Thai Metal Trade - Global Alliance Partners
Thai Metal Trade Buy (17E TP Bt20.25)
Company Update
Close Bt14.50
Steel
Earning upgrade/Earnings downgrade/Overview unchanged
August 4, 2017
2Q17E NP to have fallen by 87%YoY, but remains an attractive dividend play Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.307
1.420
KT ZMICO vs. consensus Share data
14.0%
9.9%
Reuters / Bloomberg
TMT.BK/TMT TB
Paid‐up Shares (m)
435.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
6.00/190.00
Foreign limit / actual (%)
49.00/2.41
52 week High / Low (Bt)
18.90/11.20
Avg. daily T/O (shares 000) NVDR (%)
1,039.00 2.08
Estimated free float (%)
21.79
Beta
1.13
URL
www.thaimetaltrade.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst, no. 17621 [email protected] 66 (0) 2624‐6258
Firm client base to drive healthy profit ; attractive dividend play Despite the expected weak 2Q17E earnings growth YoY and QoQ, we believe that earnings already bottomed out in 2Q17E and they are expected to recover in 2H17E. We therefore maintain our 2017E earnings projection. The recent fall of the share price should be good timing to ‘BUY’. We still like TMT for its integrated steel service center with effective management, a wide range of service availability, client base growth, good profitability and an expected dividend yield of 8% p.a. Our current DDM‐based target price is Bt20.25/share. 2Q17E NP to have fallen by 87%YoY with GPM pressured by lower steel prices We now expect TMT to post a net profit of Bt38mn in 2Q17 (below our previous forecast of Bt90mn because the gross profit margin (GPM) likely contracted to 5.1% vs. 7% assumed previously). The expected result represents a fall of 87%YoY and 85%QoQ in line with global steel prices declined as steel output in China increased and India exported more steel. Meanwhile, domestic demand has slowed down (early rainy season and slower purchases while prices are falling). In addition, TMT still had some high‐cost raw material left from 1Q17. Hence, we expect the firm’s 2Q17E GPM at 5.1% (vs. 16.7% and 12.2% in 2Q16 and 1Q17, respectively). However, given expected strong sales volume of 165,000 tons (+14%YoY, ‐4%QoQ) from clients in the construction and factory sectors, the firm’s sales for the quarter are projected at Bt3.3bn (based on an average selling price assumption of Bt20/kg, down 3%YoY and 7%QoQ). 3Q‐4Q17E earnings to recover from the bottom in 2Q; forecast maintained Should the 2Q17E earnings come out as expected, the firm’s 1H17 earnings are likely to amount to Bt293mn, accounting for 45% of our full‐ year projection of Bt647mn. The 3Q‐4Q17E earnings are likely to recover from the bottom in 2Q (selling price has improved in line with global prices since mid Jul‐17). We maintain our 2017E earnings forecast. Safe business expansion plan with an aim to achieve a CAGR of 10‐15% TMT targets a CAGR of 10‐15% over the next three years. In light of this, it will add new capacity of 200,000 tons p.a. (focusing on structural steel and steel pipes), bringing the total to 1mn tpa. in the next three years, with a planned capex of Bt1.2bn. The firm will gradually invest in the domestic steel market (e.g., preparing land for construction of a new plant and new warehouse, which is expected to be completed by early 2018, and beginning to order machinery in mid‐1Q18). This expansion plan will be funded by long‐term borrowing (from bank loans or issuance of debentures). The plan is expected to lead to sustained growth in the future. We expect EBITDA to grow from an average of Bt557mn p.a. during 2010‐15 to Bt1bn p.a. in the next years. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm EPS (Bt) Norm EPS grw (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 12,251 334 0.77 0.77 ‐24% 0.65 4.98 2014 18.89 16.47 2.91 4.5% 15.4% 114.7%
2015 11,569 321 0.74 0.74 ‐4% 0.65 5.07 2015 19.70 19.21 2.86 4.5% 14.7% 79.9%
2016 12,465 912 2.09 2.09 184% 1.50 6.51 2016 6.93 8.41 2.23 10.3% 36.2% 94.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 14,517 647 1.49 1.49 ‐29% 1.11 6.49 2017E 9.76 11.38 2.23 7.7% 22.9% 109.2%
2018E 15,915 679 1.56 1.56 5% 1.17 6.93 2018E 9.30 11.06 2.09 8.1% 23.2% 116.9%
Figure 1 : 2Q17E and 1H17E earnings projections
Consolidated Profit and Loss FY Dec (Btm) Revenue Gross profit EBITDA Interest Expenses Net other income Income tax Forex gain (loss) Other extraordinary items Gn(Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt)
2Q16 1Q17 2Q17E 2,987 3,675 3,300 498 449 170 391 355 84 (12) (13) (13) 14 16 16 (69) (64) (9) 0 0 0 0 0 0 0 0 0 283 255 38 283 255 38 0.65 0.58 0.09
Gross margin EBITDA margin Net profit margin Current ratio (x) Interest coverage (x) Effective tax rate
16.7% 12.2% 5.1% 13.1% 9.7% 2.5% 9.5% 6.9% 1.2% 1.23 1.25 1.25 33.38 27.24 6.42 19.7% 20.2% 20.0%
%YoY 10% ‐66% ‐79% 11% 12% ‐86% nm nm nm ‐87% ‐87% ‐87%
%QoQ ‐10% ‐62% ‐76% 0% 0% ‐85% nm nm nm ‐85% ‐85% ‐85%
1H16 1H17E %YoY 2016 2017E 6,150 6,975 13% 12,465 14,517 963 618 ‐36% 1584 1343 776 439 ‐43% 1296 999 (22) (26) 21% (48) (60) 28 32 15% 57 52 (138) (74) ‐47% (225) (162) 0 0 nm 0 0 0 0 nm 0 0 0 0 nm 0 0 562 293 ‐48% 912 647 562 293 ‐48% 912 647 1.29 0.67 ‐48% 2.08 1.47 15.7% 8.9% 12.6% 6.3% 9.1% 4.2% 0.00 1.25 35.99 16.83 19.8% 20.2%
12.7% 10.4% 7.3% 1.25 26.79 19.8%
YTD %YoY (% of 2017E) 16% 48% ‐15% 46% ‐23% 44% 25% 43% ‐10% 62% ‐28% 46% nm nm nm nm nm nm ‐29% 45% ‐29% 45% ‐29% 45%
9.2% 6.9% 4.5% 1.16 16.53 20.0%
Source: TMT, KT Z Research Figure 2 : Quarterly sales volume and gross margin Sales volume (ton)
Gross margin
TMT's quarterly sales volume & GM
200,000
18.0% Sales volumes (ton)
Gross margin (%)
16.7%
180,000
16.0% 14.7%
160,000
14.0% 13.0%
140,000
12.2% 12.0%
10.9% 120,000
11.0% 9.8% 8.2% 7.6% 8.6%
100,000 8.6% 80,000 60,000
7.0% 7.0% 6.0%
6.9% 5.1%
10.0%
7.7%
8.5%
8.1%
6.7% 6.8%
8.8%
8.0%
7.1% 6.0%
6.0% 6.0% 5.1%
40,000
4.0% 2.0%
0
0.0%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17E
20,000
Source: TMT, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Figure 3 : HRC prices (CIS market) US$/ton 1,300
1,100
900
700
500
300
100
Source: Bloomberg, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD, CRANE.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. 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
Company Update
Close Bt14.50
Steel
Earning upgrade/Earnings downgrade/Overview unchanged
August 4, 2017
2Q17E NP to have fallen by 87%YoY, but remains an attractive dividend play Price Performance (%)
Source: SET Smart
FY17
FY18
Consensus EPS (Bt)
1.307
1.420
KT ZMICO vs. consensus Share data
14.0%
9.9%
Reuters / Bloomberg
TMT.BK/TMT TB
Paid‐up Shares (m)
435.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
6.00/190.00
Foreign limit / actual (%)
49.00/2.41
52 week High / Low (Bt)
18.90/11.20
Avg. daily T/O (shares 000) NVDR (%)
1,039.00 2.08
Estimated free float (%)
21.79
Beta
1.13
URL
www.thaimetaltrade.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst, no. 17621 [email protected] 66 (0) 2624‐6258
Firm client base to drive healthy profit ; attractive dividend play Despite the expected weak 2Q17E earnings growth YoY and QoQ, we believe that earnings already bottomed out in 2Q17E and they are expected to recover in 2H17E. We therefore maintain our 2017E earnings projection. The recent fall of the share price should be good timing to ‘BUY’. We still like TMT for its integrated steel service center with effective management, a wide range of service availability, client base growth, good profitability and an expected dividend yield of 8% p.a. Our current DDM‐based target price is Bt20.25/share. 2Q17E NP to have fallen by 87%YoY with GPM pressured by lower steel prices We now expect TMT to post a net profit of Bt38mn in 2Q17 (below our previous forecast of Bt90mn because the gross profit margin (GPM) likely contracted to 5.1% vs. 7% assumed previously). The expected result represents a fall of 87%YoY and 85%QoQ in line with global steel prices declined as steel output in China increased and India exported more steel. Meanwhile, domestic demand has slowed down (early rainy season and slower purchases while prices are falling). In addition, TMT still had some high‐cost raw material left from 1Q17. Hence, we expect the firm’s 2Q17E GPM at 5.1% (vs. 16.7% and 12.2% in 2Q16 and 1Q17, respectively). However, given expected strong sales volume of 165,000 tons (+14%YoY, ‐4%QoQ) from clients in the construction and factory sectors, the firm’s sales for the quarter are projected at Bt3.3bn (based on an average selling price assumption of Bt20/kg, down 3%YoY and 7%QoQ). 3Q‐4Q17E earnings to recover from the bottom in 2Q; forecast maintained Should the 2Q17E earnings come out as expected, the firm’s 1H17 earnings are likely to amount to Bt293mn, accounting for 45% of our full‐ year projection of Bt647mn. The 3Q‐4Q17E earnings are likely to recover from the bottom in 2Q (selling price has improved in line with global prices since mid Jul‐17). We maintain our 2017E earnings forecast. Safe business expansion plan with an aim to achieve a CAGR of 10‐15% TMT targets a CAGR of 10‐15% over the next three years. In light of this, it will add new capacity of 200,000 tons p.a. (focusing on structural steel and steel pipes), bringing the total to 1mn tpa. in the next three years, with a planned capex of Bt1.2bn. The firm will gradually invest in the domestic steel market (e.g., preparing land for construction of a new plant and new warehouse, which is expected to be completed by early 2018, and beginning to order machinery in mid‐1Q18). This expansion plan will be funded by long‐term borrowing (from bank loans or issuance of debentures). The plan is expected to lead to sustained growth in the future. We expect EBITDA to grow from an average of Bt557mn p.a. during 2010‐15 to Bt1bn p.a. in the next years. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm EPS (Bt) Norm EPS grw (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2014 12,251 334 0.77 0.77 ‐24% 0.65 4.98 2014 18.89 16.47 2.91 4.5% 15.4% 114.7%
2015 11,569 321 0.74 0.74 ‐4% 0.65 5.07 2015 19.70 19.21 2.86 4.5% 14.7% 79.9%
2016 12,465 912 2.09 2.09 184% 1.50 6.51 2016 6.93 8.41 2.23 10.3% 36.2% 94.4%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2017E 14,517 647 1.49 1.49 ‐29% 1.11 6.49 2017E 9.76 11.38 2.23 7.7% 22.9% 109.2%
2018E 15,915 679 1.56 1.56 5% 1.17 6.93 2018E 9.30 11.06 2.09 8.1% 23.2% 116.9%
Figure 1 : 2Q17E and 1H17E earnings projections
Consolidated Profit and Loss FY Dec (Btm) Revenue Gross profit EBITDA Interest Expenses Net other income Income tax Forex gain (loss) Other extraordinary items Gn(Ls) from affiliates Net profit (loss) Normalized profit (loss) Reported EPS (Bt)
2Q16 1Q17 2Q17E 2,987 3,675 3,300 498 449 170 391 355 84 (12) (13) (13) 14 16 16 (69) (64) (9) 0 0 0 0 0 0 0 0 0 283 255 38 283 255 38 0.65 0.58 0.09
Gross margin EBITDA margin Net profit margin Current ratio (x) Interest coverage (x) Effective tax rate
16.7% 12.2% 5.1% 13.1% 9.7% 2.5% 9.5% 6.9% 1.2% 1.23 1.25 1.25 33.38 27.24 6.42 19.7% 20.2% 20.0%
%YoY 10% ‐66% ‐79% 11% 12% ‐86% nm nm nm ‐87% ‐87% ‐87%
%QoQ ‐10% ‐62% ‐76% 0% 0% ‐85% nm nm nm ‐85% ‐85% ‐85%
1H16 1H17E %YoY 2016 2017E 6,150 6,975 13% 12,465 14,517 963 618 ‐36% 1584 1343 776 439 ‐43% 1296 999 (22) (26) 21% (48) (60) 28 32 15% 57 52 (138) (74) ‐47% (225) (162) 0 0 nm 0 0 0 0 nm 0 0 0 0 nm 0 0 562 293 ‐48% 912 647 562 293 ‐48% 912 647 1.29 0.67 ‐48% 2.08 1.47 15.7% 8.9% 12.6% 6.3% 9.1% 4.2% 0.00 1.25 35.99 16.83 19.8% 20.2%
12.7% 10.4% 7.3% 1.25 26.79 19.8%
YTD %YoY (% of 2017E) 16% 48% ‐15% 46% ‐23% 44% 25% 43% ‐10% 62% ‐28% 46% nm nm nm nm nm nm ‐29% 45% ‐29% 45% ‐29% 45%
9.2% 6.9% 4.5% 1.16 16.53 20.0%
Source: TMT, KT Z Research Figure 2 : Quarterly sales volume and gross margin Sales volume (ton)
Gross margin
TMT's quarterly sales volume & GM
200,000
18.0% Sales volumes (ton)
Gross margin (%)
16.7%
180,000
16.0% 14.7%
160,000
14.0% 13.0%
140,000
12.2% 12.0%
10.9% 120,000
11.0% 9.8% 8.2% 7.6% 8.6%
100,000 8.6% 80,000 60,000
7.0% 7.0% 6.0%
6.9% 5.1%
10.0%
7.7%
8.5%
8.1%
6.7% 6.8%
8.8%
8.0%
7.1% 6.0%
6.0% 6.0% 5.1%
40,000
4.0% 2.0%
0
0.0%
1Q11 2Q11 3Q11 4Q11 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 3Q13 4Q13 1Q14 2Q14 3Q14 4Q14 1Q15 2Q15 3Q15 4Q15 1Q16 2Q16 3Q16 4Q16 1Q17 2Q17E
20,000
Source: TMT, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Sep-07 Dec-07 Mar-08 Jun-08 Sep-08 Dec-08 Mar-09 Jun-09 Sep-09 Dec-09 Mar-10 Jun-10 Sep-10 Dec-10 Mar-11 Jun-11 Sep-11 Dec-11 Mar-12 Jun-12 Sep-12 Dec-12 Mar-13 Jun-13 Sep-13 Dec-13 Mar-14 Jun-14 Sep-14 Dec-14 Mar-15 Jun-15 Sep-15 Dec-15 Mar-16 Jun-16 Sep-16 Dec-16 Mar-17 Jun-17
Figure 3 : HRC prices (CIS market) US$/ton 1,300
1,100
900
700
500
300
100
Source: Bloomberg, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Note: KT ZMICO has two major shareholders, Krungthai Bank PLC (KTB) and Seamico Securities PLC (ZMICO). Therefore, prior to making investments in the securities of KTB and ZMICO, investors should consider the risk factors carefully. An executive of KT ZMICO Securities is also a board member of BCP, BTC, CI, CPI, KBS, MAJOR, MK, PACE, PSL, SVH, VNG, ZMICO, SAWAD, TFG. A management member of KT ZMICO Securities is also a board member of BTC and NFC. KT ZMICO is a financial advisor for U, LOXLEY, ZMICO, MAKRO, CPALL, SAFARI, M‐CHAI, POMPUI, TTL, NMG, SAWAD, CRANE.
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 returns over a six‐month period due to specific UNDERWEIGHT: The industry, as defined by the analyst's coverage universe, is expected to underperform the relevant catalysts SELL: Expecting negative total returns of 10% or more primary market index by 10% over the next 12 months. 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
