Sherwood Chemicals - Global Alliance Partners
Sherwood Chemicals Underperform (16E TP Bt11.00)
Company Update
Close Bt11.10
mai ‐ Industrial
Earnings upgrade/Earnings downgrade/Overview unchanged
July 15, 2016
2Q16 net profit to have risen 4% YoY but declined 25%QoQ Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.040
1.220
0%
0%
KT ZMICO vs. consensus Share data Reuters / Bloomberg
SWC.BK/SWC TB
Paid‐up Shares (m)
150.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
2.00/48.00
Foreign limit / actual (%)
49.00/0.02
52 week High / Low (Bt)
11.90/7.20
Avg. daily T/O (shares 000) NVDR (%)
1,129.00 0.42
Estimated free float (%)
37.69
Beta
0.95
URL
www.sherwood.co.th
CGR
Anti‐corruption
n.a.
Downgrade rating to Underperform; fully valued in the short term SWC’s 2Q16E earnings are likely to have remained flat YoY but declined QoQ. In the short term, the share price has already been fully valued vs. our 2016E TP of Bt11/share (10.5x PER). Therefore, we downgrade our rating to “Underperform” (from Buy). We like SWC for its bright earnings outlook, net cash position and expected dividend yield of 5‐6% p.a. in 2016‐17E. We anticipate SWC’sDPS of Bt0.30 for its 1H16 operating performance, implying a dividend yield of 5.2% p.a. 2Q16 net profit to have risen by 4%YoY but dropped by 25%QoQ We expect SWC to post 2Q16 net profit of Bt41mn, up 4%YoY but down 25%QoQ. During the sales season start in May or June to rainy season, the firm needs to launch promotional campaigns or offer special freebies in order to maintain its sales growth. The firm’s 2Q16E sales are estimated at Bt347mn, up 7%YoY and 10%QoQ, driven by growth in both existing products and launches of new product lines, i.e., mosquito repellents and hand cleaners. The gross profit margin for the quarter is expected to have narrowed to 35% vs. 37.3% in 2Q15 and 40% in 1Q16 as the firm gave away freebies to promote sales. Meanwhile, the 2Q16E SG&A to sales ratio is projected at 19.5% vs. 22% in 2Q15 and 18% in 1Q16 (note: the firm booked additional expenses relating to marketing expenses and advisory fees for business restructuring). 2016E net profit maintained If the 2Q16 net profit comes out as expected, the firm’s 1H16 net profit is likely to have amounted to Bt96mn (+13%YoY), accounting for 62% of our full‐year projection of Bt156mn (+28%YoY). While the sales are expected to increase in 3Q16 during the peak sales season, the marketing activities to be launched during the quarter may keep the gross profit margin low before improving in 4Q16. Nonetheless, sales are expected to fall on seasonality. We thus believe our current earnings projection for 2016E is achievable. Financial and Valuation FY Ended 31 Dec
2013
2014
2015
2016E
2017E
Revenues (Btmn)
1,143
1,149
1,175
1,330
1,463
Net profit (Btmn)
118
88
122
156
183
EPS (Bt)
0.78
0.59
0.81
1.04
1.22
Norm. EPS (Bt)
0.78
0.59
0.81
1.04
1.22
21%
‐25%
39%
28%
17%
0.19
0.40
0.55
0.64
0.75
Norm. EPS growth (%) Dividend (Bt) BV (Bt)
3.64
3.80
4.19
4.63
5.15
FY Ended 31 Dec
2013
2014
2015
2016E
2017E
Phornsri Laysanitsaerekul
PER (x)
14.28
19.13
13.76
10.78
9.20
Analyst , no 17621
EV/EBITDA (x)
6.76
9.20
6.38
5.44
4.41 2.09
[email protected] 66 (0) 2624‐6258
PBV (x)
3.08
2.95
2.67
2.37
Dividend yield (%)
1.70%
3.57%
4.02%
4.92%
5.76%
ROE (%)
22.7%
15.7%
20.4%
23.3%
24.1%
cash
cash
cash
cash
cash
Net gearing (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1 : 2Q16 earnings preview (Bt m) Sales COGS Gross profit SG&A expense Others income EBIT Interest expense EBT Tax expense Equity income MI Norm. profit Extra. Items Net profit
2Q15 325 (204) 121 (72) 1 50 ‐ 50 (11) ‐ (0) 40 ‐ 40
EPS (Bt)
0.26 0.37 0.27
Gross margin SG&A /Sales EBIT margin Norm. profit margin Net profit margin
1Q16 316 (190) 126 (57) 2 71 ‐ 71 (15) ‐ 2 55 ‐ 55
37.3% 22.1% 15.4% 12.2% 12.2%
39.9% 18.0% 22.5% 17.4% 17.4%
2Q16E % YoY %QoQ 347 7.0% 10.1% (226) 10.8% 19.0% 122 0.5% ‐3.4% (68) ‐5.5% 19.4% 1 ‐38.4% ‐75.6% 54 8.6% ‐23.7% ‐ nm nm 54 8.6% ‐23.7% (11) 2.7% ‐24.7% ‐ nm nm 2 nm nm 41 3.9% ‐24.8% ‐ nm nm 41 3.9% ‐24.8%
35.0% 19.5% 15.6% 11.9% 11.9%
3.9%
1H15 587 (373) 214 (135) 2 81 ‐ 81 (16) ‐ 1 63 ‐ 63
1H16E % YoY 663 3.6% (415) 0.6% 247 9.2% (125) 5.5% 3 ‐42.7% 125 13.3% ‐ nm 125 13.3% (26) 18.7% ‐ nm 4 nm 96 12.6% ‐ nm 96 12.6%
2015 1,175 (727) 448 (295) 2 155 ‐ 155 (32) ‐ 1 122 ‐ 122
2016E % YoY YTD (% of 2016E) 1,330 13.2% 49.8% (857) 17.9% 48.5% 473 5.6% 52.3% (281) ‐4.9% 44.4% 2 3.0% 113.5% 195 25.5% 64.4% ‐ nm nm 195 25.5% 64.4% (39) 21.8% 66.2% ‐ nm nm ‐ nm nm 156 27.7% 61.6% ‐ nm nm 156 27.7% 61.6%
‐24.8% 0.42 0.64
12.6% 0.81 1.04
36.5% 23.1% 13.8% 10.8% 10.8%
38.1% 25.1% 13.2% 10.4% 10.4%
37.3% 18.8% 18.9% 14.5% 14.5%
27.7%
35.6% 21.1% 14.6% 11.7% 11.7%
Source: SWC and KTZ Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
61.6%
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Extra items Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2013 1,143 (744) 398 (253) 166 (17) 149 0 0 4 149 (30) 2 0 118 0.78 0.78 118 0.78 0.44
2014 1,149 (765) 383 (278) 130 (21) 109 (0) 0 4 109 (21) 0 0 88 0.59 0.59 88 0.59 0.40
2015 1,175 (727) 448 (295) 178 (23) 155 0 0 2 155 (32) 1 0 122 0.81 0.81 122 0.81 0.45
2016E 1,330 (857) 473 (281) 218 (24) 195 0 0 2 195 (39) 0 0 156 1.04 1.04 156 1.04 0.64
2017E 1,463 (937) 526 (300) 253 (24) 228 0 0 2 228 (46) 0 0 183 1.22 1.22 183 1.22 0.75
BALANCE SHEET (Btm) Cash and equivalents Inventories Investment PP&E-net Total assets ST debt & current portion Long-term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity
2013 115 171 69 290 770 0 0 224 (1) 546 770
2014 92 144 14 340 763 0 0 194 (1) 569 763
2015 106 192 62 334 853 0 0 224 0 629 853
2016E 48 189 62 391 971 0 0 268 0 703 971
2017E 107 210 62 388 1,074 0 0 294 0 780 1,075
CASH FLOW (Btm) EBIT 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 Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
2013 149 17 42 (12) 196 (31) (39) (71) 0 (65) (65) 0 (65) 60 164 1.09
2014 109 21 (17) (47) 67 (81) 55 (26) 0 (66) (66) 0 (66) (25) -15 -0.10
2015 155 23 (33) 3 148 (22) (48) (70) 0 (66) (66) 3 (66) 14 125 0.84
2016E 195 24 (120) (18) 81 (57) 0 (57) 0 (82) (82) 0 (82) (58) 24 0.16
2017E 228 24 (48) (44) 161 3 0 3 0 (105) (105) 0 (105) 59 164 1.09
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013 7.5 18.3 (14.1) 34.9 14.5 12.7 10.3 10.3 (19.9)
2014 0.5 (21.3) 30.3 33.4 11.3 9.2 7.6 7.6 (19.1)
2015 2.3 36.6 0.6 38.1 15.1 13.0 10.4 10.4 (20.6)
2016E 13.2 22.7 23.0 35.6 16.4 14.5 11.7 11.7 (20.0)
2017E 10.0 15.6 17.1 35.9 17.3 15.4 12.5 12.5 (20.0)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY. KT ZMICO is a co‐underwriter of ALT, EKH.
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
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Company Update
Close Bt11.10
mai ‐ Industrial
Earnings upgrade/Earnings downgrade/Overview unchanged
July 15, 2016
2Q16 net profit to have risen 4% YoY but declined 25%QoQ Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.040
1.220
0%
0%
KT ZMICO vs. consensus Share data Reuters / Bloomberg
SWC.BK/SWC TB
Paid‐up Shares (m)
150.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
2.00/48.00
Foreign limit / actual (%)
49.00/0.02
52 week High / Low (Bt)
11.90/7.20
Avg. daily T/O (shares 000) NVDR (%)
1,129.00 0.42
Estimated free float (%)
37.69
Beta
0.95
URL
www.sherwood.co.th
CGR
Anti‐corruption
n.a.
Downgrade rating to Underperform; fully valued in the short term SWC’s 2Q16E earnings are likely to have remained flat YoY but declined QoQ. In the short term, the share price has already been fully valued vs. our 2016E TP of Bt11/share (10.5x PER). Therefore, we downgrade our rating to “Underperform” (from Buy). We like SWC for its bright earnings outlook, net cash position and expected dividend yield of 5‐6% p.a. in 2016‐17E. We anticipate SWC’sDPS of Bt0.30 for its 1H16 operating performance, implying a dividend yield of 5.2% p.a. 2Q16 net profit to have risen by 4%YoY but dropped by 25%QoQ We expect SWC to post 2Q16 net profit of Bt41mn, up 4%YoY but down 25%QoQ. During the sales season start in May or June to rainy season, the firm needs to launch promotional campaigns or offer special freebies in order to maintain its sales growth. The firm’s 2Q16E sales are estimated at Bt347mn, up 7%YoY and 10%QoQ, driven by growth in both existing products and launches of new product lines, i.e., mosquito repellents and hand cleaners. The gross profit margin for the quarter is expected to have narrowed to 35% vs. 37.3% in 2Q15 and 40% in 1Q16 as the firm gave away freebies to promote sales. Meanwhile, the 2Q16E SG&A to sales ratio is projected at 19.5% vs. 22% in 2Q15 and 18% in 1Q16 (note: the firm booked additional expenses relating to marketing expenses and advisory fees for business restructuring). 2016E net profit maintained If the 2Q16 net profit comes out as expected, the firm’s 1H16 net profit is likely to have amounted to Bt96mn (+13%YoY), accounting for 62% of our full‐year projection of Bt156mn (+28%YoY). While the sales are expected to increase in 3Q16 during the peak sales season, the marketing activities to be launched during the quarter may keep the gross profit margin low before improving in 4Q16. Nonetheless, sales are expected to fall on seasonality. We thus believe our current earnings projection for 2016E is achievable. Financial and Valuation FY Ended 31 Dec
2013
2014
2015
2016E
2017E
Revenues (Btmn)
1,143
1,149
1,175
1,330
1,463
Net profit (Btmn)
118
88
122
156
183
EPS (Bt)
0.78
0.59
0.81
1.04
1.22
Norm. EPS (Bt)
0.78
0.59
0.81
1.04
1.22
21%
‐25%
39%
28%
17%
0.19
0.40
0.55
0.64
0.75
Norm. EPS growth (%) Dividend (Bt) BV (Bt)
3.64
3.80
4.19
4.63
5.15
FY Ended 31 Dec
2013
2014
2015
2016E
2017E
Phornsri Laysanitsaerekul
PER (x)
14.28
19.13
13.76
10.78
9.20
Analyst , no 17621
EV/EBITDA (x)
6.76
9.20
6.38
5.44
4.41 2.09
[email protected] 66 (0) 2624‐6258
PBV (x)
3.08
2.95
2.67
2.37
Dividend yield (%)
1.70%
3.57%
4.02%
4.92%
5.76%
ROE (%)
22.7%
15.7%
20.4%
23.3%
24.1%
cash
cash
cash
cash
cash
Net gearing (%)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1 : 2Q16 earnings preview (Bt m) Sales COGS Gross profit SG&A expense Others income EBIT Interest expense EBT Tax expense Equity income MI Norm. profit Extra. Items Net profit
2Q15 325 (204) 121 (72) 1 50 ‐ 50 (11) ‐ (0) 40 ‐ 40
EPS (Bt)
0.26 0.37 0.27
Gross margin SG&A /Sales EBIT margin Norm. profit margin Net profit margin
1Q16 316 (190) 126 (57) 2 71 ‐ 71 (15) ‐ 2 55 ‐ 55
37.3% 22.1% 15.4% 12.2% 12.2%
39.9% 18.0% 22.5% 17.4% 17.4%
2Q16E % YoY %QoQ 347 7.0% 10.1% (226) 10.8% 19.0% 122 0.5% ‐3.4% (68) ‐5.5% 19.4% 1 ‐38.4% ‐75.6% 54 8.6% ‐23.7% ‐ nm nm 54 8.6% ‐23.7% (11) 2.7% ‐24.7% ‐ nm nm 2 nm nm 41 3.9% ‐24.8% ‐ nm nm 41 3.9% ‐24.8%
35.0% 19.5% 15.6% 11.9% 11.9%
3.9%
1H15 587 (373) 214 (135) 2 81 ‐ 81 (16) ‐ 1 63 ‐ 63
1H16E % YoY 663 3.6% (415) 0.6% 247 9.2% (125) 5.5% 3 ‐42.7% 125 13.3% ‐ nm 125 13.3% (26) 18.7% ‐ nm 4 nm 96 12.6% ‐ nm 96 12.6%
2015 1,175 (727) 448 (295) 2 155 ‐ 155 (32) ‐ 1 122 ‐ 122
2016E % YoY YTD (% of 2016E) 1,330 13.2% 49.8% (857) 17.9% 48.5% 473 5.6% 52.3% (281) ‐4.9% 44.4% 2 3.0% 113.5% 195 25.5% 64.4% ‐ nm nm 195 25.5% 64.4% (39) 21.8% 66.2% ‐ nm nm ‐ nm nm 156 27.7% 61.6% ‐ nm nm 156 27.7% 61.6%
‐24.8% 0.42 0.64
12.6% 0.81 1.04
36.5% 23.1% 13.8% 10.8% 10.8%
38.1% 25.1% 13.2% 10.4% 10.4%
37.3% 18.8% 18.9% 14.5% 14.5%
27.7%
35.6% 21.1% 14.6% 11.7% 11.7%
Source: SWC and KTZ Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
61.6%
PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Extra items Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2013 1,143 (744) 398 (253) 166 (17) 149 0 0 4 149 (30) 2 0 118 0.78 0.78 118 0.78 0.44
2014 1,149 (765) 383 (278) 130 (21) 109 (0) 0 4 109 (21) 0 0 88 0.59 0.59 88 0.59 0.40
2015 1,175 (727) 448 (295) 178 (23) 155 0 0 2 155 (32) 1 0 122 0.81 0.81 122 0.81 0.45
2016E 1,330 (857) 473 (281) 218 (24) 195 0 0 2 195 (39) 0 0 156 1.04 1.04 156 1.04 0.64
2017E 1,463 (937) 526 (300) 253 (24) 228 0 0 2 228 (46) 0 0 183 1.22 1.22 183 1.22 0.75
BALANCE SHEET (Btm) Cash and equivalents Inventories Investment PP&E-net Total assets ST debt & current portion Long-term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity
2013 115 171 69 290 770 0 0 224 (1) 546 770
2014 92 144 14 340 763 0 0 194 (1) 569 763
2015 106 192 62 334 853 0 0 224 0 629 853
2016E 48 189 62 391 971 0 0 268 0 703 971
2017E 107 210 62 388 1,074 0 0 294 0 780 1,075
CASH FLOW (Btm) EBIT 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 Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt)
2013 149 17 42 (12) 196 (31) (39) (71) 0 (65) (65) 0 (65) 60 164 1.09
2014 109 21 (17) (47) 67 (81) 55 (26) 0 (66) (66) 0 (66) (25) -15 -0.10
2015 155 23 (33) 3 148 (22) (48) (70) 0 (66) (66) 3 (66) 14 125 0.84
2016E 195 24 (120) (18) 81 (57) 0 (57) 0 (82) (82) 0 (82) (58) 24 0.16
2017E 228 24 (48) (44) 161 3 0 3 0 (105) (105) 0 (105) 59 164 1.09
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013 7.5 18.3 (14.1) 34.9 14.5 12.7 10.3 10.3 (19.9)
2014 0.5 (21.3) 30.3 33.4 11.3 9.2 7.6 7.6 (19.1)
2015 2.3 36.6 0.6 38.1 15.1 13.0 10.4 10.4 (20.6)
2016E 13.2 22.7 23.0 35.6 16.4 14.5 11.7 11.7 (20.0)
2017E 10.0 15.6 17.1 35.9 17.3 15.4 12.5 12.5 (20.0)
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY. KT ZMICO is a co‐underwriter of ALT, EKH.
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.
