Thai Oil - Global Alliance Partners
-edits
Thai Oil
Underperform (18E TP Bt87.00)
Company Update
Close Bt87.00
Energy & Utilities August 10, 2017
Earnings upgrade / Earnings downgrade / Overview unchanged
Weak earnings momentum in 2Q17, in line with peers Price Performance (%)
Source: SET
FY17
FY18
Consensus EPS (Bt)
8.542
8.268
KT ZMICO vs. consensus Share data
‐2.1%
‐3.5%
Reuters / Bloomberg
TOP.BK/TOP TB
Paid‐up Shares (m)
2,040.03
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
177.00/5,337.00
Foreign limit / actual (%)
40.00/23.39
52 week High / Low (Bt)
88.00/63.75
Avg. daily T/O (shares 000)
5,013.00
NVDR (%)
16.29
Estimated free float (%)
50.19
Beta
1.03
URL
www.thaioilgroup.com
CGR Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
2017E earnings momentum capped; long wait for next growth cycle Despite the company’s solid fundamentals with low cash costs as the main cushion during the negative headwinds, its 2017E earnings momentum is likely to be capped by flat market GIM (led by a weak PX spread, particularly in 2H following the new supply additions). Meanwhile, the next wave of the growth cycle will take a long time to realize, particularly in the case of the Clean Fuel Project (upgrading low‐value to high‐value product with more flexible use of heavy crude slate), with the project’s COD likely to start in 2021E. As such, we maintain our Underperform rating with the rolled‐over SOTP‐based TP at Bt87 being fully valued. Lower market GIM, as well as impact of stock loss and NRV behind weak 2Q17 earnings TOP delivered 2Q17 NP at Bt3.25bn, ‐58% YoY and ‐54% QoQ, beating our forecast at Bt2.7bn by 20%, mainly due to a higher‐than‐expected profit contribution from affiliates and forex gain, but less than the consensus forecast by 22%. This was largely blamed on lower market GIM along with the impact of stock loss and NRV (~Bt2.2bn) in the quarter. Lower accounting GIM both YoY and QoQ to US$6.2/bbl in 2Q17 With a weakening market GRM, particularly QoQ, and the sharp drop in aromatics spreads from the abnormal high last quarter, its market GIM registered at US$8.3/bbl in 2Q17, down from US$9.4/bbl in 1Q17, but up from US$6.9/bbl in 2Q16. Meanwhile, the operating rate remained high at 112% for the refinery and 90% for the lube base plant in 2Q17, against the lower operating rate at 78% for the aromatics plant in accordance with decreasing spreads in the quarter. Given that the low oil price led to reported stock loss totaling Bt2.1bn in 2Q17 (~US$2.2/bbl), its accounting GIM marked at US$6.2/bbl in the quarter (vs. US$9.3/bbl in 1Q17 and US$11.1/bbl in 2Q16 with stock gain in both periods). Earnings estimates slightly fine‐tuned The company’s 1H17 core profit accounted for 52% of our full‐year forecast with the inclusion of the stock impact and NRV, and represented 67% with the exclusion of that item. Note that its stock loss and NRV amounted to Bt2.47bn in 1H17. With earnings deceleration likely in 2H17E following new supply additions that will weaken the PX spread, we are comfortable with our 2017E earnings estimates. Note that we negligibly fine‐tune our 2017‐ 18E NP by +1.1‐1.2% to reflect the slight upward earnings revision made to its 30%‐owned GPSC earlier. We also roll over its 2018E SOTP‐based TP to Bt87. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 293,569 12,181 5.97 nm 2.70 45.28 2015 14.57 8.57 1.92 3.1% 13.9% 24.2%
2016 274,739 21,222 10.40 74.22 4.50 52.38 2016 8.36 5.92 1.66 5.2% 21.3% 14.5%
2017E 332,280 17,051 8.36 (19.65) 3.76 56.44 2017E 10.41 6.94 1.54 4.3% 15.4% 28.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 342,106 16,274 7.98 (4.56) 3.59 60.74 2018E 10.91 6.69 1.43 4.1% 13.6% 18.6%
2019E 349,879 16,245 7.96 (0.18) 3.58 65.12 2019E 10.93 6.29 1.34 4.1% 12.7% 9.6%
Figure 1: TOP’s 2Q17 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates
Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
2Q16
1Q17
2Q17
72,368 9,361 10,602 (866) 400 (688) 110 ‐ 198 (97) 7,753 7,642 3.80 12.94 14.65 10.71 3.59 10.04 0.76 49.59 31.28
87,596 8,303 9,554 (846) 225 (1,461) 1,323 ‐ 280 (161) 7,075 5,751 3.47 9.48 10.91 8.08 3.84 9.12 0.61 55.83 25.64
80,053 4,364 5,425 (830) 489 (629) 476 ‐ 314 (100) 3,250 2,773 1.59 5.45 6.78 4.06 4.53 4.25 0.62 54.43 11.56
% YoY 10.6 (53.4) (48.8) (4.1) 22.2 (8.6) 331.3 nm 58.2 3.1 (58.1) (63.7) (58.1)
% QoQ (8.6) (47.4) (43.2) (1.9) 116.8 (57.0) (64.0) nm 12.0 (38.0) (54.1) (51.8) (54.1)
1H16
1H17
129,158 14,585 17,160 (1,670) 692 (1,051) 798 ‐ 503 (202) 12,479 11,681 6.12 11.29 13.29 9.66 3.59 8.03 0.76 49.59 24.67
167,649 12,667 14,979 (1,676) 714 (2,090) 1,800 ‐ 594 (261) 10,324 8,524 5.06 7.56 8.93 6.16 4.53 6.71 0.62 54.43 18.60
% YoY 29.8 (13.2) (12.7) 0.4 3.2 98.9 125.6 nm 18.1 28.7 (17.3) (27.0) (17.3)
YTD 2016
2017E
274,739 27,478 32,606 (3,461) 1,123 (2,295) 446 ‐ 930 (365) 21,222 20,776 10.40 10.00 11.87 7.72 3.39 7.18 0.71 52.38 21.30
332,280 24,450 30,342 (3,219) 850 (3,279) 725 ‐ 1,217 (500) 17,051 16,327 8.36 7.36 9.13 5.13 3.89 6.60 0.73 56.44 15.36
Source: KT Zmico Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
% YoY 20.9 (11.0) (6.9) (7.0) (24.3) 42.8 62.4 nm 30.9 37.0 (19.7) (21.4) (19.7)
(%17E)
50.5 51.8 49.4 52.1 84.0 63.7 248.4 nm 48.8 52.1 60.5 52.2 60.6
Financial tables 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 Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 390,090 (394,170) (4,080) (2,641) (189) 6,533 (6,722) (3,966) 3,917 (6,771) 920 996 386 630 (301) (4,140) (2.03) (2.03) (5,522) (2.71) 1.16
2015 293,569 (273,819) 19,750 (3,207) 23,309 6,766 16,543 (3,435) 3,035 16,143 (1,597) (2,754) 0 712 (323) 12,181 5.97 5.97 14,935 7.32 2.70
2016 274,739 (247,261) 27,478 (2,633) 32,606 7,762 24,844 (3,461) 1,123 22,507 (2,295) 446 0 930 (365) 21,222 10.40 10.40 20,776 10.18 4.50
2017E 332,280 (307,831) 24,450 (3,192) 30,342 9,084 21,258 (3,219) 850 18,889 (3,279) 725 0 1,217 (500) 17,051 8.36 8.36 16,327 8.00 3.76
2018E 342,106 (318,006) 24,100 (3,421) 29,973 9,294 20,679 (3,089) 1,000 18,590 (3,230) 159 0 1,309 (554) 16,274 7.98 7.98 16,115 7.90 3.59
2019E 349,879 (325,620) 24,260 (3,495) 30,270 9,505 20,765 (2,873) 1,000 18,892 (3,437) (159) 0 1,510 (561) 16,245 7.96 7.96 16,404 8.04 3.58
2014 46,483 16,141 28,533 79,120 23,331 193,607 12,836 67,265 105,763 20,400 83,396 4,448 193,607
2015 53,129 14,177 18,883 83,258 22,720 192,166 1,787 73,719 95,157 20,400 92,371 4,637 192,166
2016 60,774 19,536 33,189 82,312 21,921 217,731 8,005 68,296 106,134 20,400 106,857 4,741 217,731
2017E 51,379 22,759 42,169 95,004 22,782 234,093 4,755 79,598 113,709 20,400 115,143 5,241 234,093
2018E 56,448 23,432 43,562 91,630 24,330 239,403 2,755 76,783 109,690 20,400 123,919 5,794 239,403
2019E 63,953 23,964 44,605 88,088 26,105 246,716 5,755 70,968 107,513 20,400 132,847 6,356 246,716
2014 (4,140) (996) 6,533 20,453 21,850 (21,579)
2015 12,181 2,754 6,766 4,837 26,537 (11,204)
2016 21,222 (446) 7,762 (8,424) 20,113 (7,350)
2017E 17,051 (725) 9,084 (13,446) 11,964 (21,571)
2018E 16,274 (159) 9,294 (2,251) 23,158 (6,220)
2019E 16,245 159 9,505 (2,132) 23,778 (6,263)
(21,579) 5,238 467 (3,529) 221 2,397 2,668 271 0.13
(11,204) (4,595) 1,120 (3,937) (1,275) (8,687) 6,646 15,333 7.52
(7,350) 795 1,172 (7,344) 259 (5,118) 7,646 12,764 6.26
(21,571) 8,052 379 (8,427) 208 212 (9,395) ‐9,607 ‐4.71
(6,220) (4,815) 755 (7,498) (311) (11,869) 5,069 16,938 8.30
(6,263) (2,815) 949 (7,317) (826) (10,009) 7,505 17,514 8.59
2014 (5.9) (100.9) (144.4) (1.0) (0.0) (1.7) (1.1) (1.4) 13.6
2015 (24.7) (12,452.0) 394.3 6.7 7.9 5.6 4.1 5.1 9.9
2016 (6.4) 39.9 74.2 10.0 11.9 9.0 7.7 7.6 10.2
2017E 20.9 (6.9) (19.7) 7.4 9.1 6.4 5.1 4.9 17.4
2018E 3.0 (1.2) (4.6) 7.0 8.8 6.0 4.8 4.7 17.4
2019E 2.3 1.0 (0.2) 6.9 8.7 5.9 4.6 4.7 18.2
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.
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
Thai Oil
Underperform (18E TP Bt87.00)
Company Update
Close Bt87.00
Energy & Utilities August 10, 2017
Earnings upgrade / Earnings downgrade / Overview unchanged
Weak earnings momentum in 2Q17, in line with peers Price Performance (%)
Source: SET
FY17
FY18
Consensus EPS (Bt)
8.542
8.268
KT ZMICO vs. consensus Share data
‐2.1%
‐3.5%
Reuters / Bloomberg
TOP.BK/TOP TB
Paid‐up Shares (m)
2,040.03
Par (Bt)
10.00
Market cap (Bt bn / US$ m)
177.00/5,337.00
Foreign limit / actual (%)
40.00/23.39
52 week High / Low (Bt)
88.00/63.75
Avg. daily T/O (shares 000)
5,013.00
NVDR (%)
16.29
Estimated free float (%)
50.19
Beta
1.03
URL
www.thaioilgroup.com
CGR Anti‐corruption
Level 4 (Certified)
Patcharin Karsemarnuntana Analyst, no 17834 [email protected] 66 (0) 2695‐5837
2017E earnings momentum capped; long wait for next growth cycle Despite the company’s solid fundamentals with low cash costs as the main cushion during the negative headwinds, its 2017E earnings momentum is likely to be capped by flat market GIM (led by a weak PX spread, particularly in 2H following the new supply additions). Meanwhile, the next wave of the growth cycle will take a long time to realize, particularly in the case of the Clean Fuel Project (upgrading low‐value to high‐value product with more flexible use of heavy crude slate), with the project’s COD likely to start in 2021E. As such, we maintain our Underperform rating with the rolled‐over SOTP‐based TP at Bt87 being fully valued. Lower market GIM, as well as impact of stock loss and NRV behind weak 2Q17 earnings TOP delivered 2Q17 NP at Bt3.25bn, ‐58% YoY and ‐54% QoQ, beating our forecast at Bt2.7bn by 20%, mainly due to a higher‐than‐expected profit contribution from affiliates and forex gain, but less than the consensus forecast by 22%. This was largely blamed on lower market GIM along with the impact of stock loss and NRV (~Bt2.2bn) in the quarter. Lower accounting GIM both YoY and QoQ to US$6.2/bbl in 2Q17 With a weakening market GRM, particularly QoQ, and the sharp drop in aromatics spreads from the abnormal high last quarter, its market GIM registered at US$8.3/bbl in 2Q17, down from US$9.4/bbl in 1Q17, but up from US$6.9/bbl in 2Q16. Meanwhile, the operating rate remained high at 112% for the refinery and 90% for the lube base plant in 2Q17, against the lower operating rate at 78% for the aromatics plant in accordance with decreasing spreads in the quarter. Given that the low oil price led to reported stock loss totaling Bt2.1bn in 2Q17 (~US$2.2/bbl), its accounting GIM marked at US$6.2/bbl in the quarter (vs. US$9.3/bbl in 1Q17 and US$11.1/bbl in 2Q16 with stock gain in both periods). Earnings estimates slightly fine‐tuned The company’s 1H17 core profit accounted for 52% of our full‐year forecast with the inclusion of the stock impact and NRV, and represented 67% with the exclusion of that item. Note that its stock loss and NRV amounted to Bt2.47bn in 1H17. With earnings deceleration likely in 2H17E following new supply additions that will weaken the PX spread, we are comfortable with our 2017E earnings estimates. Note that we negligibly fine‐tune our 2017‐ 18E NP by +1.1‐1.2% to reflect the slight upward earnings revision made to its 30%‐owned GPSC earlier. We also roll over its 2018E SOTP‐based TP to Bt87. Financials and Valuation FY Ended 31 Dec Revenues (Btmn) Net profit (Btmn) EPS (Bt) EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Dec PER (x) EV/EBITDA (x) PBV (x) Dividend yield (%) ROE (%) Net gearing (%)
2015 293,569 12,181 5.97 nm 2.70 45.28 2015 14.57 8.57 1.92 3.1% 13.9% 24.2%
2016 274,739 21,222 10.40 74.22 4.50 52.38 2016 8.36 5.92 1.66 5.2% 21.3% 14.5%
2017E 332,280 17,051 8.36 (19.65) 3.76 56.44 2017E 10.41 6.94 1.54 4.3% 15.4% 28.6%
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
2018E 342,106 16,274 7.98 (4.56) 3.59 60.74 2018E 10.91 6.69 1.43 4.1% 13.6% 18.6%
2019E 349,879 16,245 7.96 (0.18) 3.58 65.12 2019E 10.93 6.29 1.34 4.1% 12.7% 9.6%
Figure 1: TOP’s 2Q17 earnings review Profit and Loss (Btmn) Year‐end 31 Dec Revenue Gross profit EBITDA Interest expense Other income Income tax Forex gain (loss) Extraordinary Items Gn (Ls) from affiliates
Minority interests Net profit (loss) Core profit (loss) Reported EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%) Current ratio (x) Interest coverage (x) Debt / equity (x) BVPS (Bt) ROE (%)
2Q16
1Q17
2Q17
72,368 9,361 10,602 (866) 400 (688) 110 ‐ 198 (97) 7,753 7,642 3.80 12.94 14.65 10.71 3.59 10.04 0.76 49.59 31.28
87,596 8,303 9,554 (846) 225 (1,461) 1,323 ‐ 280 (161) 7,075 5,751 3.47 9.48 10.91 8.08 3.84 9.12 0.61 55.83 25.64
80,053 4,364 5,425 (830) 489 (629) 476 ‐ 314 (100) 3,250 2,773 1.59 5.45 6.78 4.06 4.53 4.25 0.62 54.43 11.56
% YoY 10.6 (53.4) (48.8) (4.1) 22.2 (8.6) 331.3 nm 58.2 3.1 (58.1) (63.7) (58.1)
% QoQ (8.6) (47.4) (43.2) (1.9) 116.8 (57.0) (64.0) nm 12.0 (38.0) (54.1) (51.8) (54.1)
1H16
1H17
129,158 14,585 17,160 (1,670) 692 (1,051) 798 ‐ 503 (202) 12,479 11,681 6.12 11.29 13.29 9.66 3.59 8.03 0.76 49.59 24.67
167,649 12,667 14,979 (1,676) 714 (2,090) 1,800 ‐ 594 (261) 10,324 8,524 5.06 7.56 8.93 6.16 4.53 6.71 0.62 54.43 18.60
% YoY 29.8 (13.2) (12.7) 0.4 3.2 98.9 125.6 nm 18.1 28.7 (17.3) (27.0) (17.3)
YTD 2016
2017E
274,739 27,478 32,606 (3,461) 1,123 (2,295) 446 ‐ 930 (365) 21,222 20,776 10.40 10.00 11.87 7.72 3.39 7.18 0.71 52.38 21.30
332,280 24,450 30,342 (3,219) 850 (3,279) 725 ‐ 1,217 (500) 17,051 16,327 8.36 7.36 9.13 5.13 3.89 6.60 0.73 56.44 15.36
Source: KT Zmico Research REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
% YoY 20.9 (11.0) (6.9) (7.0) (24.3) 42.8 62.4 nm 30.9 37.0 (19.7) (21.4) (19.7)
(%17E)
50.5 51.8 49.4 52.1 84.0 63.7 248.4 nm 48.8 52.1 60.5 52.2 60.6
Financial tables 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 Forex gain (loss) Extra Items Gain (loss) from affiliates Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Accounts receivable Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Paid‐up shares Shareholder equity Minority interests Total liab. & shareholder equity CASH FLOW (Btm) Net income Forex and other extraordinary adjustments Depreciation & amortization Change in working capital Cash flow from operations Capex (Invest)/Divest Others Cash flow from investing Debt financing (repayment) Equity financing Dividend payment Others Cash flow from financing Net change in cash Free cash flow FCF per share (Bt) PROFITABILITY Revenue growth (%) EBITDA growth (%) EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%)
2014 390,090 (394,170) (4,080) (2,641) (189) 6,533 (6,722) (3,966) 3,917 (6,771) 920 996 386 630 (301) (4,140) (2.03) (2.03) (5,522) (2.71) 1.16
2015 293,569 (273,819) 19,750 (3,207) 23,309 6,766 16,543 (3,435) 3,035 16,143 (1,597) (2,754) 0 712 (323) 12,181 5.97 5.97 14,935 7.32 2.70
2016 274,739 (247,261) 27,478 (2,633) 32,606 7,762 24,844 (3,461) 1,123 22,507 (2,295) 446 0 930 (365) 21,222 10.40 10.40 20,776 10.18 4.50
2017E 332,280 (307,831) 24,450 (3,192) 30,342 9,084 21,258 (3,219) 850 18,889 (3,279) 725 0 1,217 (500) 17,051 8.36 8.36 16,327 8.00 3.76
2018E 342,106 (318,006) 24,100 (3,421) 29,973 9,294 20,679 (3,089) 1,000 18,590 (3,230) 159 0 1,309 (554) 16,274 7.98 7.98 16,115 7.90 3.59
2019E 349,879 (325,620) 24,260 (3,495) 30,270 9,505 20,765 (2,873) 1,000 18,892 (3,437) (159) 0 1,510 (561) 16,245 7.96 7.96 16,404 8.04 3.58
2014 46,483 16,141 28,533 79,120 23,331 193,607 12,836 67,265 105,763 20,400 83,396 4,448 193,607
2015 53,129 14,177 18,883 83,258 22,720 192,166 1,787 73,719 95,157 20,400 92,371 4,637 192,166
2016 60,774 19,536 33,189 82,312 21,921 217,731 8,005 68,296 106,134 20,400 106,857 4,741 217,731
2017E 51,379 22,759 42,169 95,004 22,782 234,093 4,755 79,598 113,709 20,400 115,143 5,241 234,093
2018E 56,448 23,432 43,562 91,630 24,330 239,403 2,755 76,783 109,690 20,400 123,919 5,794 239,403
2019E 63,953 23,964 44,605 88,088 26,105 246,716 5,755 70,968 107,513 20,400 132,847 6,356 246,716
2014 (4,140) (996) 6,533 20,453 21,850 (21,579)
2015 12,181 2,754 6,766 4,837 26,537 (11,204)
2016 21,222 (446) 7,762 (8,424) 20,113 (7,350)
2017E 17,051 (725) 9,084 (13,446) 11,964 (21,571)
2018E 16,274 (159) 9,294 (2,251) 23,158 (6,220)
2019E 16,245 159 9,505 (2,132) 23,778 (6,263)
(21,579) 5,238 467 (3,529) 221 2,397 2,668 271 0.13
(11,204) (4,595) 1,120 (3,937) (1,275) (8,687) 6,646 15,333 7.52
(7,350) 795 1,172 (7,344) 259 (5,118) 7,646 12,764 6.26
(21,571) 8,052 379 (8,427) 208 212 (9,395) ‐9,607 ‐4.71
(6,220) (4,815) 755 (7,498) (311) (11,869) 5,069 16,938 8.30
(6,263) (2,815) 949 (7,317) (826) (10,009) 7,505 17,514 8.59
2014 (5.9) (100.9) (144.4) (1.0) (0.0) (1.7) (1.1) (1.4) 13.6
2015 (24.7) (12,452.0) 394.3 6.7 7.9 5.6 4.1 5.1 9.9
2016 (6.4) 39.9 74.2 10.0 11.9 9.0 7.7 7.6 10.2
2017E 20.9 (6.9) (19.7) 7.4 9.1 6.4 5.1 4.9 17.4
2018E 3.0 (1.2) (4.6) 7.0 8.8 6.0 4.8 4.7 17.4
2019E 2.3 1.0 (0.2) 6.9 8.7 5.9 4.6 4.7 18.2
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.
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
