Somboon Advance Technology
Somboon Advance Technology Company Update
Underperform (16E TP Bt14.20) Close Bt13.70
Automotive
Earnings upgrade/Earnings downgrade/ Overview unchanged
May 9, 2016
Weak 1Q16E earnings Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.593
1.721
KT ZMICO vs. consensus Share data
‐10.9%
‐8.2%
Reuters / Bloomberg
SAT.BK/SAT TB
Paid‐up Shares (m)
425.19
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
6.00/166.00
Foreign limit / actual (%)
49.00/24.81
52 week High / Low (Bt)
19.40/13.50
Avg. daily T/O (shares 000) NVDR (%)
228.00 3.80
Estimated free float (%)
55.44
Beta
0.65
URL
www.satpcl.co.th
CGR
Level 5 (Extended)
Anti‐corruption
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Weaker outlook leads to 2016E earnings cut The current drought has made the sluggish domestic spending situation more severe, creating downside risk to SAT’s new orders (big trucks) as well as its non‐auto parts. As a result, we cut SAT’s 2016E‐2017E earnings by 5%. Our UNDERPERFORM rating is kept unchanged with the new target price of Bt14.20 pegged with PER 10x (LT‐average PER). 1Q16E earnings to have dropped 22%YoY We expect SAT to report a net profit of Bt151mn (EPS: Bt0.35) in 1Q16E, declining 22%YoY and 26%QoQ. While overall auto output declined by only 3.4%YoY, we expect revenue to fall 10%YoY to Bt2.2bn. This is attributed to the weak sales of one key client’s new pickup model. In addition, orders from non‐auto parts and big trucks, which were expected to offset orders lost from Mitsubishi, were softer than earlier expected. The low utilization (around 60% from 71% in 1Q15) likely caused its GPM to dive to 14.0% from 15.5% last year. 2Q16E earnings should recover solidly Despite the continued sluggishness of the overall industry and the series of public holidays, the low base of 2Q15 earnings should drive SAT’s 2Q16E operational performance solidly YoY. The production line modifications in preparation for Toyota’s new pickup model pushed its 2Q15 utilization rate down to 53% with a GPM of only 11.8% vs. the average of 14‐15%. Slash 2016E‐2017E earnings by 5% SAT confirmed that there has been no direct adverse impact from Toyota plant shutdowns across Japan due to the recent earthquake on the island of Kyushu and Mitsubishi’s fuel economy cheating scandal. Nevertheless, the ongoing sluggish domestic spending worsened by the critical drought situation and low farm income creates downside risk to our model, particularly for SAT’s new orders from big trucks as well as non‐auto parts. Thus, we cut the 2016E‐2017E revenue forecasts by 5% and the earnings estimates will be slashed by the same extent as the lower GPM estimate will be offset by a decline in SG&A expenses.
Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 8,084 650 1.53 1.53 ‐19.88 0.60 12.27
2015 8,644 642 1.51 1.51 ‐1.47 0.60 13.01
2016E 8,472 605 1.42 1.42 ‐5.51 0.57 13.83
2017E 8,968 674 1.58 1.58 11.33 0.63 14.84
2018E 9,665 755 1.77 1.77 11.98 0.71 15.98
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 10.60 5.28 1.32 3.70 12.88 34.47
2015 11.40 4.91 1.32 3.51 11.94 17.61
2016E 12.08 3.99 1.24 3.31 10.61 7.65
2017E 10.85 3.55 1.16 3.69 11.05 0.91
2018E 9.69 3.34 1.08 4.13 11.51 1.69
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: Earnings preview
Source: SAT and KT Zmico Research Figure 2: Earnings revision
Source: Bloomberg and KTZMICO Research Figure 3: PER and PBV band
Source: Bloomberg and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial Summary
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
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
Underperform (16E TP Bt14.20) Close Bt13.70
Automotive
Earnings upgrade/Earnings downgrade/ Overview unchanged
May 9, 2016
Weak 1Q16E earnings Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.593
1.721
KT ZMICO vs. consensus Share data
‐10.9%
‐8.2%
Reuters / Bloomberg
SAT.BK/SAT TB
Paid‐up Shares (m)
425.19
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
6.00/166.00
Foreign limit / actual (%)
49.00/24.81
52 week High / Low (Bt)
19.40/13.50
Avg. daily T/O (shares 000) NVDR (%)
228.00 3.80
Estimated free float (%)
55.44
Beta
0.65
URL
www.satpcl.co.th
CGR
Level 5 (Extended)
Anti‐corruption
Waraporn Wiboonkanarak Analyst, no. 2482 [email protected] 66 (0) 2624‐6273
Weaker outlook leads to 2016E earnings cut The current drought has made the sluggish domestic spending situation more severe, creating downside risk to SAT’s new orders (big trucks) as well as its non‐auto parts. As a result, we cut SAT’s 2016E‐2017E earnings by 5%. Our UNDERPERFORM rating is kept unchanged with the new target price of Bt14.20 pegged with PER 10x (LT‐average PER). 1Q16E earnings to have dropped 22%YoY We expect SAT to report a net profit of Bt151mn (EPS: Bt0.35) in 1Q16E, declining 22%YoY and 26%QoQ. While overall auto output declined by only 3.4%YoY, we expect revenue to fall 10%YoY to Bt2.2bn. This is attributed to the weak sales of one key client’s new pickup model. In addition, orders from non‐auto parts and big trucks, which were expected to offset orders lost from Mitsubishi, were softer than earlier expected. The low utilization (around 60% from 71% in 1Q15) likely caused its GPM to dive to 14.0% from 15.5% last year. 2Q16E earnings should recover solidly Despite the continued sluggishness of the overall industry and the series of public holidays, the low base of 2Q15 earnings should drive SAT’s 2Q16E operational performance solidly YoY. The production line modifications in preparation for Toyota’s new pickup model pushed its 2Q15 utilization rate down to 53% with a GPM of only 11.8% vs. the average of 14‐15%. Slash 2016E‐2017E earnings by 5% SAT confirmed that there has been no direct adverse impact from Toyota plant shutdowns across Japan due to the recent earthquake on the island of Kyushu and Mitsubishi’s fuel economy cheating scandal. Nevertheless, the ongoing sluggish domestic spending worsened by the critical drought situation and low farm income creates downside risk to our model, particularly for SAT’s new orders from big trucks as well as non‐auto parts. Thus, we cut the 2016E‐2017E revenue forecasts by 5% and the earnings estimates will be slashed by the same extent as the lower GPM estimate will be offset by a decline in SG&A expenses.
Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt)
2014 8,084 650 1.53 1.53 ‐19.88 0.60 12.27
2015 8,644 642 1.51 1.51 ‐1.47 0.60 13.01
2016E 8,472 605 1.42 1.42 ‐5.51 0.57 13.83
2017E 8,968 674 1.58 1.58 11.33 0.63 14.84
2018E 9,665 755 1.77 1.77 11.98 0.71 15.98
FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 10.60 5.28 1.32 3.70 12.88 34.47
2015 11.40 4.91 1.32 3.51 11.94 17.61
2016E 12.08 3.99 1.24 3.31 10.61 7.65
2017E 10.85 3.55 1.16 3.69 11.05 0.91
2018E 9.69 3.34 1.08 4.13 11.51 1.69
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
Figure 1: Earnings preview
Source: SAT and KT Zmico Research Figure 2: Earnings revision
Source: Bloomberg and KTZMICO Research Figure 3: PER and PBV band
Source: Bloomberg and KTZMICO Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial Summary
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
th
th
th
th
KT•ZMICO Securities Company Limited
st
8 , 15 -17 , 19 , 21 Floor, Liberty Square Bldg., 287 Silom Road, Bangrak, Bangkok 10500 Telephone: (66-2) 695-5000
Phaholyothin Branch
rd
Fax. (66-2) 631-1709
Ploenchit Branch
th
nd
2
Sindhorn Branch
3 Floor, Shinnawatra Tower II,
8 Floor, Ton Son Tower,
1291/1 Phaholyothin Road,
900 Ploenchit Road, Lumpini,
Floor, Sindhorn Tower 1, 130-132 Wireless Road, Lumpini,
Phayathai, Bangkok 10400
Pathumwan, Bangkok 10330
Pathumwan, Bangkok 10330
Telephone: (66-2) 686-1500
Telephone: (66-2) 626-6000
Telephone: (66-2) 627-3550
Fax. (66-2) 686-1666
Fax. (66-2) 626-6111
Fax. (66-2) 627-3582, 627-3600
Nakhon Pathom Branch 1156 Petchakasem Road, Sanamchan Subdistrict, Amphoe Meuang , Nakhon Pathom Province 73000 Telephone: (034) 271300 Fax: (034) 271300 #100
Chachoengsao Branch
Viphavadee Branch
Phitsanulok Branch
G Floor, Lao Peng Nguan 1 Bldg.,
Krung Thai Bank, Singhawat Branch
333 Soi Cheypuand, Viphavadee-Rangsit Road,
114 Singhawat Road,
Ladyao, Jatujak, Bangkok 10900
Muang, Phitsanulok 65000
Telephone: (66-2) 618-8500
Telephone: 083-490-2873
Fax. (66-2) 618-8569
th
Chonburi Branch
Pattaya Branch
108/34-36 Mahajakkrapad Road,
4 Floor, Forum Plaza Bldg.,
382/6-8 Moo 9, T. NongPrue,
T.Namuang, A.Muang,
870/52 Sukhumvit Road, T. Bangplasoy,
A. Banglamung, Cholburi 20260
Chachoengsao 24000
A. Muang, Cholburi 20000
Telephone: (038) 362-420-9
Telephone: (038) 813-088
Telephone: (038) 287-635
Fax. (038) 362-430
Fax. (038) 813-099
Fax. (038) 287-637
Khon Kaen Branch
5th Floor, Charoen Thani Princess Hotel,
Hat Yai Branch
Sriworajak Building Branch
200/301 Juldis Hatyai Plaza Floor 3,
1st – 2nd Floor, Sriworajak Building, 222
260 Srichan Road, T. Naimuang,
Niphat-Uthit 3 Rd,
Luang Road, Pomprab,
A. Muang, Khon Kaen 40000
Hatyai Songkhla 90110
Bankgok 10100
Telephone: (043) 389-171-193
Telephone: (074) 355-530-3
Telephone: (02) 689-3100
Fax. (043) 389-209
Fax: (074) 355-534
Fax. (02) 689-3199
Central World Branch
Chiang Mai Branch
Phuket Branch
999/9 The Offices at Central World,
422/49 Changklan Road, Changklan
22/61-63, Luang Por Wat Chalong Road,
16th Fl., Rama 1 Rd, Pathumwan,
Subdistrict, Amphoe Meuang,
Talat Yai, Mueang Phuket,
Bangkok 10330
Chiang Mai 50100
Phuket 83000
Telephone: (66-2) 673-5000,
Telephone: (053) 270-072
Tel. (076) 222-811,(076) 222-683
(66-2) 264-5888 Fax. (66-2) 264-5899
Fax: (053) 272-618
Fax. (076) 222-861
Pak Chong Branch
Cyber Branch @ North Nana
173 175, Mittapap Road,
Krung Thai Bank PCL, 2 Floor, North Nana Branch 35 Sukhumvit Rd.,Klong Toey Nua Subdistrict , Wattana District, Bangkok 10110 Telephone: 083-490-2871
Nong Sarai, Pak Chong, Nakhon Ratchasima 30130 Tel. (044) 279-511 Fax. (044) 279-574
Nakhon Ratchasima Branch
Bangkhae Branch
6th Floor The Mall Group Building Bangkhae 275 Moo 1 Petchkasem Road, North Bangkhae, Bangkhae, Bangkok 10160 Tel. (66-2) 454-9979 Fax. (66-2) 454-9970
624/9 Changphuek Road, . Naimaung, A.Maung, Nakhon Ratchasima 30000 Telephone: (044) 247222 Fax: (044) 247171 Information herein was obtained from sources believed to be reliable, but its completeness and accuracy are not guaranteed. All opinions expressed constitute our views on that date and are not intended as an offer or solicitation to sell or buy any securities. Investors should exercise care when making a decision to invest in securities. No one may modify or distribute any part of this report unless written permission is first received from Seamico Securities Plc. If any modifications are made, quotes or references taken from the report and the report date must be clearly mentioned and must not cause misunderstanding or damage to the company.
