Precious Shipping
stock
Precious Shipping Company Update
Outperform (18E TP Bt11.60) Close Bt9.95
Transport & Logistics August 9, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Light at the end of the tunnel Price Performance (%)
Maintain “Outperform” and shift to 18E TP at Bt11.60 We maintain our “Outperform” rating for PSL with the target price shifted to the 2018E performance at Bt11.60, vs. the 2017E TP at Bt9.80, based on P/BV of 1.3x (+1.0 SD of historical average) to reflect potential improvement in PSL’s earnings as well as the BDI. BDI to enter high season in 2H17 We expect the BDI and PSL’s earnings to continue improving in 2H17E upon entering the high season of the bulk ship industry (given the grain export season in the Northern Hemisphere in Aug‐Oct and higher coal demand before the winter season). Meanwhile, PSL believes that higher coal and steel demand from China is likely to be sustained in the longer term owing to the country’s policy to focus on high‐quality steel, the ban on imported coal from North Korea, and higher steel demand for the One Belt, One Road Project. Supply constraints likely in 2020 from environmental regulations Currently, PSL expects bulk ship supply growth of +3.7% and +0.6% in 2017‐18E. However, supply growth is likely to be much slower (or decrease) in 2020 owing to environmental regulations that will increase costs for bulk ship operators and may lead to more vessel scrapping. These regulations consist of the Ballast Water Management Convention (BWMC) and Clean Oil Burning.
Source: SET Smart
FY17
Consensus EPS (Bt) KT ZMICO vs. consensus Share data Reuters / Bloomberg
FY18
‐0.220
0.078
‐154.5%
169.2%
PSL.BK/PSL TB
Paid‐up Shares (m)
1,559.28
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
16.00/467.00
Foreign limit / actual (%)
49.00/25.30
52 week High / Low (Bt)
11.80/5.05
Avg. daily T/O (shares 000) NVDR (%)
5,525.00 6.88
Estimated free float (%)
41.28
Beta
0.86
URL
www.preciousshipping.com
CGR Anti‐corruption
Level 4 (Certified)
Note: An executive of KT ZMICO Securities is also a member of PSL’s board. Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Downward earnings projections We lower PSL’s normalized profit in 2017‐18E to Bt149mn and Bt323mn, respectively, vs. Bt183mn and Bt724mn previously, to reflect: 1) the change of the Bt/US$ assumptions in 2017/18E to 34.50/34.20, vs. 35.50/35.00 previously, 2) the upward revision to OPEX (US$/day/ship) to US$4,400/US$4,500, vs. US$4,200/US$4,300 previously, and 3) the upward revision of interest expenses in 2017‐18E owing to additional long‐term loans in 1H17. Meanwhile, we lower PSL’s fleet in 2018E to 36 vessels, vs. 37 vessels previously, as PSL decided to cancel the new vessel scheduled to be received in 1Q18. In 2017‐18E, we assume a TC rate of US$9,500 (+47% YoY, vs. US$8,897 in 1H17) and US$10,000 (+5% YoY) for PSL, respectively. According to PSL, a TC rate at US$9,300‐9,400 is likely to be the breakeven level for net profit. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) P/BV (x) EV/EBITDA (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 4,257 (2,426) (1.56) (1,286) (0.82) n.m. 0.00 10.57
2016 3,690 (2,665) (1.71) (1,284) (0.82) n.m. 0.00 8.74
2017E 4,587 189 0.12 149 0.10 n.m. 0.00 8.86
2018E 4,733 323 0.21 323 0.21 117.59 0.00 8.93
2019E 5,313 771 0.49 771 0.49 138.52 0.00 9.07
2015 n.m. 0.92 31.82 0.00 (8.09) 87.07
2016 n.m. 1.14 30.13 0.00 (8.53) 106.70
2017E n.m. 1.12 11.27 0.00 1.08 97.00
2018E 47.97 1.11 9.60 0.00 2.33 85.01
2019E 20.11 1.10 7.25 0.00 5.50 68.95
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: PSL’s P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2017E +1.5SD +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD
2.5 2.0 +2 S.D. 1.5
+1 S.D. +0.5 S.D.
Avg.
1.0 -0.5 S.D.
Jul-17
Dec-16
Nov-15
May-16
Oct-14
Apr-15
Mar-14
Aug-13
Jul-12
Feb-13
Jun-11
Dec-11
Nov-10
Oct-09
Mar-09
Aug-08
Jul-07
Feb-08
Jan-07
0.0
Apr-10
-1S.D.
0.5
P/BV (x) 1.43 1.28 1.13 0.98 0.82 0.67 0.52
Implied market price* (Bt) 12.68 11.34 10.00 8.65 7.31 5.97 4.62
Upside/Downside vs. current market price (%) 27.5 14.0 0.5 (13.0) (26.5) (40.0) (53.6)
Source: Bloomberg
Figure 2: Major assumptions behind earnings forecasts for PSL 2017E
Number of vessels (yearend) Bt/US$ Average TC rate (US$/day) Operating expenses (US$/day) Normalized profit (Btmn) Net profit (Btmn)
Current 36 34.50 9,500 4,400 149 189
Previous 36 35.50 9,000 4,200 183 202
2018E
% chg 0.0 (2.8) 5.5 4.8 (18.6) (6.4)
Current 36 34.20 10,000 4,500 323 323
Previous 37 35.00 10,000 4,300 724 724
% chg (2.7) (2.3) 0.0 4.8 (55.3) (55.3)
Source: PSL, KT ZMICO Research
Figure 3: Baltic Dry Index (BDI) ‐ Seasonality
Source: PSL
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
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 Forex gain (loss) Extra items Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) Norm. EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x)
2014 4,585 (3,995) 590 (254) 1,604 (1,268) 336 (425) 5 (84) 4 (8) (80) (0.08) (0.08) (76) (0.07) 0.20 2014 535 115 26,085 1,173 27,909 812 11,101 12,625 (1) 15,285 27,909 2014 (80) 1,268 101 55 1,345 (7,019) 1,507 (5,512) 2,081 0 (321) 1,759 (2,407) (4,167) (4.01) 2014 18.5 38.6 n.m. 12.9 35.0 7.3 (1.7) (2.9) 2014 0.44 0.74
2015 4,257 (4,594) (338) (392) 776 (1,506) (730) (565) 2 (1,292) (25) (1,115) (2,426) (1.56) (1.56) (1,286) (0.82) 0.00
2016 3,690 (3,858) (168) (373) 826 (1,367) (541) (798) 54 (1,285) 45 (1,426) (2,665) (1.71) (1.71) (1,284) (0.82) 0.00
2017E 4,587 (3,240) 1,348 (390) 2,107 (1,149) 958 (853) 28 132 (9) 49 189 0.12 0.12 149 0.10 0.00
2015 454 143 29,782 2,080 32,458 5,604 9,206 15,972 (2) 16,488 32,458
2016 2,712 41 28,384 1,179 32,316 887 16,371 18,683 0 13,633 32,316
2017E 2,527 50 27,370 1,276 31,223 1,370 14,564 17,402 (0) 13,822 31,223
2015 (2,426) 1,506 780 1,186 1,046 (4,422) 860 (3,561) 359 2,076 (1) 2,434 (81) (2,516) (1.61)
2016 (2,665) 1,367 512 1,479 693 (2,689) 1,884 (806) 2,334 0 0 2,334 2,222 (112) (0.07)
2017E 189 1,149 (63) 0 1,275 (732) 597 (135) (1,325) 0 0 (1,325) (184) 1,140 0.73
2015 (7.2) (51.6) n.m. (7.9) 18.2 (17.1) (30.2) (0.1)
2016 (13.3) 6.4 n.m. (4.5) 22.4 (14.7) (34.8) (0.0)
2017E 24.3 155.0 n.m. 29.4 45.9 20.9 3.2 (0.0)
2015 0.47 0.87
2016 0.56 1.07
2017E 0.54 0.97
2018E 4,733 (3,217) 1,516 (421) 2,310 (1,215) 1,096 (818) 28 306 0 0 323 0.21 0.21 323 0.21 0.00 2018E 2,732 48 26,029 1,283 30,092 1,361 13,203 16,173 (1) 13,919 30,091 2018E 323 1,215 136 0 1,674 (100) 0 (100) (1,370) 0 0 (1,370) 204 1,574 1.01 2018E 3.2 9.7 117.59 32.0 48.8 23.1 6.8 (0.0) 2018E 0.51 0.85
2019E 5,313 (3,347) 1,966 (472) 2,774 (1,280) 1,494 (775) 33 752 0 0 771 0.49 0.49 771 0.49 0.00 2019E 3,447 49 24,307 1,313 29,116 1,361 11,841 14,968 (2) 14,150 29,116 2019E 771 1,280 125 0 2,176 (100) 0 (100) (1,361) 0 0 (1,361) 715 2,076 1.33
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 12.3 20.1 138.52 37.0 52.2 28.1 14.5 (0.0) 2019E 0.48 0.69
Note:
KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors
carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
Precious Shipping Company Update
Outperform (18E TP Bt11.60) Close Bt9.95
Transport & Logistics August 9, 2017
Earnings upgrade/Earnings downgrade/Overview unchanged
Light at the end of the tunnel Price Performance (%)
Maintain “Outperform” and shift to 18E TP at Bt11.60 We maintain our “Outperform” rating for PSL with the target price shifted to the 2018E performance at Bt11.60, vs. the 2017E TP at Bt9.80, based on P/BV of 1.3x (+1.0 SD of historical average) to reflect potential improvement in PSL’s earnings as well as the BDI. BDI to enter high season in 2H17 We expect the BDI and PSL’s earnings to continue improving in 2H17E upon entering the high season of the bulk ship industry (given the grain export season in the Northern Hemisphere in Aug‐Oct and higher coal demand before the winter season). Meanwhile, PSL believes that higher coal and steel demand from China is likely to be sustained in the longer term owing to the country’s policy to focus on high‐quality steel, the ban on imported coal from North Korea, and higher steel demand for the One Belt, One Road Project. Supply constraints likely in 2020 from environmental regulations Currently, PSL expects bulk ship supply growth of +3.7% and +0.6% in 2017‐18E. However, supply growth is likely to be much slower (or decrease) in 2020 owing to environmental regulations that will increase costs for bulk ship operators and may lead to more vessel scrapping. These regulations consist of the Ballast Water Management Convention (BWMC) and Clean Oil Burning.
Source: SET Smart
FY17
Consensus EPS (Bt) KT ZMICO vs. consensus Share data Reuters / Bloomberg
FY18
‐0.220
0.078
‐154.5%
169.2%
PSL.BK/PSL TB
Paid‐up Shares (m)
1,559.28
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
16.00/467.00
Foreign limit / actual (%)
49.00/25.30
52 week High / Low (Bt)
11.80/5.05
Avg. daily T/O (shares 000) NVDR (%)
5,525.00 6.88
Estimated free float (%)
41.28
Beta
0.86
URL
www.preciousshipping.com
CGR Anti‐corruption
Level 4 (Certified)
Note: An executive of KT ZMICO Securities is also a member of PSL’s board. Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Downward earnings projections We lower PSL’s normalized profit in 2017‐18E to Bt149mn and Bt323mn, respectively, vs. Bt183mn and Bt724mn previously, to reflect: 1) the change of the Bt/US$ assumptions in 2017/18E to 34.50/34.20, vs. 35.50/35.00 previously, 2) the upward revision to OPEX (US$/day/ship) to US$4,400/US$4,500, vs. US$4,200/US$4,300 previously, and 3) the upward revision of interest expenses in 2017‐18E owing to additional long‐term loans in 1H17. Meanwhile, we lower PSL’s fleet in 2018E to 36 vessels, vs. 37 vessels previously, as PSL decided to cancel the new vessel scheduled to be received in 1Q18. In 2017‐18E, we assume a TC rate of US$9,500 (+47% YoY, vs. US$8,897 in 1H17) and US$10,000 (+5% YoY) for PSL, respectively. According to PSL, a TC rate at US$9,300‐9,400 is likely to be the breakeven level for net profit. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) P/BV (x) EV/EBITDA (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 4,257 (2,426) (1.56) (1,286) (0.82) n.m. 0.00 10.57
2016 3,690 (2,665) (1.71) (1,284) (0.82) n.m. 0.00 8.74
2017E 4,587 189 0.12 149 0.10 n.m. 0.00 8.86
2018E 4,733 323 0.21 323 0.21 117.59 0.00 8.93
2019E 5,313 771 0.49 771 0.49 138.52 0.00 9.07
2015 n.m. 0.92 31.82 0.00 (8.09) 87.07
2016 n.m. 1.14 30.13 0.00 (8.53) 106.70
2017E n.m. 1.12 11.27 0.00 1.08 97.00
2018E 47.97 1.11 9.60 0.00 2.33 85.01
2019E 20.11 1.10 7.25 0.00 5.50 68.95
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: PSL’s P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2017E +1.5SD +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD
2.5 2.0 +2 S.D. 1.5
+1 S.D. +0.5 S.D.
Avg.
1.0 -0.5 S.D.
Jul-17
Dec-16
Nov-15
May-16
Oct-14
Apr-15
Mar-14
Aug-13
Jul-12
Feb-13
Jun-11
Dec-11
Nov-10
Oct-09
Mar-09
Aug-08
Jul-07
Feb-08
Jan-07
0.0
Apr-10
-1S.D.
0.5
P/BV (x) 1.43 1.28 1.13 0.98 0.82 0.67 0.52
Implied market price* (Bt) 12.68 11.34 10.00 8.65 7.31 5.97 4.62
Upside/Downside vs. current market price (%) 27.5 14.0 0.5 (13.0) (26.5) (40.0) (53.6)
Source: Bloomberg
Figure 2: Major assumptions behind earnings forecasts for PSL 2017E
Number of vessels (yearend) Bt/US$ Average TC rate (US$/day) Operating expenses (US$/day) Normalized profit (Btmn) Net profit (Btmn)
Current 36 34.50 9,500 4,400 149 189
Previous 36 35.50 9,000 4,200 183 202
2018E
% chg 0.0 (2.8) 5.5 4.8 (18.6) (6.4)
Current 36 34.20 10,000 4,500 323 323
Previous 37 35.00 10,000 4,300 724 724
% chg (2.7) (2.3) 0.0 4.8 (55.3) (55.3)
Source: PSL, KT ZMICO Research
Figure 3: Baltic Dry Index (BDI) ‐ Seasonality
Source: PSL
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
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 Forex gain (loss) Extra items Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) Norm. EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x)
2014 4,585 (3,995) 590 (254) 1,604 (1,268) 336 (425) 5 (84) 4 (8) (80) (0.08) (0.08) (76) (0.07) 0.20 2014 535 115 26,085 1,173 27,909 812 11,101 12,625 (1) 15,285 27,909 2014 (80) 1,268 101 55 1,345 (7,019) 1,507 (5,512) 2,081 0 (321) 1,759 (2,407) (4,167) (4.01) 2014 18.5 38.6 n.m. 12.9 35.0 7.3 (1.7) (2.9) 2014 0.44 0.74
2015 4,257 (4,594) (338) (392) 776 (1,506) (730) (565) 2 (1,292) (25) (1,115) (2,426) (1.56) (1.56) (1,286) (0.82) 0.00
2016 3,690 (3,858) (168) (373) 826 (1,367) (541) (798) 54 (1,285) 45 (1,426) (2,665) (1.71) (1.71) (1,284) (0.82) 0.00
2017E 4,587 (3,240) 1,348 (390) 2,107 (1,149) 958 (853) 28 132 (9) 49 189 0.12 0.12 149 0.10 0.00
2015 454 143 29,782 2,080 32,458 5,604 9,206 15,972 (2) 16,488 32,458
2016 2,712 41 28,384 1,179 32,316 887 16,371 18,683 0 13,633 32,316
2017E 2,527 50 27,370 1,276 31,223 1,370 14,564 17,402 (0) 13,822 31,223
2015 (2,426) 1,506 780 1,186 1,046 (4,422) 860 (3,561) 359 2,076 (1) 2,434 (81) (2,516) (1.61)
2016 (2,665) 1,367 512 1,479 693 (2,689) 1,884 (806) 2,334 0 0 2,334 2,222 (112) (0.07)
2017E 189 1,149 (63) 0 1,275 (732) 597 (135) (1,325) 0 0 (1,325) (184) 1,140 0.73
2015 (7.2) (51.6) n.m. (7.9) 18.2 (17.1) (30.2) (0.1)
2016 (13.3) 6.4 n.m. (4.5) 22.4 (14.7) (34.8) (0.0)
2017E 24.3 155.0 n.m. 29.4 45.9 20.9 3.2 (0.0)
2015 0.47 0.87
2016 0.56 1.07
2017E 0.54 0.97
2018E 4,733 (3,217) 1,516 (421) 2,310 (1,215) 1,096 (818) 28 306 0 0 323 0.21 0.21 323 0.21 0.00 2018E 2,732 48 26,029 1,283 30,092 1,361 13,203 16,173 (1) 13,919 30,091 2018E 323 1,215 136 0 1,674 (100) 0 (100) (1,370) 0 0 (1,370) 204 1,574 1.01 2018E 3.2 9.7 117.59 32.0 48.8 23.1 6.8 (0.0) 2018E 0.51 0.85
2019E 5,313 (3,347) 1,966 (472) 2,774 (1,280) 1,494 (775) 33 752 0 0 771 0.49 0.49 771 0.49 0.00 2019E 3,447 49 24,307 1,313 29,116 1,361 11,841 14,968 (2) 14,150 29,116 2019E 771 1,280 125 0 2,176 (100) 0 (100) (1,361) 0 0 (1,361) 715 2,076 1.33
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2019E 12.3 20.1 138.52 37.0 52.2 28.1 14.5 (0.0) 2019E 0.48 0.69
Note:
KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors
carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
KT ZMICO Securities Company Limited Head Office
WWW.KTZMICO.COM
8th, 15th‐17th,19th, 21st Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok, Thailand 10500 Telephone: (66‐2) 695‐5000 Fax: (66‐2) 695‐5173 KT ZMICO Connect 662 695 5555
Central World Branch
Amarin Branch
22nd Floor, Amarin Building, 496‐502 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 018‐6200 Fax: (66‐2) 018‐6298, (66‐2) 018‐6299
8th Floor, Ton Son Tower, 900 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 626‐6000 Fax: (66‐2) 626‐6111
Phaholyothin Branch
Sindhorn Branch
Viphavadee Branch
2nd Floor, Sindhorn Tower 1, 130‐132 Wireless Road, Lumpini, Pathumwan, Bangkok 10330 Telephone: (66‐2) 627‐3550 Fax: (66‐2) 627‐3582, 627‐3600
G Floor, Lao Peng Nguan 1 Bldg., 333 Soi Cheypuand, Viphavadee‐Rangsit Road, Ladyao, Jatujak, Bangkok 10900 Telephone: (66‐2) 013‐8600 Fax: (66‐2) 618‐8569
BangKhae Branch
Chiang Mai Branch
Pak Chong Branch
999/9 The Offices at Central World, 16th Fl., Rama 1 Rd, Pathumwan, Bangkok 10330 Telephone: (66‐2) 264‐5888 Fax: (66‐2) 264 5899
1291/1, Shinnawatra Tower II, 3rd Floor, Phaholyothin Road, Phayathai, Bangkok 10400 Telephone: (66‐2) 686‐1500 Fax: (66‐2) 686‐1666
Ploenchit Branch
518 The Mall Group Building Bangkhae Branch, 6th Floor, Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Telephone: (66‐2) 454‐9979 Fax: (66‐2) 454‐9970
422/49 Changklan Road, Changklan Subdistrict, Amphoe Meuang, Chiang Mai 50100 Telephone: (053) 270‐072 Fax: (053) 272‐618
173 175, Mittapap Road, Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Telephone: (044) 279‐511 Fax: (044) 279‐574
Korat Branch
Khon Kaen Branch
Chonburi Branch
624/9 Changphuek Road, T.Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171
5th Floor, Charoen Thani Princess Hotel, 260 Srichan Road, T. Naimuang, A. Muang, Khon Kaen 40000 Telephone: (043) 389‐171‐193 Fax: (043) 389‐209
4th Floor, Forum Plaza Bldg., 870/52 Sukhumvit Road, T. Bangplasoy, A. Muang, Cholburi 20000 Telephone: (038) 287‐635 Fax: (038) 287‐637
Pattaya Branch
Chachoengsao Branch
Hat Yai Branch
Easy Point 2, 392/65 Moo.9, T.Nong Prue, A. Bang Lamung, Chonburi 20260 Telephone: (038) 420‐965 Fax: (038) 420‐968
108/34‐36 Mahajakkrapad Road, T.Namuang, A.Muang, Chachoengsao 24000 Telephone: (038) 813‐088 Fax: (038) 813‐099
200/301, 200/303 JULDIS HATYAI PLAZA Floor 3 , Niphat‐Uthit 3 Rd, Hatyai Songkhla 90110 Telephone: (074) 355530‐3 Fax: (074) 355534
Phuket Branch
22/61‐63, Luang Por Wat Chalong Road, Talat Yai, Mueang Phuket, Phuket 83000 Telephone: (076) 222‐811, (076) 222‐683 Fax: (076) 222‐861
Phitsanulok Branch
227/171 Borom Trilokkanat Road, Muang, Phitsanulok 65000 Telephone: 055‐219‐255 to 8 Fax: 055‐219‐259
Nakhon Pathom
Cyber Branch Ayutthaya
Cyber Branch @ North Nana
Cyber Branch Chiangrai
KrungThai Bank, Rojana Branch 253 Moo 5, Rojana Road, Phai Ling, Phra Nakhon Si Ayutthaya, Phra Nakhonsi Ayutthaya, 13000 Telephone: 035‐242‐477 Fax: 035‐242‐476
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd., Klong Toey Nua Subdistrict , Wattana District , Bangkok 10110 Telephone: 083‐490‐2871
River Hotel (Building 3rd),1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
KrungThai Bank, Hayaek Phokhun Mengrai Branch 116/19 Moo 19, Highway 110 Road, Rop Wiang, Mueang Chiang Rai, Chiang Rai, 57000 Telephone: 053‐715‐067 Fax: 053‐715‐068
