VGI Global Media
VGI Global Media Underperform (FY18E TP Bt5.30)
Company Update
Close Bt5.10
Media & Publishing May 22, 2017
Earnings upgrade/Earnings upgrade/Overview unchanged
Year of harvesting period has started Price Performance (%)
Maintain “Underperform” with TP slightly upgraded to Bt5.30 In accordance with the latest acquisition of MACO, we slightly upgrade VGI’s earnings in FY19E. As a result, VGI’s TP is also revised up to Bt5.3, vs. Bt5.1 previously. While we believe VGI’s aggressive expansion will enhance the company’s performance in the longer term, the success will take time to prove. Meanwhile, VGI’s share price currently has factored in the positives to a certain degree, in our view. Maintain “Underperform”. MACO’s earnings likely to improve after reporting soft earnings in 1Q17 MACO (VGI’s 33.68% investment stake) reported net profit of Bt37mn in 1Q17, falling by 14% YoY, with flat revenue (of Bt190mn) and the gross profit margin (GPM) declining to 53%, vs. 57% in 1Q16. According to MACO’s management, there was a laggard impact from the mourning period as revenue in the previous quarter had not yet reflected customers’ decisions owing to advertising bookings. Meanwhile, revenue from Multi Sign (MACO acquired this company on Oct‐16) was negatively impacted by the conversion period to change some static signs to LEDs. However, the current situation looks better with backlog orders having reached 70% of MACO’s own target.
Source: SET Smart
FY18
FY19
Consensus EPS (Bt)
0.152
0.169
KT ZMICO vs. consensus Share data
‐13.2%
‐1.8%
Reuters / Bloomberg
VGI.BK/VGI TB
Paid‐up Shares (m)
6,864.33
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
35.00/1,020.00 49.00/8.54
52 week High / Low (Bt)
6.95/3.80
Avg. daily T/O (shares 000)
14,026.00
NVDR (%)
2.54
Estimated free float (%)
25.11
Beta
1.53
URL
www.vgi.co.th
CGR
Anti‐corruption
Level 2 (Declared)
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Bundled media package sales a key for success, but not yet materialized After acquiring many media platforms in the transition period last year, VGI’s revenue capacity has now reached Bt7bn, close to the company’s own target of Bt7.3bn. One of VGI’s purposes for the aggressive expansion is to bundle many media categories and try to increase the utilization of underperforming media areas owing to increased revenue and a higher GPM. In FY17, VGI was successful in selling the package called “Station Sponsor” to one customer, “11‐Street”. However, revenue from the package accounted for less than 1% of VGI’s total revenue in FY17. Currently, VGI has new customers like “OPPO” mobile phone, and Aeon. Meanwhile, VGI will introduce new packages this year, especially upcountry, which still has much more room to grow. Revise up FY19E net profit estimate by 2% given MACO’s latest M&A We maintain our net profit estimate in FY18E for VGI, but slightly revise up the net profit estimate in FY19E by 2% to Bt1.1bn owing to the latest M&A deal of MACO. MACO recently announced the acquisition of a 70% investment stake in CO‐MASS with an investment value of not more than Bt335mn. CO‐MASS is an outdoor media company with more than nineteen years of experience in outdoor media nationwide, consisting of 113 static billboards in 23 provinces. The acquisition will increase MACO’s revenue capacity to Bt1.4bn, vs. Bt1.2bn currently. Financials and Valuation FY Ended 31 Mar Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Mar PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
FY15 2,963 838 0.122 999 0.146 (56.38) 0.176 0.266 FY15 35.03 11.45 19.14 3.45 44.29 22.31
FY16 2,341 941 0.137 852 0.122 (15.97) 0.110 0.327 FY16 41.68 12.56 15.61 2.16 46.20 cash
FY17 3,051 826 0.120 689 0.100 (17.92) 0.060 0.270 FY17 50.78 15.85 18.86 1.18 40.33 116.26
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
FY18E 3,830 908 0.132 908 0.132 31.71 0.119 0.297 FY18E 38.56 12.20 17.18 2.33 46.63 107.28
FY19E 4,609 1,138 0.166 1,138 0.166 25.30 0.149 0.330 FY19E 30.77 9.62 15.45 2.92 52.88 57.13
Figure 1: Summary of SOTP‐based valuation for VGI Business
% Holding
VGI
Valuation Method
Value to VGI (Bt)
DCF (WACC 8%)
5.09
MACO
33.68
DCF (WACC 9%)
0.22
SBK Line
30.00
DCF (WACC 10%)
0.01
5.31
SOTP‐based Source: KT ZMICO Research
Figure 2: VGI’s PER band and sensitivity of market prices based on PER at different standard deviation levels FY17E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
(X) 70 +2 S.D.
60
+1 S.D.
50 Avg.
40 30
-1 S.D.
20
-2 S.D.
10
Oct-12 Nov-12 Jan-13 Feb-13 Apr-13 May-13 Jul-13 Aug-13 Oct-13 Nov-13 Jan-14 Feb-14 Apr-14 May-14 Jul-14 Aug-14 Oct-14 Dec-14 Jan-15 Mar-15 Apr-15 Jun-15 Jul-15 Sep-15 Oct-15 Dec-15 Jan-16 Mar-16 Apr-16 Jun-16 Jul-16 Sep-16 Oct-16 Dec-16 Jan-17 Mar-17 Apr-17
0
PER (x) 48.6 44.5 40.5 36.4 32.4 28.3 24.2 20.2
Implied market price (Bt) 6.41 5.88 5.34 4.81 4.27 3.74 3.20 2.66
Upside/Downside vs. current market price (%) 25.7 15.1 4.4 (6.2) (16.8) (27.4) (38.0) (48.6)
Source: Bloomberg, KT ZMICO Research
Figure 3: VGI’s revenue capacity expansion Btmn Transit products
Office products
Outdoor products
Aviation products
FY16
Plan (FY17 – FY18) 2,200
30 BTS stations 208 carriages > 4,000 static displays 2,029 digital screens 8,800 sqm. merchandising space
2,300
Additional 100
600
100
1,700
800
1,400
1,100
300
300
1,000
1,000
7,300
3,400
30 BTS stations 208 carriages > 4,000 static displays 2,100 digital screens 8,800 sqm. merchandising space 500
135 office buildings 219 residential buildings 200,000 sqm. in Chamchuri Square sales agent for 15 clock towers
160 office buildings 260 residential buildings 200,000 sqm. in Chamchuri Square sales agent for 20 clock tower 900
667 billboards and N/W billboards 555 street furniture 131 displays in transit
1,567 billboards and N/W billboards 555 street furniture 131 displays in transit 300
13 airports (32 LCDs) 4,500 trolleys sales agent for 49 aircraft
13 airports (342 LCDs) 940 digital and static displays 7,000 trolleys sales agent for 49 aircraft
Digital products
‐
Activation
‐
Banner Advertising Direct Targeted Marketing 3,000 salespeople
Total
3,900
Source: VGI
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others 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 (%) Core EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x) Interest coverage (x)
FY15 2,963 (1,325) 1,638 (419) 1,372 (153) 1,219 (10) 15 (115) 1,109 (272) 0 838 0.122 0.122 999 0.146 0.176
FY16 2,341 (881) 1,461 (549) 1,149 (237) 912 (22) 39 178 1,107 (174) 8 941 0.137 0.137 999 0.122 0.110
FY17 3,051 (1,269) 1,783 (1,028) 1,102 (347) 755 (32) (16) 236 944 (175) 58 826 0.120 0.120 840 0.100 0.060
FY18E 3,830 (1,563) 2,267 (1,222) 1,433 (389) 1,045 (69) (37) 124 1,063 (231) 76 908 0.132 0.132 908 0.132 0.119
FY15 354 4 1,434 2,516 4,308 556 206 2,178 292 1,829 4,308
FY16 1,309 172 1,330 2,752 5,563 273 173 1,728 1,593 2,242 5,563
FY17 799 91 1,568 5,527 7,985 1,024 1,933 4,880 1,249 1,856 7,985
FY18E 771 91 1,492 5,760 8,115 1,024 1,933 4,904 1,173 2,038 8,115
FY15 838 153 490 0 1,481 (1,562) 0 (1,562) 395 346 (965) 0 (224) (305) (81) (0.01)
FY16 941 237 (288) (158) 732 (209) 0 (209) 1,103 0 (515) 0 588 1,110 522 0.08
FY17 826 347 (74) (142) 957 (3,685) 0 (3,685) 2,870 0 (652) 0 2,218 (510) (2,728 (0.40
FY18E 908 389 27 37 1,361 (935) 0 (935) 0 0 (454) 0 (454) (28) 426 0.06
FY15 (5.9) (6.0) (56.4) 55.3 46.3 41.1 28.3 33.7 24.5
FY16 (21.0) (16.3) (15.9) 62.4 49.1 39.0 40.2 35.9 15.7
FY17 30.3 (4.1) (17.9) 58.4 36.1 24.7 27.1 22.6 18.6
FY18E 25.5 30.1 31.7 59.2 37.4 27.3 23.7 23.7 21.7
FY15 0.29 0.22 111.73
FY16 0.17 cash 44.71
FY17 0.61 1.16 29.21
FY18E 0.59 1.07 17.42
FY19E 4,609 1,899) 2,710 (1,388) 1,725 (402) 1,322 (62) (9) 151 1,402 (305) 41 1,138 0.166 0.166 1,138 0.166 0.149
FY19E 1,463 91 897 5,833 8,285 1,024 1,733 4,938 1,132 2,265 8,335
FY19E 1,138 402 62 9 1,611 (150) 0 (150) (200) 0 (569) 0 (769) 692 1,461 0.21
FY19E 20.3 20.3 25.3 58.8 37.4 28.7 24.7 24.7 21.7 FY19E 0.55 0.57 22.95
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, TFD, TTL, NMG, NUSA.
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)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
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
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 Bt5.10
Media & Publishing May 22, 2017
Earnings upgrade/Earnings upgrade/Overview unchanged
Year of harvesting period has started Price Performance (%)
Maintain “Underperform” with TP slightly upgraded to Bt5.30 In accordance with the latest acquisition of MACO, we slightly upgrade VGI’s earnings in FY19E. As a result, VGI’s TP is also revised up to Bt5.3, vs. Bt5.1 previously. While we believe VGI’s aggressive expansion will enhance the company’s performance in the longer term, the success will take time to prove. Meanwhile, VGI’s share price currently has factored in the positives to a certain degree, in our view. Maintain “Underperform”. MACO’s earnings likely to improve after reporting soft earnings in 1Q17 MACO (VGI’s 33.68% investment stake) reported net profit of Bt37mn in 1Q17, falling by 14% YoY, with flat revenue (of Bt190mn) and the gross profit margin (GPM) declining to 53%, vs. 57% in 1Q16. According to MACO’s management, there was a laggard impact from the mourning period as revenue in the previous quarter had not yet reflected customers’ decisions owing to advertising bookings. Meanwhile, revenue from Multi Sign (MACO acquired this company on Oct‐16) was negatively impacted by the conversion period to change some static signs to LEDs. However, the current situation looks better with backlog orders having reached 70% of MACO’s own target.
Source: SET Smart
FY18
FY19
Consensus EPS (Bt)
0.152
0.169
KT ZMICO vs. consensus Share data
‐13.2%
‐1.8%
Reuters / Bloomberg
VGI.BK/VGI TB
Paid‐up Shares (m)
6,864.33
Par (Bt)
0.10
Market cap (Bt bn / US$ m) Foreign limit / actual (%)
35.00/1,020.00 49.00/8.54
52 week High / Low (Bt)
6.95/3.80
Avg. daily T/O (shares 000)
14,026.00
NVDR (%)
2.54
Estimated free float (%)
25.11
Beta
1.53
URL
www.vgi.co.th
CGR
Anti‐corruption
Level 2 (Declared)
Raenoo Bhandasukdi Analyst no. 17989 [email protected] 66 (0) 2695‐5836
Bundled media package sales a key for success, but not yet materialized After acquiring many media platforms in the transition period last year, VGI’s revenue capacity has now reached Bt7bn, close to the company’s own target of Bt7.3bn. One of VGI’s purposes for the aggressive expansion is to bundle many media categories and try to increase the utilization of underperforming media areas owing to increased revenue and a higher GPM. In FY17, VGI was successful in selling the package called “Station Sponsor” to one customer, “11‐Street”. However, revenue from the package accounted for less than 1% of VGI’s total revenue in FY17. Currently, VGI has new customers like “OPPO” mobile phone, and Aeon. Meanwhile, VGI will introduce new packages this year, especially upcountry, which still has much more room to grow. Revise up FY19E net profit estimate by 2% given MACO’s latest M&A We maintain our net profit estimate in FY18E for VGI, but slightly revise up the net profit estimate in FY19E by 2% to Bt1.1bn owing to the latest M&A deal of MACO. MACO recently announced the acquisition of a 70% investment stake in CO‐MASS with an investment value of not more than Bt335mn. CO‐MASS is an outdoor media company with more than nineteen years of experience in outdoor media nationwide, consisting of 113 static billboards in 23 provinces. The acquisition will increase MACO’s revenue capacity to Bt1.4bn, vs. Bt1.2bn currently. Financials and Valuation FY Ended 31 Mar Revenues (Btmn) Net profit (Btmn) EPS (Bt) Norm. profit (Btmn) Norm. EPS (Bt) Norm. EPS growth (%) Dividend (Bt) BV (Bt) FY Ended 31 Mar PER (x) EV/EBITDA (x) P/BV (x) Dividend yield (%) ROE (%) Net gearing (%)
FY15 2,963 838 0.122 999 0.146 (56.38) 0.176 0.266 FY15 35.03 11.45 19.14 3.45 44.29 22.31
FY16 2,341 941 0.137 852 0.122 (15.97) 0.110 0.327 FY16 41.68 12.56 15.61 2.16 46.20 cash
FY17 3,051 826 0.120 689 0.100 (17.92) 0.060 0.270 FY17 50.78 15.85 18.86 1.18 40.33 116.26
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 1 of 4
FY18E 3,830 908 0.132 908 0.132 31.71 0.119 0.297 FY18E 38.56 12.20 17.18 2.33 46.63 107.28
FY19E 4,609 1,138 0.166 1,138 0.166 25.30 0.149 0.330 FY19E 30.77 9.62 15.45 2.92 52.88 57.13
Figure 1: Summary of SOTP‐based valuation for VGI Business
% Holding
VGI
Valuation Method
Value to VGI (Bt)
DCF (WACC 8%)
5.09
MACO
33.68
DCF (WACC 9%)
0.22
SBK Line
30.00
DCF (WACC 10%)
0.01
5.31
SOTP‐based Source: KT ZMICO Research
Figure 2: VGI’s PER band and sensitivity of market prices based on PER at different standard deviation levels FY17E +1.0SD +0.5SD Average ‐0.5SD ‐1.0SD ‐1.5SD ‐2.0SD ‐2.5SD
(X) 70 +2 S.D.
60
+1 S.D.
50 Avg.
40 30
-1 S.D.
20
-2 S.D.
10
Oct-12 Nov-12 Jan-13 Feb-13 Apr-13 May-13 Jul-13 Aug-13 Oct-13 Nov-13 Jan-14 Feb-14 Apr-14 May-14 Jul-14 Aug-14 Oct-14 Dec-14 Jan-15 Mar-15 Apr-15 Jun-15 Jul-15 Sep-15 Oct-15 Dec-15 Jan-16 Mar-16 Apr-16 Jun-16 Jul-16 Sep-16 Oct-16 Dec-16 Jan-17 Mar-17 Apr-17
0
PER (x) 48.6 44.5 40.5 36.4 32.4 28.3 24.2 20.2
Implied market price (Bt) 6.41 5.88 5.34 4.81 4.27 3.74 3.20 2.66
Upside/Downside vs. current market price (%) 25.7 15.1 4.4 (6.2) (16.8) (27.4) (38.0) (48.6)
Source: Bloomberg, KT ZMICO Research
Figure 3: VGI’s revenue capacity expansion Btmn Transit products
Office products
Outdoor products
Aviation products
FY16
Plan (FY17 – FY18) 2,200
30 BTS stations 208 carriages > 4,000 static displays 2,029 digital screens 8,800 sqm. merchandising space
2,300
Additional 100
600
100
1,700
800
1,400
1,100
300
300
1,000
1,000
7,300
3,400
30 BTS stations 208 carriages > 4,000 static displays 2,100 digital screens 8,800 sqm. merchandising space 500
135 office buildings 219 residential buildings 200,000 sqm. in Chamchuri Square sales agent for 15 clock towers
160 office buildings 260 residential buildings 200,000 sqm. in Chamchuri Square sales agent for 20 clock tower 900
667 billboards and N/W billboards 555 street furniture 131 displays in transit
1,567 billboards and N/W billboards 555 street furniture 131 displays in transit 300
13 airports (32 LCDs) 4,500 trolleys sales agent for 49 aircraft
13 airports (342 LCDs) 940 digital and static displays 7,000 trolleys sales agent for 49 aircraft
Digital products
‐
Activation
‐
Banner Advertising Direct Targeted Marketing 3,000 salespeople
Total
3,900
Source: VGI
REFER TO DISCLOSURE SECTION AT THE END OF THE NOTES page 2 of 4
Financial tables PROFIT & LOSS (Btm) Revenues Cost of sales and service Gross profit SG&A EBITDA Depreciation & amortization EBIT Interest expense Equity earnings Other income / exp. EBT Corporate tax Minority interests Net profit Reported EPS Fully diluted EPS Core net profit Core EPS Dividend (Bt) BALANCE SHEET (Btm) Cash and equivalents Inventories PP&E‐net Other assets Total assets ST debt & current portion Long‐term debt Total liabilities Minority interests Shareholder equity Total liab. & shareholder equity CASH FLOW (Btm) Net income Depreciation & amortization Change in working capital FX, non‐cash adjustment & others 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 (%) Core EPS growth (%) Gross margin (%) EBITDA margin (%) Operating margin (%) Net margin (%) Core profit margin (%) Effective tax rate (%) FINANCIAL QUALITY Total debt to capital employed (x) Net debt to equity (x) Interest coverage (x)
FY15 2,963 (1,325) 1,638 (419) 1,372 (153) 1,219 (10) 15 (115) 1,109 (272) 0 838 0.122 0.122 999 0.146 0.176
FY16 2,341 (881) 1,461 (549) 1,149 (237) 912 (22) 39 178 1,107 (174) 8 941 0.137 0.137 999 0.122 0.110
FY17 3,051 (1,269) 1,783 (1,028) 1,102 (347) 755 (32) (16) 236 944 (175) 58 826 0.120 0.120 840 0.100 0.060
FY18E 3,830 (1,563) 2,267 (1,222) 1,433 (389) 1,045 (69) (37) 124 1,063 (231) 76 908 0.132 0.132 908 0.132 0.119
FY15 354 4 1,434 2,516 4,308 556 206 2,178 292 1,829 4,308
FY16 1,309 172 1,330 2,752 5,563 273 173 1,728 1,593 2,242 5,563
FY17 799 91 1,568 5,527 7,985 1,024 1,933 4,880 1,249 1,856 7,985
FY18E 771 91 1,492 5,760 8,115 1,024 1,933 4,904 1,173 2,038 8,115
FY15 838 153 490 0 1,481 (1,562) 0 (1,562) 395 346 (965) 0 (224) (305) (81) (0.01)
FY16 941 237 (288) (158) 732 (209) 0 (209) 1,103 0 (515) 0 588 1,110 522 0.08
FY17 826 347 (74) (142) 957 (3,685) 0 (3,685) 2,870 0 (652) 0 2,218 (510) (2,728 (0.40
FY18E 908 389 27 37 1,361 (935) 0 (935) 0 0 (454) 0 (454) (28) 426 0.06
FY15 (5.9) (6.0) (56.4) 55.3 46.3 41.1 28.3 33.7 24.5
FY16 (21.0) (16.3) (15.9) 62.4 49.1 39.0 40.2 35.9 15.7
FY17 30.3 (4.1) (17.9) 58.4 36.1 24.7 27.1 22.6 18.6
FY18E 25.5 30.1 31.7 59.2 37.4 27.3 23.7 23.7 21.7
FY15 0.29 0.22 111.73
FY16 0.17 cash 44.71
FY17 0.61 1.16 29.21
FY18E 0.59 1.07 17.42
FY19E 4,609 1,899) 2,710 (1,388) 1,725 (402) 1,322 (62) (9) 151 1,402 (305) 41 1,138 0.166 0.166 1,138 0.166 0.149
FY19E 1,463 91 897 5,833 8,285 1,024 1,733 4,938 1,132 2,265 8,335
FY19E 1,138 402 62 9 1,611 (150) 0 (150) (200) 0 (569) 0 (769) 692 1,461 0.21
FY19E 20.3 20.3 25.3 58.8 37.4 28.7 24.7 24.7 21.7 FY19E 0.55 0.57 22.95
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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, TFD, TTL, NMG, NUSA.
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)
Anti‐corruption Progress Indicator
Satisfactory (scores: 60 – 69) Pass (scores: 50 – 59) No Logo N/A (scores: below 50)
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
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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
