Precious Shipping
stock
Precious Shipping Company Update
Underperform (17E TP Bt6.00) Close Bt6.25
Transport & Logistics November 4, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Weak results continued Price Performance (%)
Maintain “Underperform” rating PSL still reported a net loss in 3Q16 and we expect the loss to continue in 2017E as the TC rate’s improvement is unlikely to be enough for a turnaround. We thus maintain our “Underperform” rating for PSL with the 2017E TP lowered slightly to Bt6.00 (based on 0.7x P/BV, ‐1.0SD), vs. Bt6.20 previously, owing to the downward earnings revision in 2016E. Normalized loss lower QoQ PSL reported a net loss of Bt860mn in 3Q16, including an extra loss of Bt615mn from the loss of six vessels sold in the quarter (Bt324mn) and an impairment loss for a further two vessels that PSL expects to sell in 2016‐17 (Bt291mn). Stripping out extra items, PSL delivered a normalized loss of Bt245mn, still increasing by 35% YoY but lower by 28% QoQ owing to a better TC rate to US$6,955/vessel/day, ‐5% YoY +11% QoQ, in line with the BDI improvement to 736 points (‐24% YoY, +20% QoQ). Meanwhile, OPEX also fell to US$4,455, ‐4% YoY and ‐2% QoQ. As of Sep‐ 16, PSL’s fleet stood at 36 vessels, vs. 45 vessels as of 2015.
Source: SET Smart
FY16
Consensus EPS (Bt)
‐1.390
‐0.390
KT ZMICO vs. consensus Share data
23.7%
‐20.5%
Reuters / Bloomberg
D/E increased but still below 1x Despite the weakening performance, as of 3Q16, PSL’s D/E increased just slightly to 0.9x, vs. 0.8x in 2Q16.
FY17
PSL.BK/PSL TB
Paid‐up Shares (m)
1,559.28
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
10.00/279.00
Foreign limit / actual (%)
49.00/24.93
52 week High / Low (Bt)
7.75/4.66
Avg. daily T/O (shares 000) NVDR (%)
4,520.00 5.98
Estimated free float (%)
48.08
Beta
1.19
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
4Q16E earnings to still be in the red, but loss to be lower QoQ For 9M16, PSL posted a normalized loss of Bt1.1bn, 89% of our norm. loss estimate of Bt1.3bn for the whole year. QTD, the BDI continued to improve to 828 points (+29% YoY, +12% QoQ) owing to seasonal demand for coal and iron ore, especially for the Capesize sector. On the other hand, supply growth has been disappointing (+1.8% in 9M16) owing to slow vessel scrapping transactions. PSL now expects supply volume growth of +2.8% in 2016E (vs. +1.5% previously expected and higher than +2.5% in 2015). As a result, we expect PSL’s TC rate to continue improving QoQ in 4Q16E, but not enough for a turnaround to profit. We thus maintain our norm. loss projection in 2016‐17E. Revise up net loss in 2016E to Bt2.7bn However, after including the loss from vessels sold and the impairment loss booked in 3Q16, we revise up the net loss in 2016E to Bt2.7bn, vs. Bt2.5bn previously expected. 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 (%)
2014 4,585 (80) (0.08) (76) (0.07) (81.87) 0.20 14.70 2014 n.m. 0.43 11.14 3.20 (0.49) 74.44
2015 4,257 (2,426) (1.56) (1,286) (0.82) n.m. 0.00 10.57 2015 n.m. 0.59 26.86 0.00 (8.09) 87.07
2016E 4,333 (2,689) (1.72) (1,288) (0.83) 0.14 0.00 8.85 2016E n.m. 0.71 23.44 0.00 (8.50) 104.76
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 5,117 (490) (0.31) (490) (0.31) (61.90) 0.00 8.53 2017E n.m. 0.73 10.40 0.00 (3.62) 100.87
2018E 6,382 724 0.46 724 0.46 n.m. 0.32 8.67 2018E 13.47 0.72 5.74 5.20 5.39 85.49
Figure 1: PSL’s P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2017E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD
2.5 2.0 +2 S.D. 1.5
+1 S.D. +0.5 S.D.
Avg.
1.0 -0.5 S.D.
Aug-16
Oct-15
Mar-16
May-15
Jun-14
Nov-14
Jul-13
Jan-14
Feb-13
Sep-12
Oct-11
Apr-12
May-11
Jul-10
Dec-10
Aug-09
Oct-08
Mar-09
Apr-08
Nov-07
Jan-07
Jun-07
0.0
Jan-10
-1S.D.
0.5
P/BV (x) 1.30 1.15 1.00 0.85 0.70 0.55 0.40
Implied market price* (Bt) 11.05 9.77 8.49 7.22 5.94 4.66 3.38
Upside/Downside vs. current market price (%) 76.9 56.4 35.9 15.4 (5.0) (25.5) (46.0)
Source: Bloomberg
Figure 2: 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Forex gain (loss) Other extra items Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%)
3Q15 1,237 57 (98) 348 (144) 0 0 6 ‐ (176) (181) ( 0.11)
2Q16 929 (62) (84) 196 (198) 8 ‐ (4) (133) (475) (338) (0.30)
3Q16 929 25 (82) 267 (195) 5 0 1 (615) (860) (245) (0.55)
% YoY (24.9) (57.1) (15.6) (23.3) 35.8 n.m. (97.9) n.m. n.m. 389.8 35.4 389.8
% QoQ 0.0 n.m. (2.1) 36.0 (1.5) (43.6) n.m. n.m. 363.4 80.8 (27.5) 80.8
9M16 2,661 (313) (283) 458 (591) 44 0 23 (1,424) (2,546) (1,146) (1.63)
% YoY (15.8) 65.5 2.0 (27.4) 43.0 3,537.9 (100.2) n.m. n.m. 178.7 30.7 135.4
2016E 4,333 (204) (388) 894 (743) 44 ‐ 22 (1,424) (2,689) (1,288) (1.72)
YTD % of 16E 61.4 153.5 73.0 51.3 79.5 99.9 ‐ 103.6 100.0 94.7 89.0 94.7
4.6 28.1 (14.6) 0.6 (0.3) 0.8 11.6 (4.1)
(6.7) 21.1 (36.4) 1.7 (0.7) 0.8 9.2 (9.2)
2.6 28.7 (26.4) 1.5 (0.3) 0.9 8.5 (7.1)
(11.8) 17.2 (43.1) 1.5 (1.0) 0.9 8.5 (10.3)
(4.7) 20.6 (29.7) 0.6 (0.8) 1.1 8.9 (8.5)
Source: PSL, KT ZMICO Research
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)
2013 3,869 (3,528) 341 (330) 1,158 (1,146) 12 (459) 11 (436) 13 935 528 0.51 0.51 (421) (0.40) 0.40 2013 2,942 102 20,050 2,416 25,510 654 8,619 9,879 10 15,621 25,510 2013 528 1,146 220 (880) 1,013 (3,125) 4,325 1,200 (756) 0 (415) (1,171) 1,041 2,213 2.13 2013 10.6 (1.9) 165.1 8.8 29.9 0.3 (10.9) (2.0) 2013 0.37 0.41
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
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
2016E 4,333 (4,536) (204) (388) 894 (1,486) (592) (743) 44 (1,291) 22 (1,424) (2,689) (1.72) (1.72) (1,288) (0.83) 0.00
2014 535 115 26,085 1,173 27,909 812 11,101 12,625 (1) 15,285 27,909
2015 454 143 29,782 2,080 32,458 5,604 9,206 15,972 (2) 16,488 32,458
2016E 517 86 27,103 2,129 29,834 1,362 13,610 16,037 (2) 13,799 29,834
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)
2015 (2,426) 1,506 780 1,186 1,046 (4,422) 860 (3,561) 359 2,076 0 2,435 (81) (2,516) (1.61)
2016E (2,689) 1,486 (89) 1,424 132 (1,200) 968 (232) 163 0 0 163 62 (100) (0.06)
2014 18.5 38.6 (81.9) 12.9 35.0 7.3 (1.7) (2.9)
2015 (7.2) (51.6) 1,023.4 (7.9) 18.2 (17.1) (30.2) (0.1)
2016E 1.8 15.2 0.1 (4.7) 20.6 (13.7) (29.7) 0.0
2014 0.44 0.74
2015 0.47 0.87
2016E 0.52 1.05
2017E 5,117 (4,395) 722 (458) 1,915 (1,651) 264 (770) 12 (495) 0 0 (490) (0.31) (0.31) (490) (0.31) 0.00 2017E 273 77 25,668 2,182 28,200 1,369 12,329 14,894 (2) 13,308 28,200 2017E (490) 1,651 87 0 1,248 (217) 0 (217) (1,275) 0 0 (1,275) (243) 1,031 0.66 2017E 18.1 114.2 (61.9) 14.1 37.4 5.2 (9.6) 0.0 2017E 0.51 1.01
2018E 6,382 (4,379) 2,002 (571) 3,148 (1,717) 1,431 (732) 19 718 0 0 724 0.46 0.46 724 0.46 0.32 2018E 982 75 24,086 2,266 27,410 1,385 11,161 13,886 (2) 13,525 27,410 2018E 724 1,717 63 0 2,503 (389) 0 (389) (1,152) 0 (253) (1,406) 709 2,115 1.36
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2018E 24.7 64.4 n.m. 31.4 49.3 22.4 11.3 0.0 2018E 0.48 0.85
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. KT ZMICO is a co‐underwriter of ALLA.
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
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th
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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
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Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
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.
Precious Shipping Company Update
Underperform (17E TP Bt6.00) Close Bt6.25
Transport & Logistics November 4, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Weak results continued Price Performance (%)
Maintain “Underperform” rating PSL still reported a net loss in 3Q16 and we expect the loss to continue in 2017E as the TC rate’s improvement is unlikely to be enough for a turnaround. We thus maintain our “Underperform” rating for PSL with the 2017E TP lowered slightly to Bt6.00 (based on 0.7x P/BV, ‐1.0SD), vs. Bt6.20 previously, owing to the downward earnings revision in 2016E. Normalized loss lower QoQ PSL reported a net loss of Bt860mn in 3Q16, including an extra loss of Bt615mn from the loss of six vessels sold in the quarter (Bt324mn) and an impairment loss for a further two vessels that PSL expects to sell in 2016‐17 (Bt291mn). Stripping out extra items, PSL delivered a normalized loss of Bt245mn, still increasing by 35% YoY but lower by 28% QoQ owing to a better TC rate to US$6,955/vessel/day, ‐5% YoY +11% QoQ, in line with the BDI improvement to 736 points (‐24% YoY, +20% QoQ). Meanwhile, OPEX also fell to US$4,455, ‐4% YoY and ‐2% QoQ. As of Sep‐ 16, PSL’s fleet stood at 36 vessels, vs. 45 vessels as of 2015.
Source: SET Smart
FY16
Consensus EPS (Bt)
‐1.390
‐0.390
KT ZMICO vs. consensus Share data
23.7%
‐20.5%
Reuters / Bloomberg
D/E increased but still below 1x Despite the weakening performance, as of 3Q16, PSL’s D/E increased just slightly to 0.9x, vs. 0.8x in 2Q16.
FY17
PSL.BK/PSL TB
Paid‐up Shares (m)
1,559.28
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
10.00/279.00
Foreign limit / actual (%)
49.00/24.93
52 week High / Low (Bt)
7.75/4.66
Avg. daily T/O (shares 000) NVDR (%)
4,520.00 5.98
Estimated free float (%)
48.08
Beta
1.19
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
4Q16E earnings to still be in the red, but loss to be lower QoQ For 9M16, PSL posted a normalized loss of Bt1.1bn, 89% of our norm. loss estimate of Bt1.3bn for the whole year. QTD, the BDI continued to improve to 828 points (+29% YoY, +12% QoQ) owing to seasonal demand for coal and iron ore, especially for the Capesize sector. On the other hand, supply growth has been disappointing (+1.8% in 9M16) owing to slow vessel scrapping transactions. PSL now expects supply volume growth of +2.8% in 2016E (vs. +1.5% previously expected and higher than +2.5% in 2015). As a result, we expect PSL’s TC rate to continue improving QoQ in 4Q16E, but not enough for a turnaround to profit. We thus maintain our norm. loss projection in 2016‐17E. Revise up net loss in 2016E to Bt2.7bn However, after including the loss from vessels sold and the impairment loss booked in 3Q16, we revise up the net loss in 2016E to Bt2.7bn, vs. Bt2.5bn previously expected. 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 (%)
2014 4,585 (80) (0.08) (76) (0.07) (81.87) 0.20 14.70 2014 n.m. 0.43 11.14 3.20 (0.49) 74.44
2015 4,257 (2,426) (1.56) (1,286) (0.82) n.m. 0.00 10.57 2015 n.m. 0.59 26.86 0.00 (8.09) 87.07
2016E 4,333 (2,689) (1.72) (1,288) (0.83) 0.14 0.00 8.85 2016E n.m. 0.71 23.44 0.00 (8.50) 104.76
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 5,117 (490) (0.31) (490) (0.31) (61.90) 0.00 8.53 2017E n.m. 0.73 10.40 0.00 (3.62) 100.87
2018E 6,382 724 0.46 724 0.46 n.m. 0.32 8.67 2018E 13.47 0.72 5.74 5.20 5.39 85.49
Figure 1: PSL’s P/BV band and sensitivity of market prices based on P/BV at different standard deviation levels (X)
2017E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD
2.5 2.0 +2 S.D. 1.5
+1 S.D. +0.5 S.D.
Avg.
1.0 -0.5 S.D.
Aug-16
Oct-15
Mar-16
May-15
Jun-14
Nov-14
Jul-13
Jan-14
Feb-13
Sep-12
Oct-11
Apr-12
May-11
Jul-10
Dec-10
Aug-09
Oct-08
Mar-09
Apr-08
Nov-07
Jan-07
Jun-07
0.0
Jan-10
-1S.D.
0.5
P/BV (x) 1.30 1.15 1.00 0.85 0.70 0.55 0.40
Implied market price* (Bt) 11.05 9.77 8.49 7.22 5.94 4.66 3.38
Upside/Downside vs. current market price (%) 76.9 56.4 35.9 15.4 (5.0) (25.5) (46.0)
Source: Bloomberg
Figure 2: 3Q16 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit SG&A expenses EBITDA Interest expenses Other income Income tax Forex gain (loss) Other extra items Net profit (loss) Normalized profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt/equity (x) BVPS (Bt) ROE (%)
3Q15 1,237 57 (98) 348 (144) 0 0 6 ‐ (176) (181) ( 0.11)
2Q16 929 (62) (84) 196 (198) 8 ‐ (4) (133) (475) (338) (0.30)
3Q16 929 25 (82) 267 (195) 5 0 1 (615) (860) (245) (0.55)
% YoY (24.9) (57.1) (15.6) (23.3) 35.8 n.m. (97.9) n.m. n.m. 389.8 35.4 389.8
% QoQ 0.0 n.m. (2.1) 36.0 (1.5) (43.6) n.m. n.m. 363.4 80.8 (27.5) 80.8
9M16 2,661 (313) (283) 458 (591) 44 0 23 (1,424) (2,546) (1,146) (1.63)
% YoY (15.8) 65.5 2.0 (27.4) 43.0 3,537.9 (100.2) n.m. n.m. 178.7 30.7 135.4
2016E 4,333 (204) (388) 894 (743) 44 ‐ 22 (1,424) (2,689) (1,288) (1.72)
YTD % of 16E 61.4 153.5 73.0 51.3 79.5 99.9 ‐ 103.6 100.0 94.7 89.0 94.7
4.6 28.1 (14.6) 0.6 (0.3) 0.8 11.6 (4.1)
(6.7) 21.1 (36.4) 1.7 (0.7) 0.8 9.2 (9.2)
2.6 28.7 (26.4) 1.5 (0.3) 0.9 8.5 (7.1)
(11.8) 17.2 (43.1) 1.5 (1.0) 0.9 8.5 (10.3)
(4.7) 20.6 (29.7) 0.6 (0.8) 1.1 8.9 (8.5)
Source: PSL, KT ZMICO Research
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)
2013 3,869 (3,528) 341 (330) 1,158 (1,146) 12 (459) 11 (436) 13 935 528 0.51 0.51 (421) (0.40) 0.40 2013 2,942 102 20,050 2,416 25,510 654 8,619 9,879 10 15,621 25,510 2013 528 1,146 220 (880) 1,013 (3,125) 4,325 1,200 (756) 0 (415) (1,171) 1,041 2,213 2.13 2013 10.6 (1.9) 165.1 8.8 29.9 0.3 (10.9) (2.0) 2013 0.37 0.41
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
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
2016E 4,333 (4,536) (204) (388) 894 (1,486) (592) (743) 44 (1,291) 22 (1,424) (2,689) (1.72) (1.72) (1,288) (0.83) 0.00
2014 535 115 26,085 1,173 27,909 812 11,101 12,625 (1) 15,285 27,909
2015 454 143 29,782 2,080 32,458 5,604 9,206 15,972 (2) 16,488 32,458
2016E 517 86 27,103 2,129 29,834 1,362 13,610 16,037 (2) 13,799 29,834
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)
2015 (2,426) 1,506 780 1,186 1,046 (4,422) 860 (3,561) 359 2,076 0 2,435 (81) (2,516) (1.61)
2016E (2,689) 1,486 (89) 1,424 132 (1,200) 968 (232) 163 0 0 163 62 (100) (0.06)
2014 18.5 38.6 (81.9) 12.9 35.0 7.3 (1.7) (2.9)
2015 (7.2) (51.6) 1,023.4 (7.9) 18.2 (17.1) (30.2) (0.1)
2016E 1.8 15.2 0.1 (4.7) 20.6 (13.7) (29.7) 0.0
2014 0.44 0.74
2015 0.47 0.87
2016E 0.52 1.05
2017E 5,117 (4,395) 722 (458) 1,915 (1,651) 264 (770) 12 (495) 0 0 (490) (0.31) (0.31) (490) (0.31) 0.00 2017E 273 77 25,668 2,182 28,200 1,369 12,329 14,894 (2) 13,308 28,200 2017E (490) 1,651 87 0 1,248 (217) 0 (217) (1,275) 0 0 (1,275) (243) 1,031 0.66 2017E 18.1 114.2 (61.9) 14.1 37.4 5.2 (9.6) 0.0 2017E 0.51 1.01
2018E 6,382 (4,379) 2,002 (571) 3,148 (1,717) 1,431 (732) 19 718 0 0 724 0.46 0.46 724 0.46 0.32 2018E 982 75 24,086 2,266 27,410 1,385 11,161 13,886 (2) 13,525 27,410 2018E 724 1,717 63 0 2,503 (389) 0 (389) (1,152) 0 (253) (1,406) 709 2,115 1.36
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
2018E 24.7 64.4 n.m. 31.4 49.3 22.4 11.3 0.0 2018E 0.48 0.85
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. KT ZMICO is a co‐underwriter of ALLA.
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
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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.
