Siam Global House
Siam Global House
Buy (17E TP Bt20.40)
Company Update
Close Bt17.70
Commerce February 21, 2017
Beat forecast/Below forecast/In line
4Q16 profitability stronger than expected Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.510
0.611
KT ZMICO vs. consensus Share data
5.9%
11.3%
Reuters / Bloomberg
GLOBAL.BK/GLOBAL TB
Paid‐up Shares (m)
3,658.49
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
65.00/1,849.00
Foreign limit / actual (%)
49.00/1.72
52 week High / Low (Bt)
18.80/8.24
Avg. daily T/O (shares 000) NVDR (%)
7,081.00 2.59
Estimated free float (%)
32.2
Beta
0.96
URL
www.globalhouse.co.th
CGR
Anti‐corruption
Level 2 (Declared)
Pornsawat Jirajarus Analyst no. 18228 [email protected] 66 (0) 2624‐6257
Acceleration of new stores to boost profit GLOBAL’s acceleration of new stores in 2H16‐1H17 should make the stock more attractive. We believe the improving profit trend will continue and new stores will remain the key profit driver for GLOBAL. Its leading position in the home improvement market in the provinces remains the attraction, which should make the stock price at 0.7x of PE/EPS growth in 17E look justified in light of its future prospects. We maintain our Buy call. 4Q16 net profit was 10% better than expected GLOBAL reported 4Q16 net profit of Bt342mn, up 81% YoY, 21% QoQ and 10% higher than our forecast. Excluding extra items of Bt22mn (from Fx loss and inventory diminution, after tax) in 4Q15, core net profit rose 62% YoY. The better‐than‐expected profit came largely from 1) 1% higher‐than‐expected sales and 2) an 86 bps higher‐than‐expected gross profit margin. The YoY net profit growth was driven by 1) 11% sales growth, 2) a 348 bps rise in the gross margin (to 21.4% from the mix of higher margin products, e.g., house brands) and 3) a 33% increase in other income. GLOBAL opened three new stores in 4Q16 (Nakorn Si Thammarat, Surat Thani and Kanchanaburi), raising the count of new stores during the past twelve months to eight. The EBITDA margin increased 313 bps YoY (to 14.7%) backed by improvement in the gross margin. GLOBAL’s 2016 full‐year net profit was Bt1.49bn, up 70% YoY. Cash + stock dividend for FY16, XD on 16 March GLOBAL announced 1) a cash dividend of Bt0.1655 per share and 2) a stock dividend at a ratio of 20 existing shares for 1 new share. This is equal to a total dividend of Bt0.2155 per share. The XD will be 16 March. The EPS dilution from the stock dividend will be 5%. New stores and improving consumption to boost profit in 2017 GLOBAL has accelerated the rollouts of new stores since last year, with six openings in 2H16 and seven new stores now under construction. This should enable the firm to roll out 4‐5 new stores in 1H17. We expect same‐store‐sales growth to gradually improve (from almost flat during 2Q16‐4Q16E, not yet disclosed for 4Q16), as most of the new stores this year are in untapped cities, thus not entailing a cannibalization impact. We maintain our forecasts for 2% same‐store‐sales growth and eight new stores in 2017, but slightly revise up the gross margin by 15‐20 bps in 17E‐18E due to its stronger‐than‐expected base in 4Q16. We maintain our 17E DCF TP of Bt20.40. 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) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 15,561 702 0.23 ‐36.1% 0.16 4.71 2014 56.48 23.74 2.76 1.22 5.3% 24.5%
2015 16,864 881 0.25 9.9% 0.18 4.28
2016 18,857 1,495 0.41 61.7% 0.29 4.44
2017E 23,308 2,091 0.54 33.2% 0.38 4.76
2018E 26,777 2,604 0.68 24.5% 0.47 5.36
2015 45.53 19.17 2.35 1.35 5.0% 25.3%
2016 43.07 25.45 3.96 1.63 9.4% 47.1%
2017E 32.70 18.21 3.74 2.14 11.8% 29.1%
2018E 26.26 15.26 3.32 2.67 13.4% 9.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: Earnings results review Profit and Loss (Btmn) FY Ended 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Other extraordinary Items Gn (Ls) from affiliates Net profit (loss) Core net profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
3Q15 3,796 670 467 (38) 149 (53) 16 26 (0) 211 185 0.06 17.6 11.8 5.4 2.3 12.4 0.5 4.2 6.0
4Q15 4,118 738 488 (40) 114 (46) (20) (22) 3 189 211 0.05 17.9 11.5 4.5 2.2 12.3 0.5 4.3 6.0
1Q16 5,155 1,008 789 (37) 173 (112) 0 0 3 452 464 0.13 19.5 14.8 8.5 2.1 21.3 0.5 4.4 7.5
2Q16 4,787 993 740 (39) 161 (100) 0 0 7 417 421 0.11 20.7 15.0 8.4 1.2 19.0 0.6 4.5 8.2
3Q16 4,362 901 613 (44) 131 (70) 0 0 (5) 284 284 0.08 20.7 13.6 6.3 1.1 14.0 0.6 4.6 8.5
4Q16 % YoY % QoQ 4,554 10.6 4.4 975 32.1 8.2 690 41.4 12.6 (49) 24.1 12.4 151 33.0 15.2 (82) 79.5 17.5 0 n.m. n.m. 0 n.m. n.m. 1 n.m. n.m. 342 81.1 20.5 342 62.2 20.5 0.09 72.4 20.5 21.4 14.7 7.3 1.1 14.0 0.7 4.7 9.2
2015 16,864 2,819 1,973 (144) 547 (219) (4) 5 3 881 875 0.26 16.7 11.3 5.2 3.0 13.7 0.5 4.2 5.5
2016 % YoY 18,857 11.8 3,877 37.5 2,831 43.5 (169) 17.0 617 12.7 (364) 66.5 0 n.m. 0 n.m. 6 n.m. 1,495 69.8 1,512 72.8 0.41 58.6 20.6 14.5 7.9 1.1 16.7 0.7 4.7 9.2
Source: GLOBAL, KT ZMICO Research
Figure 2: Sales growth
Figure 3: Earnings trend
Same‐store sales growth
Sales growth
50% 40% 30%
Core net profit
500
Core net profit growth
200%
400
150%
300
100%
200
50%
100
0%
20%
1Q16
‐50% 1Q15
‐20%
1Q14
‐ 1Q12
1Q16
1Q15
1Q14
1Q13
1Q12
0% ‐10%
1Q13
10%
Source: Company data, KT ZMICO estimates REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 4: Profitability trends Gross Profit Margin
25.0%
Figure 5: Store expansion EBITDA Margin
Stores Number of stpres
80
Net Profit Margin
New stores
20.0%
59
54
60 46
15.0%
40
10.0%
5
6
8
8
5
2017F
2018F
2011
7
2016F
2010
7
2015
2
2014
3
2013
1
2012
20 13
11
8 2009
20
5.0%
38
32
27
0 1Q16
1Q15
1Q14
1Q13
1Q12
0.0%
Source: Company data, KT ZMICO estimates Figure 6: Forecast revisions
Revenue %change Gross margin EBITDA %change EBITDA margin Net profit %change Normalized profit %change Net margin
2016 18,857 0.2% 20.6% 2,831 1.6% 14.5% 1,495 2.1% 1,495 2.1% 7.7%
New Old 2017E 2018E 2016E 2017E 2018E 23,308 26,777 18,816 23,308 26,777 0.0% 0.0% 20.8% 21.0% 20.4% 20.6% 20.8% 3,772 4,414 2,785 3,724 4,360 1.3% 1.2% 15.7% 16.0% 14.3% 15.5% 15.8% 2,091 2,604 1,464 2,073 2,563 0.9% 1.6% 2,091 2,604 1,464 2,073 2,563 0.9% 1.6% 8.7% 9.4% 7.5% 8.6% 9.3%
Same‐store sales 0.0% 2.0% 2.0% 0.0% 2.0% 2.0% % change 0.0% 0.0% 0.0% New stores 8 8 5 8 8 5 % change ‐ ‐ ‐
Figure 7: DCF valuation ###
2017F
2018F
2019F
2020F
2021F
NOPAT Depreciation Net investment in working capita Net investment in fixed assets
## 2,307 ## 949 ### 1,256 ### - 1,800 -
2,747 3,152 3,566 4,209 1,037 1,125 1,213 1,301 1,242 - 322 - 336 - 647 1,125 - 1,148 - 1,148 - 1,148
Free cash flow to firm (FCFF)
###
3,901
2,713
2,808
NPV of FCFF during adjusted period 27,590 Market risk premium NPV of Terminal value 55,980 Beta less: net interest bearing debt - 5,320 Terminal growth rate Equity value 78,251 Cost of equity No. of shares outstanding (mn) 3,841 Targeted D/E Value per share (Bt)
20.37 WACC
Source: KT ZMICO estimates REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
3,295
3,715 9.5% 0.70 3.00% 11.7% 0.54 8.5%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. KT ZMICO is a co underwriter of RPH.
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
Buy (17E TP Bt20.40)
Company Update
Close Bt17.70
Commerce February 21, 2017
Beat forecast/Below forecast/In line
4Q16 profitability stronger than expected Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
0.510
0.611
KT ZMICO vs. consensus Share data
5.9%
11.3%
Reuters / Bloomberg
GLOBAL.BK/GLOBAL TB
Paid‐up Shares (m)
3,658.49
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
65.00/1,849.00
Foreign limit / actual (%)
49.00/1.72
52 week High / Low (Bt)
18.80/8.24
Avg. daily T/O (shares 000) NVDR (%)
7,081.00 2.59
Estimated free float (%)
32.2
Beta
0.96
URL
www.globalhouse.co.th
CGR
Anti‐corruption
Level 2 (Declared)
Pornsawat Jirajarus Analyst no. 18228 [email protected] 66 (0) 2624‐6257
Acceleration of new stores to boost profit GLOBAL’s acceleration of new stores in 2H16‐1H17 should make the stock more attractive. We believe the improving profit trend will continue and new stores will remain the key profit driver for GLOBAL. Its leading position in the home improvement market in the provinces remains the attraction, which should make the stock price at 0.7x of PE/EPS growth in 17E look justified in light of its future prospects. We maintain our Buy call. 4Q16 net profit was 10% better than expected GLOBAL reported 4Q16 net profit of Bt342mn, up 81% YoY, 21% QoQ and 10% higher than our forecast. Excluding extra items of Bt22mn (from Fx loss and inventory diminution, after tax) in 4Q15, core net profit rose 62% YoY. The better‐than‐expected profit came largely from 1) 1% higher‐than‐expected sales and 2) an 86 bps higher‐than‐expected gross profit margin. The YoY net profit growth was driven by 1) 11% sales growth, 2) a 348 bps rise in the gross margin (to 21.4% from the mix of higher margin products, e.g., house brands) and 3) a 33% increase in other income. GLOBAL opened three new stores in 4Q16 (Nakorn Si Thammarat, Surat Thani and Kanchanaburi), raising the count of new stores during the past twelve months to eight. The EBITDA margin increased 313 bps YoY (to 14.7%) backed by improvement in the gross margin. GLOBAL’s 2016 full‐year net profit was Bt1.49bn, up 70% YoY. Cash + stock dividend for FY16, XD on 16 March GLOBAL announced 1) a cash dividend of Bt0.1655 per share and 2) a stock dividend at a ratio of 20 existing shares for 1 new share. This is equal to a total dividend of Bt0.2155 per share. The XD will be 16 March. The EPS dilution from the stock dividend will be 5%. New stores and improving consumption to boost profit in 2017 GLOBAL has accelerated the rollouts of new stores since last year, with six openings in 2H16 and seven new stores now under construction. This should enable the firm to roll out 4‐5 new stores in 1H17. We expect same‐store‐sales growth to gradually improve (from almost flat during 2Q16‐4Q16E, not yet disclosed for 4Q16), as most of the new stores this year are in untapped cities, thus not entailing a cannibalization impact. We maintain our forecasts for 2% same‐store‐sales growth and eight new stores in 2017, but slightly revise up the gross margin by 15‐20 bps in 17E‐18E due to its stronger‐than‐expected base in 4Q16. We maintain our 17E DCF TP of Bt20.40. 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) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 15,561 702 0.23 ‐36.1% 0.16 4.71 2014 56.48 23.74 2.76 1.22 5.3% 24.5%
2015 16,864 881 0.25 9.9% 0.18 4.28
2016 18,857 1,495 0.41 61.7% 0.29 4.44
2017E 23,308 2,091 0.54 33.2% 0.38 4.76
2018E 26,777 2,604 0.68 24.5% 0.47 5.36
2015 45.53 19.17 2.35 1.35 5.0% 25.3%
2016 43.07 25.45 3.96 1.63 9.4% 47.1%
2017E 32.70 18.21 3.74 2.14 11.8% 29.1%
2018E 26.26 15.26 3.32 2.67 13.4% 9.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: Earnings results review Profit and Loss (Btmn) FY Ended 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Other extraordinary Items Gn (Ls) from affiliates Net profit (loss) Core net profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
3Q15 3,796 670 467 (38) 149 (53) 16 26 (0) 211 185 0.06 17.6 11.8 5.4 2.3 12.4 0.5 4.2 6.0
4Q15 4,118 738 488 (40) 114 (46) (20) (22) 3 189 211 0.05 17.9 11.5 4.5 2.2 12.3 0.5 4.3 6.0
1Q16 5,155 1,008 789 (37) 173 (112) 0 0 3 452 464 0.13 19.5 14.8 8.5 2.1 21.3 0.5 4.4 7.5
2Q16 4,787 993 740 (39) 161 (100) 0 0 7 417 421 0.11 20.7 15.0 8.4 1.2 19.0 0.6 4.5 8.2
3Q16 4,362 901 613 (44) 131 (70) 0 0 (5) 284 284 0.08 20.7 13.6 6.3 1.1 14.0 0.6 4.6 8.5
4Q16 % YoY % QoQ 4,554 10.6 4.4 975 32.1 8.2 690 41.4 12.6 (49) 24.1 12.4 151 33.0 15.2 (82) 79.5 17.5 0 n.m. n.m. 0 n.m. n.m. 1 n.m. n.m. 342 81.1 20.5 342 62.2 20.5 0.09 72.4 20.5 21.4 14.7 7.3 1.1 14.0 0.7 4.7 9.2
2015 16,864 2,819 1,973 (144) 547 (219) (4) 5 3 881 875 0.26 16.7 11.3 5.2 3.0 13.7 0.5 4.2 5.5
2016 % YoY 18,857 11.8 3,877 37.5 2,831 43.5 (169) 17.0 617 12.7 (364) 66.5 0 n.m. 0 n.m. 6 n.m. 1,495 69.8 1,512 72.8 0.41 58.6 20.6 14.5 7.9 1.1 16.7 0.7 4.7 9.2
Source: GLOBAL, KT ZMICO Research
Figure 2: Sales growth
Figure 3: Earnings trend
Same‐store sales growth
Sales growth
50% 40% 30%
Core net profit
500
Core net profit growth
200%
400
150%
300
100%
200
50%
100
0%
20%
1Q16
‐50% 1Q15
‐20%
1Q14
‐ 1Q12
1Q16
1Q15
1Q14
1Q13
1Q12
0% ‐10%
1Q13
10%
Source: Company data, KT ZMICO estimates REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Figure 4: Profitability trends Gross Profit Margin
25.0%
Figure 5: Store expansion EBITDA Margin
Stores Number of stpres
80
Net Profit Margin
New stores
20.0%
59
54
60 46
15.0%
40
10.0%
5
6
8
8
5
2017F
2018F
2011
7
2016F
2010
7
2015
2
2014
3
2013
1
2012
20 13
11
8 2009
20
5.0%
38
32
27
0 1Q16
1Q15
1Q14
1Q13
1Q12
0.0%
Source: Company data, KT ZMICO estimates Figure 6: Forecast revisions
Revenue %change Gross margin EBITDA %change EBITDA margin Net profit %change Normalized profit %change Net margin
2016 18,857 0.2% 20.6% 2,831 1.6% 14.5% 1,495 2.1% 1,495 2.1% 7.7%
New Old 2017E 2018E 2016E 2017E 2018E 23,308 26,777 18,816 23,308 26,777 0.0% 0.0% 20.8% 21.0% 20.4% 20.6% 20.8% 3,772 4,414 2,785 3,724 4,360 1.3% 1.2% 15.7% 16.0% 14.3% 15.5% 15.8% 2,091 2,604 1,464 2,073 2,563 0.9% 1.6% 2,091 2,604 1,464 2,073 2,563 0.9% 1.6% 8.7% 9.4% 7.5% 8.6% 9.3%
Same‐store sales 0.0% 2.0% 2.0% 0.0% 2.0% 2.0% % change 0.0% 0.0% 0.0% New stores 8 8 5 8 8 5 % change ‐ ‐ ‐
Figure 7: DCF valuation ###
2017F
2018F
2019F
2020F
2021F
NOPAT Depreciation Net investment in working capita Net investment in fixed assets
## 2,307 ## 949 ### 1,256 ### - 1,800 -
2,747 3,152 3,566 4,209 1,037 1,125 1,213 1,301 1,242 - 322 - 336 - 647 1,125 - 1,148 - 1,148 - 1,148
Free cash flow to firm (FCFF)
###
3,901
2,713
2,808
NPV of FCFF during adjusted period 27,590 Market risk premium NPV of Terminal value 55,980 Beta less: net interest bearing debt - 5,320 Terminal growth rate Equity value 78,251 Cost of equity No. of shares outstanding (mn) 3,841 Targeted D/E Value per share (Bt)
20.37 WACC
Source: KT ZMICO estimates REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
3,295
3,715 9.5% 0.70 3.00% 11.7% 0.54 8.5%
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, TFD. KT ZMICO is a co underwriter of RPH.
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
