Singer Thailand
Singer Thailand Outperform (16E TP Bt9.30)
Company Update
Close Bt8.10
Commerce January 27, 2016
Earnings upgrade/ Earnings downgrade/Overview unchanged
A transition year ahead Price Performance (%)
Shifting to a multi‐brand strategy SINGER has set an ambitious revenue growth target of 15% in 2016. Its multi‐brand and multi‐product strategy will be a key driver to extract growth. With its strong sales network, SINGER believes that this strategy will help the firm to better serve clients’ demand by filling quality and price gaps with SINGER brands. The branded products will be carefully sourced to avoid cannibalization. Apart from mobile handsets from JMART, Mastercool fans and LG water filters will be added to the portfolio.
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
0.737
0.790
KT ZMICO vs. consensus Share data
‐19.9%
‐15.2%
Reuters / Bloomberg
SINGER.BK/SINGER TB
Paid‐up Shares (m)
270.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
2.00/61.00
Foreign limit / actual (%)
49.00/1.07
52 week High / Low (Bt)
16.30/7.45
Avg. daily T/O (shares 000)
972.00
NVDR (%)
5.74
Estimated free float (%)
59.97
Beta
1.06
URL
www.singerthai.co.th
CGR
Anti‐corruption
Level 3A (Established)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Earnings cut, downgrade to OUTPERFORM 2016 will be a transition period for SINGER. The company will adopt a multi‐brand and multi‐product strategy to make gains in the market and also increase the visibility of its business synergy with its new shareholders, i.e., JMART and the SPC group. We expect its earnings to have bottomed out with recovery underway. Our target price is trimmed to Bt9.30 pegged with PBV 1.5x (GGM model) due to the earnings cut; thus, our rating is also downgraded to OUTPERFORM (from BUY).
2016E earnings forecast downgraded The company claims that its non‐SINGER products will contribute a similar net margin compared with SINGER brands. Lower operating expenses including brand advertisements and product warranties will offset the lower gross margin. We assume its non‐SINGER brands will contribute 15% of revenue. Given the lower margins, our estimated gross margin is revised down by 340bps. As this is not sufficient to offset lower SG&A to sales, our 2016E NP is cut by 30% to Bt180mn (+12.9%YoY). Earnings recovery in 4Q15E We expect SINGER to post a net profit of Bt45mn (EPS: Bt0.17) in 4Q15E, skyrocketing 83%YoY and three‐fold QoQ on better profitability. With the sluggish domestic spending, the company has focused on selling repossessed goods, mainly commercial products. This should result in a decrease in the top line QoQ but with a better margin. Its SG&A to sales should also drop to 44% from 49% in the previous quarter due to stricter marketing cost control in accordance with the sluggish market conditions. Based on this forecast, our full‐year NP estimate is slashed by 11% to Bt159mn (‐34%YoY). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 3,627 321 1.19 42% 0.45 5.30 2013 15.50 12.71 3.47 2.4% 24.4% 65.9%
2014 3,427 241 0.89 ‐25% 0.53 5.84 2014 14.20 11.12 2.17 4.2% 16.0% 48.6%
2015E 3,414 159 0.59 ‐34% 0.35 5.90 2015E 14.99 11.95 1.50 4.0% 10.1% 56.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 3,748 180 0.67 13% 0.40 6.22 2016E 12.15 9.70 1.30 4.9% 11.0% 44.4%
2017E 4,223 212 0.78 18% 0.47 6.60 2017E 10.33 7.71 1.23 5.8% 12.2% 30.5%
Figure 1: Earnings preview Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. 4Q14 Revenue 627 Gross profit 284 SG&A (244) EBITDA 52 Interest expense (14) Other income 6 Income tax (7) Net profit (loss) 25 Normalized profit (loss) 25 Reported EPS (Bt) 0.09 Gross margin 45.2% EBITDA margin 8.3% Net margin 4.0% Current ratio (x) 2.77 Interest coverage (x) 3.36 Debt to equity (x) 1.13 BVPS 5.84 ROE 16.0%
3Q15 793 408 (385) 33 (13) 3 (3) 11 11 0.04 51.4% 4.1% 1.3% 1.52 2.04 1.25 5.74 9.0%
4Q15E 775 407 (341) 77 (12) 6 (12) 45 45 0.17 52.5% 9.9% 5.9% 2.51 5.67 1.01 5.90 10.1%
%YoY 23.6% 43.5% 39.8% 47.1% ‐9.9% ‐5.3% 62.0% 82.6% 82.6% 82.6%
9M15 2,639 1,370 (1,205) 198 (39) 11 (26) 114 114 0.42 51.9% 7.5% 4.3% 1.52 4.59 1.25 1.0% 5.74 9.0%
%QoQ ‐2.3% ‐0.2% ‐11.5% 134.3% ‐4.4% 118.1% 337.4% 329.5% 329.5% 329.5%
2.9%
YTD %YoY (%2015E) ‐0.4% 77.3% ‐1.8% 77.1% 5.1% 77.9% ‐27.1% 72.1% ‐12.3% 76.1% 39.2% 66.5% ‐26.7% 69.1% ‐34.0% 71.5% ‐34.0% 71.5% ‐34.0% 71.5%
%YoY ‐5.8% ‐10.2% ‐1.8% ‐39.0% ‐13.1% 82.4% ‐41.1% ‐47.4% ‐47.4% ‐47.4%
2015E 3,414 1,777 (1,546) 275 (51) 17 (37) 159 159 0.59 52.0% 8.1% 4.7% 2.51 4.85 1.01 1.4% 5.90 10.1%
1.0%
Source: The Company and KT Zmico Research
Figure 2: Earnings revision
Ended Dec Revenue (Btmn) EBITDA (Btmn) Net profit (Btmn) % growth Core profit (Btmn) % growth Core EPS (Bt) Core EPS growth (%) Gross margin (%) SG&A exp to sales (%)
Previous 3,458 301 180 ‐25.5% 180 ‐25.5% 0.67 ‐25.5% 52.4% 44.8%
2015E New 3,414 275 159 ‐34.0% 159 ‐34.0% 0.59 ‐34.0% 52.0% 45.3%
%chg ‐1.3% ‐8.6% ‐11.4% ‐8.4% ‐11.3% ‐8.5% ‐11.9% ‐8.4% ‐0.3% 0.5%
2016E New 3,748 302 180 12.9% 180 12.9% 0.67 12.9% 48.6% 42.0%
Previous 3,746 398 258 43.3% 258 43.3% 0.95 43.3% 52.0% 42.7%
%chg 0.1% ‐24.1% ‐30.2% ‐30.4% ‐30.2% ‐30.4% ‐29.8% ‐30.4% ‐3.4% ‐0.7%
Source: KT Zmico Research Figure 3: PER and PBV band
25.00 20.00 15.00
PBV (x)
PER (x)
30.00
6.0
+2.0SD +1.0SD
+2 S.D.
4.0
10.00 5.00
+3 S.D.
5.0
3.0
+1 S.D.
2.0
Average
‐0.5SD
‐ (5.00)
1.0
(10.00)
Source: KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Dec‐15
Oct‐14
Sep‐13
Jul‐12
Jun‐11
Apr‐10
Feb‐09
Oct‐07
Aug‐06
Jun‐05
Apr‐04
Mar‐03
0.0 Jan‐02
May‐15
Apr‐14
Mar‐13
Jan‐11
Feb‐12
Dec‐09
Sep‐08
Jul‐07
Jun‐06
Apr‐05
Feb‐03
Jan‐02
Mar‐04
‐0.5SD
(15.00)
Financial Summary PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2013 3,627 (1,764) 1,863 (1,437) 410 (26) 439 (55) 12 385 (64) 321 1.19 1.19 321 1.19 0.45
2014 3,427 (1,619) 1,809 (1,471) 319 (27) 351 (58) 12 292 (51) 241 0.89 0.89 241 0.89 0.53
2015E 3,414 (1,637) 1,777 (1,546) 224 (27) 248 (51) 17 197 (37) 159 0.59 0.59 159 0.59 0.35
2016E 3,748 (1,890) 1,822 (1,574) 258 (35) 267 (45) 19 222 (42) 180 0.67 0.67 180 0.67 0.40
2017E 4,223 (2,163) 2,028 (1,738) 305 (44) 311 (49) 21 261 (50) 212 0.78 0.78 212 0.78 0.47
BALANCE SHEET (Btm) Cash and equivalents Current portion of installment receivables Inventories Installment Receivables PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity
2013 202 1,392 327 589 361 386 3,256 225 0 1,824 270 1,432 3,256
2014 290 1,375 297 620 387 387 3,356 129 158 1,778 270 1,578 3,356
2015E 129 1,394 340 594 412 331 3,199 100 58 1,606 270 1,594 3,201
2016E 162 1,378 343 591 417 358 3,249 58 0 1,571 270 1,679 3,250
2017E 206 1,328 258 574 414 402 3,182 0 0 1,401 270 1,782 3,183
CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest 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)
2013 321 26 (570) (224) (18) (15) (540) 0 (81) 247 8 ‐242 ‐0.90
2014 241 27 95 363 (40) (6) 62 0 (122) (268) 88 323 1.20
2015E 159 27 (116) 71 (61) (59) (129) 0 (143) (172) (161) 10 0.04
2016E 180 35 75 290 (42) (41) (100) 0 (96) (216) 33 248 0.92
2017E 212 44 98 353 (43) (43) (58) 0 (108) (266) 44 310 1.15
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013 22.9 29.5 41.7 51.4 12.8 11.8 8.8 8.8 16.6
2014 (5.5) (18.9) (24.7) 52.8 11.0 9.9 7.0 7.0 17.4
2015E (0.4) (27.1) (34.0) 52.0 8.1 6.8 4.7 4.7 19.0
2016E 9.8 9.9 12.9 48.6 8.1 6.6 4.8 4.8 19.0
2017E 12.7 17.2 17.6 48.0 8.4 6.9 5.0 5.0 19.0
FINANCIAL QUALITY Total debt (Btm) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
1,145 943 0.66 8.02
1,057 768 0.49 6.01
1,028 899 0.56 4.85
908 746 0.44 5.98
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
750 544 0.31 6.29
Note: KT ZMICO is a partnership between KTB and ZMICO. 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, SUTHA, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, UWC. KT ZMICO is a co‐underwriter of TKN. 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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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 Bt8.10
Commerce January 27, 2016
Earnings upgrade/ Earnings downgrade/Overview unchanged
A transition year ahead Price Performance (%)
Shifting to a multi‐brand strategy SINGER has set an ambitious revenue growth target of 15% in 2016. Its multi‐brand and multi‐product strategy will be a key driver to extract growth. With its strong sales network, SINGER believes that this strategy will help the firm to better serve clients’ demand by filling quality and price gaps with SINGER brands. The branded products will be carefully sourced to avoid cannibalization. Apart from mobile handsets from JMART, Mastercool fans and LG water filters will be added to the portfolio.
Source: SET Smart
FY15
FY16
Consensus EPS (Bt)
0.737
0.790
KT ZMICO vs. consensus Share data
‐19.9%
‐15.2%
Reuters / Bloomberg
SINGER.BK/SINGER TB
Paid‐up Shares (m)
270.00
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
2.00/61.00
Foreign limit / actual (%)
49.00/1.07
52 week High / Low (Bt)
16.30/7.45
Avg. daily T/O (shares 000)
972.00
NVDR (%)
5.74
Estimated free float (%)
59.97
Beta
1.06
URL
www.singerthai.co.th
CGR
Anti‐corruption
Level 3A (Established)
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Earnings cut, downgrade to OUTPERFORM 2016 will be a transition period for SINGER. The company will adopt a multi‐brand and multi‐product strategy to make gains in the market and also increase the visibility of its business synergy with its new shareholders, i.e., JMART and the SPC group. We expect its earnings to have bottomed out with recovery underway. Our target price is trimmed to Bt9.30 pegged with PBV 1.5x (GGM model) due to the earnings cut; thus, our rating is also downgraded to OUTPERFORM (from BUY).
2016E earnings forecast downgraded The company claims that its non‐SINGER products will contribute a similar net margin compared with SINGER brands. Lower operating expenses including brand advertisements and product warranties will offset the lower gross margin. We assume its non‐SINGER brands will contribute 15% of revenue. Given the lower margins, our estimated gross margin is revised down by 340bps. As this is not sufficient to offset lower SG&A to sales, our 2016E NP is cut by 30% to Bt180mn (+12.9%YoY). Earnings recovery in 4Q15E We expect SINGER to post a net profit of Bt45mn (EPS: Bt0.17) in 4Q15E, skyrocketing 83%YoY and three‐fold QoQ on better profitability. With the sluggish domestic spending, the company has focused on selling repossessed goods, mainly commercial products. This should result in a decrease in the top line QoQ but with a better margin. Its SG&A to sales should also drop to 44% from 49% in the previous quarter due to stricter marketing cost control in accordance with the sluggish market conditions. Based on this forecast, our full‐year NP estimate is slashed by 11% to Bt159mn (‐34%YoY). Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec Norm. PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
2013 3,627 321 1.19 42% 0.45 5.30 2013 15.50 12.71 3.47 2.4% 24.4% 65.9%
2014 3,427 241 0.89 ‐25% 0.53 5.84 2014 14.20 11.12 2.17 4.2% 16.0% 48.6%
2015E 3,414 159 0.59 ‐34% 0.35 5.90 2015E 14.99 11.95 1.50 4.0% 10.1% 56.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 3,748 180 0.67 13% 0.40 6.22 2016E 12.15 9.70 1.30 4.9% 11.0% 44.4%
2017E 4,223 212 0.78 18% 0.47 6.60 2017E 10.33 7.71 1.23 5.8% 12.2% 30.5%
Figure 1: Earnings preview Profit and Loss Statement (Btmn) Fiscal Year‐Ended Dec. 4Q14 Revenue 627 Gross profit 284 SG&A (244) EBITDA 52 Interest expense (14) Other income 6 Income tax (7) Net profit (loss) 25 Normalized profit (loss) 25 Reported EPS (Bt) 0.09 Gross margin 45.2% EBITDA margin 8.3% Net margin 4.0% Current ratio (x) 2.77 Interest coverage (x) 3.36 Debt to equity (x) 1.13 BVPS 5.84 ROE 16.0%
3Q15 793 408 (385) 33 (13) 3 (3) 11 11 0.04 51.4% 4.1% 1.3% 1.52 2.04 1.25 5.74 9.0%
4Q15E 775 407 (341) 77 (12) 6 (12) 45 45 0.17 52.5% 9.9% 5.9% 2.51 5.67 1.01 5.90 10.1%
%YoY 23.6% 43.5% 39.8% 47.1% ‐9.9% ‐5.3% 62.0% 82.6% 82.6% 82.6%
9M15 2,639 1,370 (1,205) 198 (39) 11 (26) 114 114 0.42 51.9% 7.5% 4.3% 1.52 4.59 1.25 1.0% 5.74 9.0%
%QoQ ‐2.3% ‐0.2% ‐11.5% 134.3% ‐4.4% 118.1% 337.4% 329.5% 329.5% 329.5%
2.9%
YTD %YoY (%2015E) ‐0.4% 77.3% ‐1.8% 77.1% 5.1% 77.9% ‐27.1% 72.1% ‐12.3% 76.1% 39.2% 66.5% ‐26.7% 69.1% ‐34.0% 71.5% ‐34.0% 71.5% ‐34.0% 71.5%
%YoY ‐5.8% ‐10.2% ‐1.8% ‐39.0% ‐13.1% 82.4% ‐41.1% ‐47.4% ‐47.4% ‐47.4%
2015E 3,414 1,777 (1,546) 275 (51) 17 (37) 159 159 0.59 52.0% 8.1% 4.7% 2.51 4.85 1.01 1.4% 5.90 10.1%
1.0%
Source: The Company and KT Zmico Research
Figure 2: Earnings revision
Ended Dec Revenue (Btmn) EBITDA (Btmn) Net profit (Btmn) % growth Core profit (Btmn) % growth Core EPS (Bt) Core EPS growth (%) Gross margin (%) SG&A exp to sales (%)
Previous 3,458 301 180 ‐25.5% 180 ‐25.5% 0.67 ‐25.5% 52.4% 44.8%
2015E New 3,414 275 159 ‐34.0% 159 ‐34.0% 0.59 ‐34.0% 52.0% 45.3%
%chg ‐1.3% ‐8.6% ‐11.4% ‐8.4% ‐11.3% ‐8.5% ‐11.9% ‐8.4% ‐0.3% 0.5%
2016E New 3,748 302 180 12.9% 180 12.9% 0.67 12.9% 48.6% 42.0%
Previous 3,746 398 258 43.3% 258 43.3% 0.95 43.3% 52.0% 42.7%
%chg 0.1% ‐24.1% ‐30.2% ‐30.4% ‐30.2% ‐30.4% ‐29.8% ‐30.4% ‐3.4% ‐0.7%
Source: KT Zmico Research Figure 3: PER and PBV band
25.00 20.00 15.00
PBV (x)
PER (x)
30.00
6.0
+2.0SD +1.0SD
+2 S.D.
4.0
10.00 5.00
+3 S.D.
5.0
3.0
+1 S.D.
2.0
Average
‐0.5SD
‐ (5.00)
1.0
(10.00)
Source: KT Zmico Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Dec‐15
Oct‐14
Sep‐13
Jul‐12
Jun‐11
Apr‐10
Feb‐09
Oct‐07
Aug‐06
Jun‐05
Apr‐04
Mar‐03
0.0 Jan‐02
May‐15
Apr‐14
Mar‐13
Jan‐11
Feb‐12
Dec‐09
Sep‐08
Jul‐07
Jun‐06
Apr‐05
Feb‐03
Jan‐02
Mar‐04
‐0.5SD
(15.00)
Financial Summary PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Other income / exp. EBT Corporate tax Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt)
2013 3,627 (1,764) 1,863 (1,437) 410 (26) 439 (55) 12 385 (64) 321 1.19 1.19 321 1.19 0.45
2014 3,427 (1,619) 1,809 (1,471) 319 (27) 351 (58) 12 292 (51) 241 0.89 0.89 241 0.89 0.53
2015E 3,414 (1,637) 1,777 (1,546) 224 (27) 248 (51) 17 197 (37) 159 0.59 0.59 159 0.59 0.35
2016E 3,748 (1,890) 1,822 (1,574) 258 (35) 267 (45) 19 222 (42) 180 0.67 0.67 180 0.67 0.40
2017E 4,223 (2,163) 2,028 (1,738) 305 (44) 311 (49) 21 261 (50) 212 0.78 0.78 212 0.78 0.47
BALANCE SHEET (Btm) Cash and equivalents Current portion of installment receivables Inventories Installment Receivables PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Total liab. & shareholder equity
2013 202 1,392 327 589 361 386 3,256 225 0 1,824 270 1,432 3,256
2014 290 1,375 297 620 387 387 3,356 129 158 1,778 270 1,578 3,356
2015E 129 1,394 340 594 412 331 3,199 100 58 1,606 270 1,594 3,201
2016E 162 1,378 343 591 417 358 3,249 58 0 1,571 270 1,679 3,250
2017E 206 1,328 258 574 414 402 3,182 0 0 1,401 270 1,782 3,183
CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest 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)
2013 321 26 (570) (224) (18) (15) (540) 0 (81) 247 8 ‐242 ‐0.90
2014 241 27 95 363 (40) (6) 62 0 (122) (268) 88 323 1.20
2015E 159 27 (116) 71 (61) (59) (129) 0 (143) (172) (161) 10 0.04
2016E 180 35 75 290 (42) (41) (100) 0 (96) (216) 33 248 0.92
2017E 212 44 98 353 (43) (43) (58) 0 (108) (266) 44 310 1.15
PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2013 22.9 29.5 41.7 51.4 12.8 11.8 8.8 8.8 16.6
2014 (5.5) (18.9) (24.7) 52.8 11.0 9.9 7.0 7.0 17.4
2015E (0.4) (27.1) (34.0) 52.0 8.1 6.8 4.7 4.7 19.0
2016E 9.8 9.9 12.9 48.6 8.1 6.6 4.8 4.8 19.0
2017E 12.7 17.2 17.6 48.0 8.4 6.9 5.0 5.0 19.0
FINANCIAL QUALITY Total debt (Btm) Net debt (Cash) (Btm) Net debt to equity (x) Interest coverage (x)
1,145 943 0.66 8.02
1,057 768 0.49 6.01
1,028 899 0.56 4.85
908 746 0.44 5.98
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
750 544 0.31 6.29
Note: KT ZMICO is a partnership between KTB and ZMICO. 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, SUTHA, ZMICO, MAKRO, CPALL, SAFARI, PACE, PLE, TPOLY, UWC. KT ZMICO is a co‐underwriter of TKN. 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
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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.
