Thai Metal Trade - Global Alliance Partners
Thai Metal Trade Buy (16E TP Bt13.60)
Company Update
Close Bt12.50
Steel Earning upgrade/Earnings downgrade/Overview unchanged
October 17, 2016
3Q16E earnings forecast revised up by 8%; dividend yield of 9% expected Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.935
1.000
KT ZMICO vs. consensus Share data
‐8.5%
0.0%
Reuters / Bloomberg
TMT.BK/TMT TB
Paid‐up Shares (m)
435.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
5.00/154.00
Foreign limit / actual (%)
49.00/0.52
52 week High / Low (Bt)
13.60/8.30
Avg. daily T/O (shares 000) NVDR (%)
481.00 1.49
Estimated free float (%)
21.29
Beta
0.64
URL
www.thaimetaltrade.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst, no. 17621 [email protected] 66 (0) 2624‐6258
Expect outstanding dividend yield of 9% We like TMT for being an steel service center with efficient management of raw material and a variety of products to serve the demand of the market well. The firm continues to gain a larger market share while its gross profit margin remains strong. We project earnings growth of 141% for 2016, which will be a new high, and a dividend yield of 9% for the same year. As its 3Q16E earnings are likely to grow well YoY, we upgrade our rating to “BUY” (from Outperform), with a DDM‐based target price of Bt13.60/share. Sales volume to hit a new high in 3Q16E Sales are expected to gain momentum and hit a new high in 3Q16E due to growing demand from all customer groups (except modern trade) who slowed down their orders in 2Q16 and then returned to buy for restocking purposes ahead of the peak sales season in 4Q16‐1Q17. The hot rolled coil price in China is likely to increase. In addition, Thailand will impose an anti‐dumping duty that will prevent importers from importing hot rolled coil from Turkey, Brazil and Iran as well as steel pipes from China and Korea. We expect TMT to see greater sales volume from both dealers (larger market shares from medium to small customers in both the private and state construction sectors, as well as fabricators who will continue to gain steel structure work for power plants in the US in 2017) and industrial plants (producers of agricultural equipment and trucks may need to buy more steel to support greater demand from their customers). TMT’s pipe production business is also expected to generate good sales. We thus project TMT’s sales volume at 177,692 tons (+24%YoY, +22%QoQ) in 3Q16, better than our previous forecast of +7% and representing a new high after the previous high point in 1Q16. 3Q16E earnings forecast revised up by 8% to Bt137mn We revise up our 3Q16 profit forecast by 8% (vs. Bt126mn) to Bt137mn (+66%YoY, ‐52%QoQ) to reflect stronger than previously expected sales volume. Hence, we project 3Q16 sales of Bt3.3bn (up 6%) and a gross profit margin of 9.1% (vs. 9%). 2016E NP growth of 141% to mark a new high, with upside of 5‐10% Estimated 9M16E profit of Bt699mn, up 171%, accounts for 90% of our full‐year projection of Bt773mn. We assume sales volume of 624,000 tons (+10%) vs. the firm’s target of 650,000 tons (+15%). The gross profit margin is estimated at 11.5% vs. 7.2% in 2015. With strong sales momentum and the average selling price at Bt19/kg in Oct‐16, we see potential upside of 5‐10% to our current projection. 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 (%)
2013 13,055 440 1.01 1.01 7% 0.80 5.01 2013 12.37 3.94 2.49 6.4% 20.7% 139.6%
2014 12,251 334 0.77 0.77 ‐24% 0.65 4.98 2014 16.28 4.48 2.51 5.2% 15.4% 114.7%
2015 11,569 321 0.74 0.74 ‐4% 0.65 5.07 2015 16.98 4.69 2.47 5.2% 14.7% 79.9%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 12,711 773 1.77 1.77 141% 1.15 6.19 2016E 7.04 1.37 2.02 9.2% 31.5% 76.0%
2017E 14,094 438 1.00 1.00 ‐43% 0.80 6.04 2017E 12.44 2.05 2.07 6.4% 16.4% 94.0%
Figure 1 : 3Q16 and 9M16 earnings projections Consolidated Profit and Loss FY Dec (Btm) 3Q15 2Q16 3Q16E Revenue 2,859 2,987 3,302 203 498 300 Gross profit EBITDA 139 391 250 Interest Expenses (15) (12) (12) Net other income 18 14 14 Income tax (21) (69) (34) Forex gain (loss) 0 0 0 Other extraordinary items 0 0 0 0 0 0 Gn(Ls) from affiliates 82 283 137 Net profit (loss) Normalized profit (loss) 82 283 137 Reported EPS (Bt) 0.19 0.65 0.31 Gross margin 7.1% 16.7% 9.1% EBITDA margin 4.8% 13.1% 7.6% 2.9% 9.5% 4.1% Net profit margin Current ratio (x) 1.18 1.23 1.23 Interest coverage (x) 9.18 33.38 21.38 Effective tax rate 20.2% 19.7% 20.0% Source: TMT, KT Z Research
%YoY 15% 48% 81% ‐22% ‐23% 63% nm nm nm 66% 66% 65%
%QoQ 11% ‐40% ‐36% 0% 0% ‐51% nm nm nm ‐52% ‐52% ‐52%
9M15 9M16E %YoY 2015 2016E 8,934 9,452 6% 11,569 12,711 630 1263 101% 833 1462 426 1027 141% 612 1213 (48) (33) ‐30% (60) (55) 52 42 ‐19% 67 43 (65) (173) 166% (84) (193) 0 0 nm 0 0 0 0 nm 0 0 0 0 nm 0 0 257 699 172% 321 773 257 699 172% 321 773 0.59 1.60 172% 0.73 1.76 7.0% 4.8% 2.9% 1.18 8.96 20.2%
13.4% 10.9% 7.4% 1.23 30.85 19.8%
7.2% 5.3% 2.8% 1.25 10.28 20.7%
YTD %YoY (% of 2016E) 10% 74% 75% 86% 98% 85% ‐7% 60% ‐36% 98% 131% 89% nm nm nm nm nm nm 141% 90% 141% 90% 141% 91%
11.5% 9.5% 6.1% 1.41 21.93 20.0%
2Q16
3Q16E
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
Figure 2 : Quarterly sales volume and gross profit margin projections Gross margin Sales volume (ton) TMT's quarterly sales volume & GM 18.0% 200,000 16.7% Sales volumes (ton) Gross margin (%) 180,000 16.0% 14.7% 160,000 14.0% 13.0% 140,000 11.0% 12.0% 120,000 10.0% 9.8% 8.5% 8.6% 100,000 8.2% 8.6% 9.1% 8.1% 8.0% 7.0% 7.7% 7.6% 80,000 7.1% 6.8% 6.9% 7.0% 6.0% 6.0% 6.0% 60,000 6.7% 6.0% 5.1% 4.0% 40,000 2.0% 20,000 0 0.0% Source: TMT, KT Z Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
PBV Band (X) 50.0 40.0 30.0
+3 S.D. +2 S.D. +1 S.D.
20.0 Avg. 10.0
-1 S.D.
Jan-16
HRC price
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
Figure 4 : HRC price (CIS market) US$/ton 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 Source: Bloomberg, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Oct-16
Sep-14
May-15
Apr-13
Dec-13
Aug-12
Nov-11
Jul-10
Mar-11
Oct-09
Feb-09
May-08
Jan-07
-10.0 Sep-07
Jan-16
Oct-16
Sep-14
May-15
Apr-13
0.0
Dec-13
Aug-12
Nov-11
Jul-10
Mar-11
Oct-09
Feb-09
May-08
Jan-07
Sep-07
Figure 3 : PER & PBV Band PER Band (X) 40 35 30 +2 S.D. 25 20 +1 S.D. 15 +0.5 S.D. Avg. 10 -0.5 S.D. 5 -1 S.D. 0 Source: SET, KT Z Research
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, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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th
th
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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 Bt12.50
Steel Earning upgrade/Earnings downgrade/Overview unchanged
October 17, 2016
3Q16E earnings forecast revised up by 8%; dividend yield of 9% expected Price Performance (%)
Source: SET Smart
FY16
FY17
Consensus EPS (Bt)
1.935
1.000
KT ZMICO vs. consensus Share data
‐8.5%
0.0%
Reuters / Bloomberg
TMT.BK/TMT TB
Paid‐up Shares (m)
435.38
Par (Bt)
1.00
Market cap (Bt bn / US$ m)
5.00/154.00
Foreign limit / actual (%)
49.00/0.52
52 week High / Low (Bt)
13.60/8.30
Avg. daily T/O (shares 000) NVDR (%)
481.00 1.49
Estimated free float (%)
21.29
Beta
0.64
URL
www.thaimetaltrade.com
CGR
Anti‐corruption
Level 2 (Declared)
Phornsri Laysanitsaerekul Analyst, no. 17621 [email protected] 66 (0) 2624‐6258
Expect outstanding dividend yield of 9% We like TMT for being an steel service center with efficient management of raw material and a variety of products to serve the demand of the market well. The firm continues to gain a larger market share while its gross profit margin remains strong. We project earnings growth of 141% for 2016, which will be a new high, and a dividend yield of 9% for the same year. As its 3Q16E earnings are likely to grow well YoY, we upgrade our rating to “BUY” (from Outperform), with a DDM‐based target price of Bt13.60/share. Sales volume to hit a new high in 3Q16E Sales are expected to gain momentum and hit a new high in 3Q16E due to growing demand from all customer groups (except modern trade) who slowed down their orders in 2Q16 and then returned to buy for restocking purposes ahead of the peak sales season in 4Q16‐1Q17. The hot rolled coil price in China is likely to increase. In addition, Thailand will impose an anti‐dumping duty that will prevent importers from importing hot rolled coil from Turkey, Brazil and Iran as well as steel pipes from China and Korea. We expect TMT to see greater sales volume from both dealers (larger market shares from medium to small customers in both the private and state construction sectors, as well as fabricators who will continue to gain steel structure work for power plants in the US in 2017) and industrial plants (producers of agricultural equipment and trucks may need to buy more steel to support greater demand from their customers). TMT’s pipe production business is also expected to generate good sales. We thus project TMT’s sales volume at 177,692 tons (+24%YoY, +22%QoQ) in 3Q16, better than our previous forecast of +7% and representing a new high after the previous high point in 1Q16. 3Q16E earnings forecast revised up by 8% to Bt137mn We revise up our 3Q16 profit forecast by 8% (vs. Bt126mn) to Bt137mn (+66%YoY, ‐52%QoQ) to reflect stronger than previously expected sales volume. Hence, we project 3Q16 sales of Bt3.3bn (up 6%) and a gross profit margin of 9.1% (vs. 9%). 2016E NP growth of 141% to mark a new high, with upside of 5‐10% Estimated 9M16E profit of Bt699mn, up 171%, accounts for 90% of our full‐year projection of Bt773mn. We assume sales volume of 624,000 tons (+10%) vs. the firm’s target of 650,000 tons (+15%). The gross profit margin is estimated at 11.5% vs. 7.2% in 2015. With strong sales momentum and the average selling price at Bt19/kg in Oct‐16, we see potential upside of 5‐10% to our current projection. 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 (%)
2013 13,055 440 1.01 1.01 7% 0.80 5.01 2013 12.37 3.94 2.49 6.4% 20.7% 139.6%
2014 12,251 334 0.77 0.77 ‐24% 0.65 4.98 2014 16.28 4.48 2.51 5.2% 15.4% 114.7%
2015 11,569 321 0.74 0.74 ‐4% 0.65 5.07 2015 16.98 4.69 2.47 5.2% 14.7% 79.9%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2016E 12,711 773 1.77 1.77 141% 1.15 6.19 2016E 7.04 1.37 2.02 9.2% 31.5% 76.0%
2017E 14,094 438 1.00 1.00 ‐43% 0.80 6.04 2017E 12.44 2.05 2.07 6.4% 16.4% 94.0%
Figure 1 : 3Q16 and 9M16 earnings projections Consolidated Profit and Loss FY Dec (Btm) 3Q15 2Q16 3Q16E Revenue 2,859 2,987 3,302 203 498 300 Gross profit EBITDA 139 391 250 Interest Expenses (15) (12) (12) Net other income 18 14 14 Income tax (21) (69) (34) Forex gain (loss) 0 0 0 Other extraordinary items 0 0 0 0 0 0 Gn(Ls) from affiliates 82 283 137 Net profit (loss) Normalized profit (loss) 82 283 137 Reported EPS (Bt) 0.19 0.65 0.31 Gross margin 7.1% 16.7% 9.1% EBITDA margin 4.8% 13.1% 7.6% 2.9% 9.5% 4.1% Net profit margin Current ratio (x) 1.18 1.23 1.23 Interest coverage (x) 9.18 33.38 21.38 Effective tax rate 20.2% 19.7% 20.0% Source: TMT, KT Z Research
%YoY 15% 48% 81% ‐22% ‐23% 63% nm nm nm 66% 66% 65%
%QoQ 11% ‐40% ‐36% 0% 0% ‐51% nm nm nm ‐52% ‐52% ‐52%
9M15 9M16E %YoY 2015 2016E 8,934 9,452 6% 11,569 12,711 630 1263 101% 833 1462 426 1027 141% 612 1213 (48) (33) ‐30% (60) (55) 52 42 ‐19% 67 43 (65) (173) 166% (84) (193) 0 0 nm 0 0 0 0 nm 0 0 0 0 nm 0 0 257 699 172% 321 773 257 699 172% 321 773 0.59 1.60 172% 0.73 1.76 7.0% 4.8% 2.9% 1.18 8.96 20.2%
13.4% 10.9% 7.4% 1.23 30.85 19.8%
7.2% 5.3% 2.8% 1.25 10.28 20.7%
YTD %YoY (% of 2016E) 10% 74% 75% 86% 98% 85% ‐7% 60% ‐36% 98% 131% 89% nm nm nm nm nm nm 141% 90% 141% 90% 141% 91%
11.5% 9.5% 6.1% 1.41 21.93 20.0%
2Q16
3Q16E
1Q16
4Q15
3Q15
2Q15
1Q15
4Q14
3Q14
2Q14
1Q14
4Q13
3Q13
2Q13
1Q13
4Q12
3Q12
2Q12
1Q12
4Q11
3Q11
2Q11
1Q11
Figure 2 : Quarterly sales volume and gross profit margin projections Gross margin Sales volume (ton) TMT's quarterly sales volume & GM 18.0% 200,000 16.7% Sales volumes (ton) Gross margin (%) 180,000 16.0% 14.7% 160,000 14.0% 13.0% 140,000 11.0% 12.0% 120,000 10.0% 9.8% 8.5% 8.6% 100,000 8.2% 8.6% 9.1% 8.1% 8.0% 7.0% 7.7% 7.6% 80,000 7.1% 6.8% 6.9% 7.0% 6.0% 6.0% 6.0% 60,000 6.7% 6.0% 5.1% 4.0% 40,000 2.0% 20,000 0 0.0% Source: TMT, KT Z Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
PBV Band (X) 50.0 40.0 30.0
+3 S.D. +2 S.D. +1 S.D.
20.0 Avg. 10.0
-1 S.D.
Jan-16
HRC price
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
Figure 4 : HRC price (CIS market) US$/ton 1,300 1,200 1,100 1,000 900 800 700 600 500 400 300 Source: Bloomberg, KT Z Research
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 3 of 4
Oct-16
Sep-14
May-15
Apr-13
Dec-13
Aug-12
Nov-11
Jul-10
Mar-11
Oct-09
Feb-09
May-08
Jan-07
-10.0 Sep-07
Jan-16
Oct-16
Sep-14
May-15
Apr-13
0.0
Dec-13
Aug-12
Nov-11
Jul-10
Mar-11
Oct-09
Feb-09
May-08
Jan-07
Sep-07
Figure 3 : PER & PBV Band PER Band (X) 40 35 30 +2 S.D. 25 20 +1 S.D. 15 +0.5 S.D. Avg. 10 -0.5 S.D. 5 -1 S.D. 0 Source: SET, KT Z Research
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, PACE, TPOLY, M‐CHAI, TFD, SUTHA. KT ZMICO is a co‐underwriter of RJH, BCPG, ITEL, SQ, ALLA.
Corporate Governance Report (CGR) Source: Sec, Thai Institute of Directors Association (IOD) Excellent (scores: 90 ‐ 100) Very Good (scores: 80 – 89) Good (scores: 70 – 79)
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
Anti‐corruption Progress Indicator Source: Sec, Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC)
Level 1 (Committed) : Organization’s statement or board's resolution to work against corruption and to be in compliance with all relevant laws. Level 2 (Declared) : Public declaration statement to participate in Thailand's private sector Collective Action Coalition Against Corruption (CAC) or equivalent initiatives Level 3 (Established) : Public out preventive measures, risk assessment, communication and training for all employees, including consistent monitoring and review processes Level 4 (Certified) : Audit engagement by audit committee or auditors approved by the office of SEC, and receiving certification or assurance by independent external assurance providers (CAC etc.) Level 5 (Extended) : Extension of the anti‐corruption policy to business partners in the supply chain, and disclosure of any current investigations, prosecutions or closed cases Insufficient or not clearly defined policy Data not available / no policy
DISCLAIMER This document is produced using open sources believed to be reliable. However, their accuracy and completeness cannot be guaranteed. The statements and opinions herein were formed after due and careful consideration for use as information for the purposes of investment. The opinions contained herein are subject to change without notice. This document is not, and should not be construed as, an offer or the solicitation of an offer to buy or sell any securities. The use of any information contained in this document shall be at the sole discretion and risk of the user.
KT ZMICO RESEARCH – RECOMMENDATION DEFINITIONS STOCK RECOMMENDATIONS
SECTOR RECOMMENDATIONS
BUY: Expecting positive total returns of 15% or more OVERWEIGHT: The industry, as defined by the analyst's over the next 12 months coverage universe, is expected to outperform the relevant OUTPERFORM: Expecting total returns between ‐10% primary market index by at least 10% over the next 12 months. to +15%; returns expected to exceed market returns NEUTRAL: The industry, as defined by the analyst's coverage over a six‐month period due to specific catalysts universe, is expected to perform in line with the relevant UNDERPERFORM: Expecting total returns between primary market index over the next 12 months. ‐10% to +15%; returns expected to be below market UNDERWEIGHT: The industry, as defined by the analyst's returns over a six‐month period due to specific coverage universe, is expected to underperform the relevant catalysts primary market index by 10% over the next 12 months. SELL: Expecting negative total returns of 10% or more over the next 12 months
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 4 of 4
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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
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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.
