Siam Global House
Siam Global House Buy (16E TP Bt12.00)
Company update
Close Bt10.90
Commerce April 25, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Improving sales and profitability Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.291
0.351
KT ZMICO vs. consensus Share data
6.5%
14%
Reuters / Bloomberg
GLOBAL.BK/GLOBAL TB
Paid‐up Shares (m)
3,484.28
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
38.00/1,083.00
Foreign limit / actual (%)
49.00/1.76
52 week High / Low (Bt)
11.52/7.57
Avg. daily T/O (shares 000) NVDR (%)
3,658.00 0.88
Estimated free float (%)
33.07
Beta
1.05
URL
www.globalhouse.co.th
CGR
Anti‐corruption
Level 2 (Declared)
Pornsawat Jirajarus Analyst no. 18228 [email protected] 66 (0) 2624‐6257
Growing urbanization the catalysts Improving sales and profitability have convinced us that favorable sales from new stores, a lessening cannibalization impact and increasing profitability from house brands should raise GLOBAL’s profit more than we previously thought. We revise up the FY16E TP by 14% and retain our view that the urbanization trend that is driving home improvement demand in the middle‐ to‐low end market and the sizeable land bank for future expansion remain the catalysts for GLOBAL. The stock is trading at 1.2x of PE /EPS growth in 16E‐17E. We maintain our Buy call. Expect 1Q16 net profit to increase 29% YoY We expect GLOBAL to report 1Q16 net profit of Bt280mn, up 29% YoY and 48% QoQ (seasonal). Excluding inventory loss provisions of Bt17mn in 1Q15 and Bt22mn in 4Q15, the normalized net profit would be up 20% YoY and 33% QoQ. The YoY profit growth should be driven by 1) strong sales from four new stores (especially Yasothon, Buengkan and Pranburi opened in late 4Q15; no new stores in 1Q16), lessening cannibalization and pent‐up demand in the provinces and 2) a rising gross margin (+254bps YoY to 16.9% in 1Q16) from house brand products and rising steel prices. Same‐ store sales should rise 2‐3% YoY, not continuing the declining trend from 2H15 as we previously thought. SG&A expenses should continue the YoY rising trend from 2H15 (from promotions and store expansion), resulting in the EBITDA margin being up just 100 bps YoY to 11.3%. Growing market share and improving profitability Apart from the abovementioned reasons, the better‐than‐expected sales in the provinces could also have resulted from the favorable sales of stores in border provinces and GLOBAL’s increasing market share in certain locations; meanwhile, the weak farm income that is hindering spending power in the provinces has not yet improved. Slowing expansion of Thai Wasadu, its rival that plans to open just one new store this year, should mean a softer impact from competition. We believe growing sales of house brands should continue to be a key factor for profitability improvement. Revise up FY16E TP by 14% GLOBAL expects to resume rollouts of one new store per month from May onward. However, we maintain our forecast for five new stores per year as we see risk from delays in construction. Its better‐than‐expected sales recovery causes us to revise up the same‐store‐sales growth forecast from 1% YoY to 2% in 16E. We revise up the gross margin by 58 bps to 17.1% in 16E‐17E, raise the net profit forecasts in 16E‐17E by 11% and increase the 16E DCF TP from Bt10.50 to Bt12.00. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 15,561 702 0.23 ‐36.1% 0.16 4.71
FY Ended 31 Dec PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
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 2015 45.53 19.17 2.35 1.35 5.0% 25.3%
2016E 19,077 1,119 0.31 21.1% 0.21 4.34
2017E 22,884 1,481 0.40 32.3% 0.28 4.70
2018E 26,046 1,827 0.50 23.3% 0.35 5.14
2016E 35.62 17.55 2.51 1.97 7.1% 27.4%
2017E 26.92 14.20 2.32 2.60 9.0% 24.6%
2018E 21.83 11.88 2.12 3.21 10.2% 18.9%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: Earnings results preview 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) Normalized profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
1Q15 4,515 648 478 (34) 149 (54) 0 (21) 0 217 234 0.07 14.4 10.3 4.6 2.8 14.0 0.5 4.7 4.9
2Q15 4,435 763 540 (33) 136 (66) 0 21 (0) 263 247 0.08 17.2 11.8 5.8 3.0 16.5 0.5 4.2 5.5
3Q15 3,796 670 467 (38) 149 (53) 16 (20) (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) (19) 3 189 211 0.05 17.9 11.5 4.5 2.2 12.3 0.5 4.3 6.0
1Q16E % YoY % QoQ 5,000 10.7 21.4 845 30.4 14.5 580 21.3 19.0 (40) 17.0 0.7 155 4.3 36.4 (70) 29.3 52.9 0 n.m. n.m. (18) n.m. n.m. 2 n.m. n.m. 280 29.1 48.1 280 19.9 32.6 0.08 7.6 41.0 16.9 11.3 5.4 n.a. 14.5 n.a. n.a. n.a.
2015 16,864 2,819 1,973 (144) 547 (219) 0 0 0 881 876 0.25 16.7 11.3 5.1 2.2 13.7 0.5 4.3 6.0
2016E % YoY % YTD 19,077 8.4 26.2 3,265 19.7 25.9 2,350 16.5 24.7 (135) 8.6 29.7 618 9.8 25.1 (280) 24.5 25.0 0 n.m. n.m. 0 n.m. n.m. 0 n.m. n.m. 1,119 25.6 25.0 1,119 25.8 25.0 0.31 9.9 25.0 17.1 11.9 5.7 2.3 17.4 0.5 4.3 7.3
Source: GLOBAL, KT ZMICO Research
Figure 2: Sales growth
Figure 3: Forecast revisions
Same-store sales growth
Sales growth Revenue %change Gross margin EBITDA %change EBITDA margin Net profit %change Normalized profit %change Net margin
50.0% 40.0% 30.0% 20.0% 10.0% 2Q16E
4Q15
1Q16E
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
-10.0%
1Q12
0.0%
Same‐store sales % change New stores % change
-20.0%
New 2016E 19,077 0.9% 17.1% 2,350 5.0% 11.9% 1,119 10.6% 1,119 10.6% 5.7%
2015 16,864 16.7% 1,973 11.3% 881 876 5.1% ‐0.5% 6
2017E 22,884 0.9% 17.1% 2,895 5.2% 12.2% 1,481 10.9% 1,481 10.9% 6.3%
Old 2016E 2017E 18,907 22,673 16.5% 2,238
16.5% 2,752
11.5% 1,012
11.7% 1,335
1,012
1,335
5.2%
5.7%
2.0% 2.0% 1.0% 2.0% 1.0% 0.0% 5 5 5 5 ‐ ‐
Source: Company data, KT ZMICO estimates Figure 4: DCF Valuation
####
2016F
2017F
2018F
2019F
2020F
NOPAT 834 1,254 1,614 1,939 2,336 2,751 Depreciation 683 816 910 1,005 1,100 1,195 110 814 645 632 606 Net investment in working capita - 554 Net investment in fixed assets #### - 1,500 - 1,200 - 1,200 - 1,224 - 1,224 Free cash flow to firm (FCFF)
- 459
459
510
1,099
1,580
2,116
NPV of FCFF during adjustment period 8,338 NPV of Terminal value 40,004 less: net interest bearing debt - 4,348 Equity value 43,994 No. of shares outstanding (mn) 3,658
-
9.5% Market risk premium Beta 0.70 Terminal growth rat 3.00% Cost of equity 11.7% Targeted D/E 0.54
Value per share (Bt)
-
WACC
12.03
8.6%
Source: KT ZMICO estimates REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
PROFIT & LOSS (Btmn) Revenues al es and s ervi ce Cos t of s Gross profit SG&A EBITDA a ti on & a morti zati on Depreci EBIT Interes t expens e Other i ncome / exp. EBT te ta x Corpora Forex gai n (l os s ) Extra Items os s ) from a ffi l i a tes Ga i n (l Net profit Reported EPS Ful l y di l uted EPS Core net profit Core EPS Di vi dend (Bt)
BALANCE SHEET (Btmn) Ca s h and equi va l ents Accounts recei va bl e Inventori es PP&E‐net s s ets Other a Total assets ST debt & current porti on Long‐term debt Total liabilities Pa i d‐up s ha res Shareholder equity Total liab. & shareholder equity
2013 2014 2015 2016E 2017E 2018E 14,302 15,561 16,864 19,077 22,884 26,046 (12,113) (13,205) (14,045) (15,811) (18,967) (21,562) 2,189 2,356 2,819 3,265 3,917 4,485 (1,388) (1,844) (2,114) (2,350) (2,688) (2,948) 1,619 1,693 1,973 2,350 2,895 3,401 384 683 721 816 910 1,005 1,235 1,010 1,252 1,534 1,984 2,396 (71) (133) (144) (135) (133) (113) 434 498 547 618 755 860 1,164 877 1,099 1,399 1,852 2,283 (222) (176) (219) (280) (370) (457) (57) 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 942 701 881 1,119 1,481 1,827 0.36 0.23 0.25 0.31 0.40 0.50 0.36 0.23 0.25 0.31 0.40 0.50 998 697 876 1,119 1,481 1,827 0.38 0.23 0.25 0.31 0.40 0.50 0.02 0.02 0.05 0.05 0.06 0.07 2013 2014 2015 2016E 2017E 2018E 162 283 297 376 344 379 13 19 19 21 26 29 6,664 7,041 7,579 7,884 9,094 10,043 8,607 13,160 13,677 14,362 14,651 14,846 20 96 561 622 692 773 16,047 21,174 23,037 24,238 25,857 27,206 3,466 1,219 1,724 1,424 1,274 924 0 3,000 3,000 3,300 3,300 3,000 5,746 7,091 8,119 8,359 8,665 8,410 2,613 3,049 3,484 3,658 3,658 3,658 10,301 14,083 14,918 15,878 17,192 18,796 16,047 21,174 23,037 24,238 25,857 27,206
CASH FLOW (Btmn) 2013 2014 2015 2016E Net i ncome 942 701 881 1,119 Forex a nd other extraordi na ry a djus tments 0 0 0 0 a ti on & a morti zati on Depreci 384 683 721 816 Cha nge i (2,440) 211 (528) (198) n worki ng capi ta l Cash flow from operations (1,082) 1,595 1,073 1,737 Ca pex (Inves t)/Di ves t (2,490) (1,423) (1,284) (1,500) Cash flow from investing (2,490) (1,423) (1,284) (1,500) Debt fi 3,207 752 305 0 na nci ng (repa yment) Equi ty fi na nci ng 910 436 436 174 Di vi dend pa yment (40) (48) (48) (159) Others (359) (839) (436) (174) Cash flow from financing 3,718 301 256 (158) Net cha nge i n ca s h 146 473 46 79 Free cash flow (1,082) 1,595 1,073 1,737 FCF per share (Bt) (4.14) 5.23 3.08 4.75
2017E 2018E 1,481 1,827 0 0 910 1,005 (906) (724) 1,486 2,108 (1,200) (1,200) (1,200) (1,200) (150) (650) 0 0 (168) (222) 0 0 (318) (872) (32) 36 1,486 2,108 4.06 5.76
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gros s ma rgi n (%) EBITDA ma rgi n (%) Opera ti ng ma rgi n (%) rgi n (%) Net ma Core profi t ma rgi n (%) Effecti ve ta x rate (%)
2013 2014 2015 2016E 32.6 8.8 8.4 13.1 29.7 4.6 16.5 19.1 23.50 (36.17) 9.88 21.07 15.3 15.1 16.7 17.1 11.0 10.5 11.3 11.9 8.4 6.3 7.2 7.8 6.4 4.4 5.1 5.7 6.8 4.3 5.0 5.7 19.1 20.0 19.9 20.0
2017E 2018E 20.0 13.8 23.2 17.5 32.33 23.30 17.1 17.2 12.2 12.6 8.4 8.9 6.3 6.8 6.3 6.8 20.0 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 investment in the securities of KTB and ZMICO, investor should consider 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, BIGC, BJC. KT ZMICO is a co‐underwriter of TPBI.
Anti‐corruption Progress Indicator
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 BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% 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
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 Bt10.90
Commerce April 25, 2016
Earnings upgrade/Earnings downgrade/Overview unchanged
Improving sales and profitability Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
0.291
0.351
KT ZMICO vs. consensus Share data
6.5%
14%
Reuters / Bloomberg
GLOBAL.BK/GLOBAL TB
Paid‐up Shares (m)
3,484.28
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
38.00/1,083.00
Foreign limit / actual (%)
49.00/1.76
52 week High / Low (Bt)
11.52/7.57
Avg. daily T/O (shares 000) NVDR (%)
3,658.00 0.88
Estimated free float (%)
33.07
Beta
1.05
URL
www.globalhouse.co.th
CGR
Anti‐corruption
Level 2 (Declared)
Pornsawat Jirajarus Analyst no. 18228 [email protected] 66 (0) 2624‐6257
Growing urbanization the catalysts Improving sales and profitability have convinced us that favorable sales from new stores, a lessening cannibalization impact and increasing profitability from house brands should raise GLOBAL’s profit more than we previously thought. We revise up the FY16E TP by 14% and retain our view that the urbanization trend that is driving home improvement demand in the middle‐ to‐low end market and the sizeable land bank for future expansion remain the catalysts for GLOBAL. The stock is trading at 1.2x of PE /EPS growth in 16E‐17E. We maintain our Buy call. Expect 1Q16 net profit to increase 29% YoY We expect GLOBAL to report 1Q16 net profit of Bt280mn, up 29% YoY and 48% QoQ (seasonal). Excluding inventory loss provisions of Bt17mn in 1Q15 and Bt22mn in 4Q15, the normalized net profit would be up 20% YoY and 33% QoQ. The YoY profit growth should be driven by 1) strong sales from four new stores (especially Yasothon, Buengkan and Pranburi opened in late 4Q15; no new stores in 1Q16), lessening cannibalization and pent‐up demand in the provinces and 2) a rising gross margin (+254bps YoY to 16.9% in 1Q16) from house brand products and rising steel prices. Same‐ store sales should rise 2‐3% YoY, not continuing the declining trend from 2H15 as we previously thought. SG&A expenses should continue the YoY rising trend from 2H15 (from promotions and store expansion), resulting in the EBITDA margin being up just 100 bps YoY to 11.3%. Growing market share and improving profitability Apart from the abovementioned reasons, the better‐than‐expected sales in the provinces could also have resulted from the favorable sales of stores in border provinces and GLOBAL’s increasing market share in certain locations; meanwhile, the weak farm income that is hindering spending power in the provinces has not yet improved. Slowing expansion of Thai Wasadu, its rival that plans to open just one new store this year, should mean a softer impact from competition. We believe growing sales of house brands should continue to be a key factor for profitability improvement. Revise up FY16E TP by 14% GLOBAL expects to resume rollouts of one new store per month from May onward. However, we maintain our forecast for five new stores per year as we see risk from delays in construction. Its better‐than‐expected sales recovery causes us to revise up the same‐store‐sales growth forecast from 1% YoY to 2% in 16E. We revise up the gross margin by 58 bps to 17.1% in 16E‐17E, raise the net profit forecasts in 16E‐17E by 11% and increase the 16E DCF TP from Bt10.50 to Bt12.00. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 15,561 702 0.23 ‐36.1% 0.16 4.71
FY Ended 31 Dec PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
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 2015 45.53 19.17 2.35 1.35 5.0% 25.3%
2016E 19,077 1,119 0.31 21.1% 0.21 4.34
2017E 22,884 1,481 0.40 32.3% 0.28 4.70
2018E 26,046 1,827 0.50 23.3% 0.35 5.14
2016E 35.62 17.55 2.51 1.97 7.1% 27.4%
2017E 26.92 14.20 2.32 2.60 9.0% 24.6%
2018E 21.83 11.88 2.12 3.21 10.2% 18.9%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: Earnings results preview 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) Normalized profit (loss) Reported EPS (THB) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
1Q15 4,515 648 478 (34) 149 (54) 0 (21) 0 217 234 0.07 14.4 10.3 4.6 2.8 14.0 0.5 4.7 4.9
2Q15 4,435 763 540 (33) 136 (66) 0 21 (0) 263 247 0.08 17.2 11.8 5.8 3.0 16.5 0.5 4.2 5.5
3Q15 3,796 670 467 (38) 149 (53) 16 (20) (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) (19) 3 189 211 0.05 17.9 11.5 4.5 2.2 12.3 0.5 4.3 6.0
1Q16E % YoY % QoQ 5,000 10.7 21.4 845 30.4 14.5 580 21.3 19.0 (40) 17.0 0.7 155 4.3 36.4 (70) 29.3 52.9 0 n.m. n.m. (18) n.m. n.m. 2 n.m. n.m. 280 29.1 48.1 280 19.9 32.6 0.08 7.6 41.0 16.9 11.3 5.4 n.a. 14.5 n.a. n.a. n.a.
2015 16,864 2,819 1,973 (144) 547 (219) 0 0 0 881 876 0.25 16.7 11.3 5.1 2.2 13.7 0.5 4.3 6.0
2016E % YoY % YTD 19,077 8.4 26.2 3,265 19.7 25.9 2,350 16.5 24.7 (135) 8.6 29.7 618 9.8 25.1 (280) 24.5 25.0 0 n.m. n.m. 0 n.m. n.m. 0 n.m. n.m. 1,119 25.6 25.0 1,119 25.8 25.0 0.31 9.9 25.0 17.1 11.9 5.7 2.3 17.4 0.5 4.3 7.3
Source: GLOBAL, KT ZMICO Research
Figure 2: Sales growth
Figure 3: Forecast revisions
Same-store sales growth
Sales growth Revenue %change Gross margin EBITDA %change EBITDA margin Net profit %change Normalized profit %change Net margin
50.0% 40.0% 30.0% 20.0% 10.0% 2Q16E
4Q15
1Q16E
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
-10.0%
1Q12
0.0%
Same‐store sales % change New stores % change
-20.0%
New 2016E 19,077 0.9% 17.1% 2,350 5.0% 11.9% 1,119 10.6% 1,119 10.6% 5.7%
2015 16,864 16.7% 1,973 11.3% 881 876 5.1% ‐0.5% 6
2017E 22,884 0.9% 17.1% 2,895 5.2% 12.2% 1,481 10.9% 1,481 10.9% 6.3%
Old 2016E 2017E 18,907 22,673 16.5% 2,238
16.5% 2,752
11.5% 1,012
11.7% 1,335
1,012
1,335
5.2%
5.7%
2.0% 2.0% 1.0% 2.0% 1.0% 0.0% 5 5 5 5 ‐ ‐
Source: Company data, KT ZMICO estimates Figure 4: DCF Valuation
####
2016F
2017F
2018F
2019F
2020F
NOPAT 834 1,254 1,614 1,939 2,336 2,751 Depreciation 683 816 910 1,005 1,100 1,195 110 814 645 632 606 Net investment in working capita - 554 Net investment in fixed assets #### - 1,500 - 1,200 - 1,200 - 1,224 - 1,224 Free cash flow to firm (FCFF)
- 459
459
510
1,099
1,580
2,116
NPV of FCFF during adjustment period 8,338 NPV of Terminal value 40,004 less: net interest bearing debt - 4,348 Equity value 43,994 No. of shares outstanding (mn) 3,658
-
9.5% Market risk premium Beta 0.70 Terminal growth rat 3.00% Cost of equity 11.7% Targeted D/E 0.54
Value per share (Bt)
-
WACC
12.03
8.6%
Source: KT ZMICO estimates REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
PROFIT & LOSS (Btmn) Revenues al es and s ervi ce Cos t of s Gross profit SG&A EBITDA a ti on & a morti zati on Depreci EBIT Interes t expens e Other i ncome / exp. EBT te ta x Corpora Forex gai n (l os s ) Extra Items os s ) from a ffi l i a tes Ga i n (l Net profit Reported EPS Ful l y di l uted EPS Core net profit Core EPS Di vi dend (Bt)
BALANCE SHEET (Btmn) Ca s h and equi va l ents Accounts recei va bl e Inventori es PP&E‐net s s ets Other a Total assets ST debt & current porti on Long‐term debt Total liabilities Pa i d‐up s ha res Shareholder equity Total liab. & shareholder equity
2013 2014 2015 2016E 2017E 2018E 14,302 15,561 16,864 19,077 22,884 26,046 (12,113) (13,205) (14,045) (15,811) (18,967) (21,562) 2,189 2,356 2,819 3,265 3,917 4,485 (1,388) (1,844) (2,114) (2,350) (2,688) (2,948) 1,619 1,693 1,973 2,350 2,895 3,401 384 683 721 816 910 1,005 1,235 1,010 1,252 1,534 1,984 2,396 (71) (133) (144) (135) (133) (113) 434 498 547 618 755 860 1,164 877 1,099 1,399 1,852 2,283 (222) (176) (219) (280) (370) (457) (57) 5 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 0 942 701 881 1,119 1,481 1,827 0.36 0.23 0.25 0.31 0.40 0.50 0.36 0.23 0.25 0.31 0.40 0.50 998 697 876 1,119 1,481 1,827 0.38 0.23 0.25 0.31 0.40 0.50 0.02 0.02 0.05 0.05 0.06 0.07 2013 2014 2015 2016E 2017E 2018E 162 283 297 376 344 379 13 19 19 21 26 29 6,664 7,041 7,579 7,884 9,094 10,043 8,607 13,160 13,677 14,362 14,651 14,846 20 96 561 622 692 773 16,047 21,174 23,037 24,238 25,857 27,206 3,466 1,219 1,724 1,424 1,274 924 0 3,000 3,000 3,300 3,300 3,000 5,746 7,091 8,119 8,359 8,665 8,410 2,613 3,049 3,484 3,658 3,658 3,658 10,301 14,083 14,918 15,878 17,192 18,796 16,047 21,174 23,037 24,238 25,857 27,206
CASH FLOW (Btmn) 2013 2014 2015 2016E Net i ncome 942 701 881 1,119 Forex a nd other extraordi na ry a djus tments 0 0 0 0 a ti on & a morti zati on Depreci 384 683 721 816 Cha nge i (2,440) 211 (528) (198) n worki ng capi ta l Cash flow from operations (1,082) 1,595 1,073 1,737 Ca pex (Inves t)/Di ves t (2,490) (1,423) (1,284) (1,500) Cash flow from investing (2,490) (1,423) (1,284) (1,500) Debt fi 3,207 752 305 0 na nci ng (repa yment) Equi ty fi na nci ng 910 436 436 174 Di vi dend pa yment (40) (48) (48) (159) Others (359) (839) (436) (174) Cash flow from financing 3,718 301 256 (158) Net cha nge i n ca s h 146 473 46 79 Free cash flow (1,082) 1,595 1,073 1,737 FCF per share (Bt) (4.14) 5.23 3.08 4.75
2017E 2018E 1,481 1,827 0 0 910 1,005 (906) (724) 1,486 2,108 (1,200) (1,200) (1,200) (1,200) (150) (650) 0 0 (168) (222) 0 0 (318) (872) (32) 36 1,486 2,108 4.06 5.76
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gros s ma rgi n (%) EBITDA ma rgi n (%) Opera ti ng ma rgi n (%) rgi n (%) Net ma Core profi t ma rgi n (%) Effecti ve ta x rate (%)
2013 2014 2015 2016E 32.6 8.8 8.4 13.1 29.7 4.6 16.5 19.1 23.50 (36.17) 9.88 21.07 15.3 15.1 16.7 17.1 11.0 10.5 11.3 11.9 8.4 6.3 7.2 7.8 6.4 4.4 5.1 5.7 6.8 4.3 5.0 5.7 19.1 20.0 19.9 20.0
2017E 2018E 20.0 13.8 23.2 17.5 32.33 23.30 17.1 17.2 12.2 12.6 8.4 8.9 6.3 6.8 6.3 6.8 20.0 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 investment in the securities of KTB and ZMICO, investor should consider 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, BIGC, BJC. KT ZMICO is a co‐underwriter of TPBI.
Anti‐corruption Progress Indicator
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 BUY: Expecting positive total returns of 15% or more over the next 12 months OUTPERFORM: Expecting total returns between ‐10% to +15%; returns expected to exceed market returns over a six‐month period due to specific catalysts UNDERPERFORM: Expecting total returns between ‐10% to +15%; returns expected to be below market returns over a six‐month period due to specific catalysts SELL: Expecting negative total returns of 10% or more over the next 12 months
SECTOR RECOMMENDATIONS OVERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to outperform the relevant primary market index by at least 10% over the next 12 months. NEUTRAL: The industry, as defined by the analyst's coverage universe, is expected to perform in line with the relevant primary market index over the next 12 months. UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant primary market index by 10% 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
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.
