95 0 107 1,847 491 3,294 137 43 859 1,157 401 2,137 3,294
2016E 591 108 0 149 4,654 172 5,674 162 46 2,987 3,314 401 2,360 5,674
2013 24 16 22 (26) 36 (131) (6) (136) 48 381 0 (60) 369 268 (100) (0.36)
2014 50 5 27 (0) 82 (844) (46) (891) 526 1,140 0 197 1,864 1,055 (809) (2.60)
2015 68 2 34 (91) 14 (730) (615) (1,345) 89 4 0 66 159 (1,172) (1,331) (3.32)
2016E 247 (42) 60 310 575 (2,867) 0 (2,867) 2,153 0 (40) 16 2,129 (163) (2,292) (5.71)
2013 0.0% 14137%
2014 43.3% 118.5% 80.0% 43.3% 37.4% 26.9% 11.1% 11.1% ‐14.7%
2015 18.1% 14.3% 29.2% 40.5% 36.2% 25.0% 15.3% 15.3% ‐6.0%
2016E 114.7% 190.7% 324.6% 49.3% 49.1% 39.9% 30.3% 30.3% 0.0%
2017E 1,378 (667) 711 (71) 759 (118) 640 (96) 0 544 0 65 0 (186) 422 1.05 422 1.05 0.32
2017E 820 227 0 189 6,885 172 8,294 329 93 4,849 5,389 401 2,905 8,294
2018E 901 414 0 209 6,690 172 8,386 708 183 4,083 5,092 401 3,294 8,386
2017E 608 (65) 118 (73) 590 (2,350) 24 (2,326) 2,029 0 (74) 10 1,965 229 (1,736) (4.33)
35.2% 24.5% 12.6% 5.4% 5.4% 1.7%
2018E 2,517 (1,303) 1,214 (77) 1,332 (195) 1,137 (149) 0 987 0 59 0 (357) 689 1.72 689 1.72 0.69
2018E 1,046 (59) 195 (97) 1,085 0 40 40 (387) 0 (300) (357) (1,044) 81 1,125 2.80
2017E 110.6% 136.3% 113.2% 51.6% 55.0% 46.5% 30.6% 30.6% 0.0%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2018E 82.6% 75.5% 63.1% 48.2% 52.9% 45.2% 27.4% 27.4% 0.0%
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, PACE, TPOLY, M‐CHAI, TFD, SUTHA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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
