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Thailand

Daily

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KEY HIGHLIGHTS

Results

Aapico Hitech (AH TB/HOLD/Bt14.50/Target: Bt15.40)

Page 2

1Q14: In-line results, positive long-term outlook. Upgrade to HOLD.

Bangkok Dusit Medical Services (BGH TB/BUY/Bt15.50/Target: Bt17.00)

Page 5

1Q14: Better than expectation as cost control measures bear fruit. Earnings growth should continue into the next few years.

Central Plaza Hotel (CENTEL TB/BUY/Bt30.50/Target: Bt35.50)

Page 8

1Q14: Results beat expectations by 10.3%.

Hana Microelectronics (HANA TB/HOLD/Bt35.00/Target: Bt33.00)

Page 11

1Q14: Significant gains from flood claims.

Thai Union Frozen Products (TUF TB/BUY/Bt69.50/Target: Bt80.00)

Page 14

1Q14: Earnings in line with our expectation.

Thai Vegetable Oil (TVO TB/BUY/Bt22.40/Target: Bt28.00)

Page 17

1Q14: Earnings slightly lower than our expectation.

Vinythai (VNT TB/HOLD/Bt10.50/Target: Bt11.20)

Page 20

1Q14: Weak results, as expected.

AT A GLANCE

Corporate

Page 23

BEC: 1Q14: Results earnings lower than our expectation. SPALI: 1Q14: Results in line with expectation.

TICON: 1Q14: Earnings down 84.2% qoq.

Sector

Page 25

Property: Sector set to suffer sales decline in 2014.

Economics / Politics

Page 25

Economy: Negative growth seen for 1Q14.

Refer to last page for important disclosures.

Friday, 16 May 2014

KEY INDICES

Symbol

Close

Chg

%Chg

SET

1,395.21

(0.82)

(0.06)

SET50

946.88

0.10

0.01

Value (Btm) - SET Top 5 Sector

36,451,256

BANK

522.42

0.52

0.10

PETRO

947.93

4.14

0.44

PROP

256.03

(2.45)

(0.95)

ENERG

19,292.78

(15.43)

(0.08)

ICT

219.17

(2.99)

(1.35)

Source: Bloomberg

TOP VOLUME

 

Chg

Volume

Symbol

Price (Bt)

(%)

(‘000)

SAWAD

14.30

(2.72)

273,026.6

TRUE

6.75

(4.26)

242,732.9

IEC

0.03

-

166,469.8

N-PARK

0.05

(16.67)

164,762.7

ICHI

25.50

4.94

144,643.4

TOP GAINERS

 

Chg

Volume

Symbol

Price (Bt)

(%)

(‘000)

SITHAI

2.10

793.62

38,464.0

ABC

4.96

27.18

0.1

THIP

121.50

20.30

98.4

TOG

4.84

18.05

18,374.1

LTX

61.25

16.67

61.7

TOP LOSERS

 

Chg

Volume

Symbol

Price (Bt)

(%)

(‘000)

NSI

60.50

(19.33)

143.9

METCO

214.00

(19.25)

78.9

N-PARK

0.05

(16.67)

164,762.7

WAT

0.05

(16.67)

68,646.6

PT

7.25

(14.20)

2,199.9

KEY STATISTICS

-------------%Chg--------------

Commodity

Current

Price

1m

3M

YTD

Brent crude* Dubai crude* Baltic Dry Index Gold Spot***

109.4

0.1

1.3

0.3

105.8

0.3

0.3

(2.0)

1,021.0

5.3

(7.7)

(55.2)

1,295.5

(0.5)

(1.8)

7.5

*(US$/bbl), *** (US$/toz)

FOREIGN PORTFOLIO INVESTMENT IN EQUITIES (THAILAND)

Day

MTD Net

YTD Net

YTD Net

(Mil US$)

(Mil US$)

(Mil US$)

YoY%

18.6

(34.7)

(171.8)

(5,683.6)

Source: Bloomberg

Foreign Exchange Rate - THB/US$ (onshore) = 32.49 Interest Rate (%) - TH 1-day RP = 2.00 Thai Lending Rate (%)* - MLR = 6.75

* Based on Bangkok Bank’s rate

1

Thailand

Daily

COMPANY RESULTS

Aapico Hitech (AH TB)

1Q14: In-line, Positive Long-term Outlook

AH’s 1Q14 earnings dropped by 45.2% yoy to Bt152.7m, due to high-base effect from the first-car scheme and a drop in domestic consumption. Even though the outlook for 2Q14 remains negative on seasonal effect, we have a positive long- term outlook on government support and the high average age of domestic vehicles. Upgrade to HOLD with a new target price of Bt15.40. Entry price is

Bt13.50.

1Q14 RESULTS

Year to 31 Dec (Btm)

1Q13

4Q13

1Q14

yoy chg (%)

qoq chg (%)

Net turnover

4,542

3,370

3,574

-21.3

6.1

Gross profit

385

160

220

-42.9

37.5

EBIT

146

-46

46

-68.3

-199.5

EBITDA

327

183

224

-31.5

22.8

Net income

279

1

153

-45.2

12,626.3

EPS

0.86

0.00

0.47

-45.2

12,626.3

Ratio (%)

bp yoy

bp qoq

Gross margin EBIT margin EBITDA margin SGA % of sales Net margin

8.5

4.7

6.1

-2.3

1.4

3.2

-1.4

1.3

-1.9

2.7

7.2

5.4

6.3

-0.9

0.9

5.3

6.1

4.9

-0.4

-1.3

6.1

0.0

4.3

-1.9

4.2

Source: AH

RESULTS

Earnings dropped as expected. Aapico Hitech’s (AH) 1Q14 earnings dropped by 45.2% yoy to Bt152.7m, due to high-base effect from the first-car scheme and a drop in domestic consumption. Gross margin decreased by 2.3ppt yoy to 6.1% from lower utilisation rate. Revenue dropped by 21.3% yoy to Bt3.6b along with total car production, which also decreased by 28.3% yoy to 517,492 units relative to our expectation. AH’s 1Q14 net profit accounts for 30% of our 2014 full-year forecast.

Weakest results to be in 2Q14. We expect 2Q14 to be the weakest quarter of the year for AH primarily due to the fewer number of production days. As such, its earnings might fall sharply qoq as lower utilisation could affect its gross margin.

KEY FINANCIALS

Year to 31 Dec (Btm)

2012

2013

2014F

2015F

2016F

Net turnover EBITDA Operating profit Net profit (rep./act.) Net profit (adj.) EPS (Bt) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (n.a.) Net margin (%) Net debt/(cash) to equity (%) Interest cover (x) ROE (%) Consensus net profit UOBKH/Consensus (x)

16,120

15,627

13,949

14,723

15,566

1,004

982

767

780

771

240

216

86

128

155

921

1,463

496

601

677

921

1,463

496

601

677

2.9

4.5

1.5

1.9

2.1

5.1

3.2

9.4

7.8

6.9

1.4

1.5

1.3

1.1

1.0

9.7

9.9

12.7

12.5

12.6

n.a.

n.a.

n.a.

n.a.

n.a.

5.7

9.4

3.6

4.1

4.4

105.8

82.7

85.1

69.8

56.6

3.5

3.6

3.1

3.2

3.3

20.8

28.8

9.0

10.0

10.3

-

-

535

631

707

-

-

0.93

0.95

0.96

Source: Aapico Hitech, Bloomberg, UOB Kay Hian

Refer to last page for important disclosures.

Friday, 16 May 2014

HOLD

(Upgraded)

Share Price

Bt14.50

Target Price

Bt15.40

Upside

+6.2%

(Previous TP

Bt13.20)

COMPANY DESCRIPTION

Auto parts manufacturer such as chassis, forged parts, pressed parts, jigs, dies, door check and fuel tanks. The company is also engaged in automobile dealership for Ford, and Mitsubishi in Thailand, Honda in Malaysia and car navigation businesses.

STOCK DATA

GICS sector

Consumer

Discretionary

Bloomberg ticker:

AH TB

Shares issued (m):

322.6

Market cap (Btm):

4,677.5

Market cap (US$m):

144.1

3-mth avg daily t'over (US$m):

0.1

Price Performance (%)

52-week high/low

 

Bt28.00/Bt12.80

1mth

3mth

6mth

1yr

YTD

5.1 (4.0)

(11.6)

(46.8)

(0.7)

Major Shareholders

 

%

Yeap family

33.0

Sojitz corporation

 

16.0

Jurangkool

7.0

FY14 NAV/Share (Bt)

 

11.14

FY14 Net Debt/Share (Bt)

15.19

PRICE CHART

(lcy) AAPICO HITECH PCL AAPICO HITECH PCL/SET INDEX (%) 30 110 100 25 90 80
(lcy)
AAPICO HITECH PCL
AAPICO HITECH PCL/SET INDEX
(%)
30
110
100
25
90
80
20
70
60
15
50
10
40
3
Volume (m)
2
1
0
May 13
Jul 13
Sep 13
Nov 13
Jan 14
Mar 14
May 14

Source: Bloomberg

ANALYST

Arsit Pamaranont +662 659 8317 arsit@uobkayhian.co.th

2

Thailand

STOCK IMPACT

2014 car production outlook. We still maintain our forecast that total car production could reach 2.15m units in 2014 - 0.96m units for domestic sales and 1.2m units for exports. We think domestic car sales should perform in line with our forecast. We still have a positive longer-term outlook for this industry, due to a tax exemption programme from the Thai government for stimulating relocation from car makers. We expect total car production could reach 3.0m units in 2019, or at a 6.9% 4-year CAGR.

Average age of vehicles in Thailand. We expect domestic demand to increase in the next few years as the current vehicle age has reached an average of 8.9 years. We think that in the next 1-2 years, a surge in replacement demand could stimulate domestic car sales again as car owners tend to replace their vehicles after 11 years.

EARNINGS REVISION/RISK

Key risks include: a) decrease in total car production, b) a larger-than-expected plunge in domestic sales, and c) the political turmoil being extended.

VALUATION/RECOMMENDATION

We think 2Q14 could be the period for accumulating its shares as we expect weak 2Q14 earnings due to fewer working days (lower utilisation), which could have a negative impact on the share price.

Upgrade to HOLD with a target price at Bt15.40 pegged at 10.0x 2014F PE, or +0.5 SD to its 4-year average. We believe that negative factors have been priced in. In the longer term, the automobile industry could see positive effects from manufacturers’ relocation to Thailand, which will become an ASEAN car manufacturing hub. Entry price is Bt13.50.

SHARE PRICE CATALYST

Thailand International Motor Expo in Nov 14.

Daily

Refer to last page for important disclosures.

Friday, 16 May 2014

PE BAND

PE( x )

15.0 +3SD: 13.8x +2SD: 121x +1SD: 10.3x 10.0 Mean: 8.6x -1SD: 6.8x -2SD: 5.1x 5.0
15.0
+3SD: 13.8x
+2SD: 121x
+1SD: 10.3x
10.0
Mean: 8.6x
-1SD: 6.8x
-2SD: 5.1x
5.0
-
Jan-10
Sep-11
May-13

Source: Bloomberg, UOB Kay Hian

CCI & DOMESTIC CAR SALES 160,000 140,000 120,000 100,000 80,000 60,000 40,000 20,000 - Car
CCI & DOMESTIC CAR SALES
160,000
140,000
120,000
100,000
80,000
60,000
40,000
20,000
-
Car Sales
Consumer Con.
Jan-11
Apr-11
Jul-11
Oct-11
Jan-12
Apr-12
Jul-12
Oct-12
Jan-13
Apr-13
Jul-13
Oct-13
Jan-14

Source: UTCC, UOB Kay Hian

90

85

80

75

70

65

GROSS MARGIN 11.0% 10.0% 9.0% 8.0% 7.0% 6.0% 5.0% 4.0% 1Q11 3Q11 1Q12 3Q12 1Q13
GROSS MARGIN
11.0%
10.0%
9.0%
8.0%
7.0%
6.0%
5.0%
4.0%
1Q11
3Q11
1Q12
3Q12
1Q13
3Q13
1Q14

Source: AH, UOB Kay Hian

3

Thailand

Daily

Friday, 16 May 2014

PROFIT & LOSS

BALANCE SHEET

Year to 31 Dec (Btm)

2013

2014F

2015F

2016F

Year to 31 Dec (Btm)

2013

2014F

2015F

2016F

Net turnover EBITDA Deprec. & amort. EBIT Total other non-operating income Associate contributions Net interest income/(expense) Pre-tax profit Tax Minorities Net profit Net profit (adj.)

15,627

13,949

14,723

15,566

Fixed assets Other LT assets Cash/ST investment Other current assets Total assets ST debt Other current liabilities LT debt Other LT liabilities Shareholders' equity Minority interest Total liabilities & equity

6,674

6,428

6,076

5,760

982

767

780

771

1,843

3,106

3,387

3,696

766

681

652

616

238

117

450

761

216

86

128

155

3,825

3,869

4,061

4,273

1,371

497

517

538

12,579

13,519

13,974

14,490

246

234

281

309

2,563

2,825

2,575

2,325

(273)

(251)

(241)

(232)

2,360

2,465

2,599

2,729

1,560

567

685

770

2,061

2,191

2,251

2,311

(74)

(64)

(77)

(86)

124

116

116

116

(24)

(6.6)

(6.6)

(6.6)

5,307

5,759

6,270

6,845

1,463

496

601

677

163

163

163

163

1,463

496

601

677

12,579

13,519

13,974

14,490

CASH FLOW

KEY METRICS

Year to 31 Dec (Btm)

2013

2014F

2015F

2016F

Year to 31 Dec (%)

2013

2014F

2015F

2016F

Operating Pre-tax profit Tax Deprec. & amort. Associates Working capital changes Non-cash items Other operating cashflows Investing Capex (growth) Capex (maintenance) Investments Proceeds from sale of assets Others Financing Dividend payments Issue of shares Proceeds from borrowings Loan repayment Others/interest paid Net cash inflow (outflow) Beginning cash & cash equivalent Changes due to forex impact Ending cash & cash equivalent

1,961

265

1,161

1,142

Profitability

708

567

685

770

EBITDA margin

6.3

5.5

5.3

5.0

(48)

(64)

(77)

(86)

Pre-tax margin

10.0

4.1

4.7

4.9

766

681

652

616

Net margin

9.4

3.6

4.1

4.4

(246)

(234)

(281)

(309)

ROA

11.1

3.8

4.4

4.8

(395)

10

(59)

(81)

ROE

28.8

9.0

10.0

10.3

0.0

0.0

0.0

0.0

1,176

(694)

241

232

Growth Turnover EBITDA Pre-tax profit Net profit Net profit (adj.) EPS

 

(744)

(412)

(300)

(300)

(3.1)

(10.7)

5.5

5.7

(734)

(400)

(300)

(300)

(2.2)

(21.9)

1.7

(1.3)

0.0

0.0

0.0

0.0

61.6

(63.7)

20.8

12.4

(23)

(14)

0.0

0.0

58.8

(66.1)

21.1

12.7

12

0.0

0.0

0.0

58.8

(66.1)

21.1

12.7

0.0

1.6

0.0

0.0

58.8

(66.1)

21.1

12.7

(1,223)

33

(522)

(524)

(180)

(99)

(90)

(102)

Leverage Debt to total capital Debt to equity Net debt/(cash) to equity Interest cover (x)

 

0.0

0.0

0.0

0.0

45.8

45.9

42.9

39.8

922

280

210

210

87.1

87.1

77.0

67.7

(1,732)

200

(400)

(400)

82.7

85.1

69.8

56.6

(232)

(348)

(241)

(232)

3.6

3.1

3.2

3.3

(6.0)

(114)

339

318

207

238

117

450

37

(6.6)

(6.6)

(6.6)

238

117

450

761

Refer to last page for important disclosures.

4

Thailand

COMPANY RESULTS

Bangkok Dusit Medical Services (BGH TB)

Daily

1Q14: Better-than-expected Results; Maintain BUY

BGH reported good 1Q14 results and beat our and consensus estimates. The group showed that it has found the right balance of cost control and earnings growth. This will be key for sustainable earnings growth going forward. It will also enable BGH to start looking for new M&A deals to fulfil its ambition of having 50 hospitals. Maintain BUY with target price at Bt17.00.

1Q14 RESULTS

Year to 31 Dec (Btm)

1Q14

1Q13

yoy

4Q13

qoq

Remarks

 

% chg

% chg

 

13,861

12,267

13.0

13,030

6.4

Increasing number of patients & focus on higher intensity cases

Sales Gross Profit EBITDA Pre-tax Profit Tax Net Profit Net Profit (Ex EI) EPS (Bt) Gross margin (%) EBITDA margin (%) Net margin (%)

5,078

4,397

15.5

4,268

19.0

3,299

2,897

13.9

2,528

30.5

Effective cost control

2,379

2,115

12.5

1,626

46.3

(453)

(410)

10.5

(367)

23.4

2,075

1,948

6.5

1,417

46.4

2,075

1,938

7.1

1,395

48.7

0.13

0.13

0.0

0.09

44.4

36.6

35.8

32.8

23.8

23.6

19.4

15.0

15.9

10.9

Source: BH, UOB Kay Hian

RESULTS

Satisfactory 1Q14 results. Bangkok Dusit Medical Services (BGH) reported better-than- expected 1Q14 results as the group’s cost controls bore fruit. 1Q14 earnings are 5-6% better than our and consensus forecasts. 1Q14 sales grew impressively by 13% to Bt14.9b on increasing number of patients and its focus on higher intensity cases. An expansion of two new hospitals in 2013 - Samitivej Thonburi Hospital and Bangkok Hospital Pitsanulok - also contributed to its revenue growth in this quarter. With the centralisation of job allocation, equipment sharing, scaling down of opening of new hospitals and tight cost control, 1Q14 EBITDA margin was restored to 24%, the same as in 1Q13. Including lower equity accounting in 1Q14 as there was no gain on sales of Ramkhamhaeng Hospital investment as in 1Q13, BGH reported 1Q14 net profit of Bt2.1b, an increase of 7% yoy. BGH’s 1Q14 performance was also better qoq as the hospital’s tight cost control started to bear fruit.

KEY FINANCIALS

Year to 31 Dec (Btm)

2012

2013

2014F

2015F

2016F

Net turnover EBITDA Operating profit Net profit (rep./act.) Net profit (adj.) EPS (Bt) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (%) Net margin (%) Net debt/(cash) to equity (%) Interest cover (x) ROE (%) Consensus net profit UOBKH/Consensus (x)

45,305

50,461

57,000

66,272

77,263

10,009

10,148

12,286

14,349

16,962

7,097

6,935

8,834

10,724

13,301

7,849

6,261

7,687

9,521

11,841

6,037

6,076

7,687

9,521

11,841

0.4

0.4

0.5

0.6

0.8

39.7

39.4

31.2

25.2

20.3

6.5

5.9

5.3

4.7

4.1

25.9

25.5

21.1

18.1

15.3

1.2

1.3

1.6

2.0

2.5

17.3

12.4

13.5

14.4

15.3

43.6

45.8

37.4

26.0

11.2

11.8

10.6

14.4

21.6

29.4

22.8

16.2

17.9

19.7

21.7

-

-

6,949

8,148

9,918

-

-

1.11

1.17

1.19

Source: Bangkok Dusit Medical Services, Bloomberg, UOB Kay Hian

STOCK IMPACT

Refer to last page for important disclosures.

Friday, 16 May 2014

BUY

(Maintained)

Share Price

Bt15.50

Target Price

Bt17.00

Upside

+9.7%

COMPANY DESCRIPTION

A group of leading private hospitals with a nationwide network. Its proportion of local and foreign revenue is currently at 72:28. Growth drivers come from local and regional expansion via greenfield projects and mergers & acquisitions.

STOCK DATA

GICS sector

Health Care

Bloomberg ticker:

BGH TB

Shares issued (m):

15,491.0

Market cap (Btm):

240,109.8

Market cap (US$m):

7,395.0

3-mth avg daily t'over (US$m):

11.9

Price Performance (%)

52-week high/low

 

Bt17.45/Bt10.85

1mth

3mth

6mth

1yr

YTD

17.0 27.0

20.6

(10.7)

31.9

Major Shareholders

 

%

Prasarttong-osoth family

31.2

Tongtang family

15.2

Viriya Insurance

6.2

FY14 NAV/Share (Bt)

2.93

FY14 Net Debt/Share (Bt)

1.10

PRICE CHART

BANGKOK DUSIT MED SERVICE (lcy) (%) BANGKOK DUSIT MED SERVICE/SET INDEX 20 120 110 18
BANGKOK DUSIT MED SERVICE
(lcy)
(%)
BANGKOK DUSIT MED SERVICE/SET INDEX
20
120
110
18
100
16
90
14
80
12
70
10
60
150
Volume (m)
100
50
0
May 13
Jul 13
Sep 13
Nov 13
Jan 14
Mar 14
May 14

Source: Bloomberg

ANALYST

Kowit Pongwinyoo +662 659 8304 kowit.p@uobkayhian.co.th

REVENUE BREAKDOWN

5

Thailand

Daily

Earnings to continue to grow despite the low season in 2Q14. As BGH seemed to find the right measures to control cost, we expect BGH’s earnings growth to continue in the following quarters despite its plans to open up to six new hospitals this year. However, the pace of growth may slow down slightly in 2Q14 as the hospital industry enters the low season. Earnings growth should come back strongly in 3Q14 as the industry enters the high season.

Expect more acquisition of new hospitals soon. With cost control in place, we expect management may pay more attention on network expansion. In the pipeline is a schedule to open six new hospitals in 2014, two new hospitals in 2015 and one new hospital in 2016. This will enable BGH to have 40 hospitals under its umbrella. We expect more acquisitions soon to fulfil its target to have 50 hospitals under the group.

EARNINGS REVISION/RISK

Forecasts maintained. Despite better-than-expected earnings, we expect BGH’s earnings growth momentum should slow down in 2Q14 as the industry braces for the low season. We therefore maintain our forecasts for sales growth of 13% and 16% in 2014 and 2015, respectively. Its core profits are forecasted to grow by 27% and 24%, in 2014 and 2015, respectively.

VALUATION/RECOMMENDATION

Maintain BUY. BGH is a good play on earnings recovery as evident in its good 1Q14 results. We expect its earnings growth should continue and gather momentum in 3Q14. We therefore maintain BUY on BGH. It also trades at 31x PE, on a par with the regional peers’ yet offers catalysts on potential M&A deals in the foreseeable future. Current share price still offers 10% upside to our Bt17.00 target price, based on DCF model at a discount rate of 8%.

SHARE PRICE CATALYST

Announcement of M&A deals.

PEER COMPARISON

 

P/BV

EV/EBITDA

Div yield

ROE

Earnings

Company

Ticker

P/E (x)

(x)

(x)

(%)

(%)

Growth (%)

 

2014F

2014F

2014F

2014F

2014F

2014F

Bangkok Dusit

BGH TB

31.2

5.1

20.7

1.6

17.1

26.5*

Bumrungrad

BH TB

30.1

7.5

18.8

1.8

26.5

12.2*

Bangkok Chain

BCH TB

23.9

3.6

11.5

2.7

15.8

27.4*

Raffles Medical

RFMD SP

27.4

3.8

20.7

1.5

14.4

5.8

IHH Healthcare

IHH MK

42.5

1.8

19.6

0.4

4.3

18.5

KPJ Healthcare

KPJ MK

30.3

2.8

16.5

1.6

9.2

6.8

Ramsay

RHC AU

28.3

5.6

14.8

1.8

20.1

19.6

Apollo

APHS IN

38.3

4.4

19.5

0.6

11.8

7.7

Local aver.

28.4

5.4

17.0

2.0

19.8

22.0

Total aver.

31.5

4.3

17.8

1.5

14.9

7.3

*Core Earnings Source: Bloomberg, UOB Kay Hian

Refer to last page for important disclosures.

Friday, 16 May 2014

26% 28% 28% 30% 74% 72% 72% 70% 2011 2012 2013 1Q14F Domestic Foreign
26%
28%
28%
30%
74%
72%
72%
70%
2011
2012
2013
1Q14F
Domestic
Foreign

Source: BGH

SALES AND CORE PROFIT GROWTH (Btm) (%) 70,000 70 60,000 60 50,000 50 40,000 40
SALES AND CORE PROFIT GROWTH
(Btm)
(%)
70,000
70
60,000
60
50,000
50
40,000
40
27
24
30,000
30
20,000
20
16
13
10,000
10
-
0
2012
2013
2014F
2015F
Sales
Core profit
Sales growth yoy
Core profit growth

Source: BGH,UOB Kay Hian

QUARTERLY NET PROFIT

(Btm) 3500 3000 2500 2000 1500 1000 500 0 1Q 2Q 3Q 4Q 2012 2013
(Btm)
3500
3000
2500
2000
1500
1000
500
0
1Q
2Q
3Q
4Q
2012
2013
2014

Source: BGH

QUARTERLY MARGINS 40% 35% 30% 25% 20% 15% 10% 5% 0% 1Q13 2Q13 3Q13 4Q13
QUARTERLY MARGINS
40%
35%
30%
25%
20%
15%
10%
5%
0%
1Q13
2Q13
3Q13
4Q13
1Q14
2Q13
3Q13
4Q13
Gross margin
EBITDA margin
Net margin

Source: BGH

P/B MEAN AND SD

BV (x) BGH TB / Forward P/BV 7.0 +2SD: 6.0x 6.0 5.0 +1SD: 4.8x 4.0
BV (x)
BGH TB / Forward P/BV
7.0
+2SD: 6.0x
6.0
5.0
+1SD: 4.8x
4.0
Mean: 3.6x
3.0
-1SD: 2.3x
2.0
-2SD: 1.1x
1.0
0.0

Jan-06 Nov-06 Sep-07 Jul-08 May-09 Mar-10 Jan-11 Nov-11 Sep-12 Jul-13 May-1

Source: Bloomberg, UOB Kay Hian

6

Thailand

Daily

Friday, 16 May 2014

PROFIT & LOSS

BALANCE SHEET

Year to 31 Dec (Btm)

2013

2014F

2015F

2016F

Year to 31 Dec (Btm)

2013

2014F

2015F

2016F

Net turnover EBITDA Deprec. & amort. EBIT Total other non-operating income Associate contributions Net interest income/(expense) Pre-tax profit Tax Minorities Net profit Net profit (adj.)

50,461

57,000

66,272

77,263

Fixed assets Other LT assets Cash/ST investment Other current assets Total assets ST debt Other current liabilities LT debt Other LT liabilities Shareholders' equity Minority interest Total liabilities & equity

38,875

41,978

44,069

44,502

10,148

12,286

14,349

16,962

27,295

27,796

28,313

28,849

3,213

3,452

3,625

3,661

4,181

1,696

1,782

6,399

6,935

8,834

10,724

13,301

6,048

6,817

7,905

9,180

761

777

788

815

76,399

78,286

82,070

88,929

988

1,036

1,203

1,408

4,072

3,616

2,116

3,616

(957)

(853)

(664)

(577)

7,689

8,613

9,802

11,133

7,727

9,794

12,052

14,946

18,729

15,048

12,932

9,316

(1,392)

(1,752)

(2,170)

(2,708)

3,265

3,592

3,951

4,346

(259)

(355)

(361)

(397)

40,681

45,356

51,106

58,246

6,261

7,687

9,521

11,841

1,963

2,061

2,164

2,272

6,076

7,687

9,521

11,841

76,399

78,286

82,070

88,929

CASH FLOW

KEY METRICS

Year to 31 Dec (Btm)

2013

2014F

2015F

2016F

Year to 31 Dec (%)

2013

2014F

2015F

2016F

Operating Pre-tax profit Tax Deprec. & amort. Associates Working capital changes Non-cash items Other operating cashflows Investing Capex (growth) Financing Dividend payments Issue of shares Proceeds from borrowings Loan repayment Others/interest paid Net cash inflow (outflow) Beginning cash & cash equivalent

8,913

10,210

11,236

12,288

Profitability

6,924

8,758

10,848

13,538

EBITDA margin

20.1

21.6

21.7

22.0

(1,392)

(1,752)

(2,170)

(2,708)

Pre-tax margin

15.3

17.2

18.2

19.3

3,213

3,452

3,625

3,661

Net margin

12.4

13.5

14.4

15.3

988

1,036

1,203

1,408

ROA

8.6

9.9

11.9

13.8

353

(249)

(1,068)

(2,204)

ROE

16.2

17.9

19.7

21.7

(914)

(681)

(842)

(1,011)

(259)

(355)

(361)

(397)

Growth Turnover EBITDA Pre-tax profit Net profit Net profit (adj.) EPS

 

(9,857)

(5,884)

(4,152)

(1,299)

11.4

13.0

16.3

16.6

(9,857)

(5,884)

(4,152)

(1,299)

1.4

21.1

16.8

18.2

1,267

(6,812)

(6,998)

(6,373)

(2.9)

26.8

23.0

24.0

(2,782)

(3,099)

(3,844)

(4,760)

(20.2)

22.8

23.8

24.4

463

0.0

0.0

0.0

0.6

26.5

23.8

24.4

3,586

0.0

0.0

0.0

0.6

26.3

23.8

24.4

0.0

(3,712)

(3,154)

(1,613)

0.0

0.0

0.0

0.0

Leverage Debt to total capital Debt to equity

 

323

(2,485)

87

4,616

34.8

28.2

22.0

17.6

3,858

4,181

1,696

1,782

56.0

41.1

29.4

22.2

Ending cash & cash equivalent

4,181

1,696

1,782

6,399

Net debt/(cash) to equity Interest cover (x)

45.8

37.4

26.0

11.2

 

10.6

14.4

21.6

29.4

Refer to last page for important disclosures.

7

Thailand

COMPANY RESULTS

Daily

Central Plaza Hotel (CENTEL TB)

1Q14: Results Beat Expectations By 10.3%

CENTEL reported a 1Q14 net profit of Bt501.9m, down 22.7% yoy owing to a) poor performance of its hotels in Bangkok from political demonstrations and b) increased SG&A expenses for food business. The results were better than our expectation by 10.3% due to better-than-expected hotel revenue and gross margin from hotel operations. Maintain BUY in view of CENTEL’s promising long-term earnings outlook and greater flexibility in restaurant portfolio management. Target price: Bt35.50.

1Q14 Results

Year to 31 Dec (Btm)

1Q13

4Q13

1Q14

% qoq

% yoy

Revenue from hotel business Revenue from food business Other income

2,241.2

2,192.7

2,229.6

1.7

-0.5

2,150.4

2,327.1

2,286.4

-1.7

6.3

121.9

104.7

109.5

4.6

-10.2

Total revenue Cost of sales - hotel business Cost of sales - food business Total cost of sales Gross operating profit from hotel business Gross operating profit from food business Total gross operating profit

4,513.5

4,624.5

4,625.5

0.0

2.5

(746.5)

(803.8)

(719.1)

-10.5

-3.7

(1,043.8)

(1,160.9)

(1,141.1)

-1.7

9.3

(1,790.3)

(1,964.7)

(1,860.2)

-5.3

3.9

1,494.7

1,388.9

1,510.5

8.8

1.1

1,106.6

1,166.2

1,145.3

-1.8

3.5

2,601.3

2,555.1

2,655.8

3.9

2.1

EBITDA Net profit before extra items Net profit (loss) Gross operating profit margin from hotel Gross operating profit margin from food Overall gross operating profit margin EBITDA margin

1,279.6

913.4

1,171.3

28.2

-8.5

649.0

290.3

501.9

72.9

-22.7

649.0

290.3

501.9

72.9

-22.7

66.7%

63.3%

67.7%

4.4

1.1

51.5%

50.1%

50.1%

0.0

-1.4

59.2%

56.5%

58.8%

2.3

-0.4

28.4%

19.8%

25.3%

5.6

-3.0

Source: CENTEL, UOB Kay Hian

RESULTS

1Q14 net profit dropped 22.7% yoy due to political disturbances and consumption slowdown. Central Plaza Hotel (CENTEL) posted 1Q14 net profit of

Bt501.9m, up 72.9% qoq but down 22.7% yoy. The yoy drop in net profit was owing to

a) poor performance of its hotels in Bangkok as a result of political demonstrations and

b) increased SG&A expenses for food business. The results were better than our

expectation by 10.3% due to better-than-expected hotel revenue and gross margin from

hotel operations. Its 1Q14 net profit accounted for 33% of our full-year forecast.

Contribution from Maldives resorts partially offset poor performance of Bangkok hotels. CENTEL’s revenue from hotel business dropped slightly by 0.5% yoy to Bt2,229.6m in 1Q14 since the impressive performance of its resorts in Maldives partially offset the negative impact of political turmoil to its hotels in Bangkok and Pattaya.

KEY FINANCIALS

Year to 31 Dec (Btm)

2012

2013

2014F

2015F

2016F

Net turnover EBITDA Operating profit Net profit (rep./act.) Net profit (adj.) EPS (Bt) PE (x) P/B (x) EV/EBITDA (x) Dividend yield (%) Net margin (%) Net debt/(cash) to equity (%) Interest cover (x) ROE (%) Consensus net profit UOBKH/Consensus (x)

14,918

17,557

18,930

21,536

23,528

3,200

3,905

4,395

4,896

5,383

1,839

2,327

2,550

2,924

3,294

1,596

1,322

1,521

1,829

2,195

1,064

1,334

1,521

1,829

2,195

0.8

1.0

1.1

1.4

1.6

38.7

30.9

27.1

22.5

18.8

4.6

4.0

3.6

3.3

2.9

16.3

13.3

11.8

10.6

9.7

1.0

1.2

1.3

1.6

1.9

10.7

7.5

8.0

8.5

9.3

130.5

103.6

88.1

72.1

54.8

6.6

7.7

8.5

9.5

11.8

21.6

13.7

14.0

15.2

17.2

-

-

1,496

1,927

2,294

-

-

1.02

0.95

0.96

Source: Central Plaza Hotel, Bloomberg, UOB Kay Hian

Refer to last page for important disclosures.

Friday, 16 May 2014

BUY

(Maintained)

Share Price

Bt30.50

Target Price

Bt35.50

Upside

+16.4%

COMPANY DESCRIPTION

CENTEL is Thailand’s leading operator of hotels both in Thailand and overseas, as well as Quick Service Restaurant (QSR) in Thailand. CENTEL is part of Central Group of companies.

STOCK DATA

GICS sector

Consumer

Discretionary

Bloomberg ticker:

CENTEL TB

Shares issued (m):

1,350.0

Market cap (Btm):

41,175.0

Market cap (US$m):

1,268.1

3-mth avg daily t'over (US$m):

2.8

Price Performance (%)

52-week high/low

 

Bt42.75/Bt24.10

1mth

3mth

6mth

1yr

YTD

1.7 (0.8)

(21.8)

(19.2)

10.9

Major Shareholders

 

%

Chirathivat Family

64.0

Local Investors

26.0

Foreign Investors

 

10.0

FY14 NAV/Share (Bt)

8.43

FY14 Net Debt/Share (Bt)

7.43

PRICE CHART

CENTRAL PLAZA HOTEL PCL (lcy) (%) CENTRAL PLAZA HOTEL PCL/SET INDEX 50 140 130 45
CENTRAL PLAZA HOTEL PCL
(lcy)
(%)
CENTRAL PLAZA HOTEL PCL/SET INDEX
50
140
130
45
120
40
110
100
35
90
30
80
70
25
60
20
50
15
Volume (m)
10
5
0
May 13
Jul 13
Sep 13
Nov 13
Jan 14
Mar 14
May 14

Source: Bloomberg

ANALYST

Pornthipa Rayabsangduan +662 659 8302 pornthipa@uobkayhian.co.th

8

Thailand

Daily

Note that Centara Grand Island Resort and Centara Ras Fushi Resort in Maldives reported strong RevPar growth of 17.5% in 1Q14. In addition, Centara Ras Fushi Resort & Spa Maldives, opened on 24 Mar 13, will have a full-year 2014 contribution. RevPar of its Bangkok hotels declined 44% yoy to Bt1,391 in 1Q14 as a result of a lower occupancy rate of 48% (vs 78% in 1Q13) and a 9% drop in average room rate (ARR). However, CENTEL’s hotels in upcountry were less affected as its RevPar managed to be flat yoy at Bt4,490 in 1Q14. In sum, its RevPar of CENTEL’s hotel portfolio, including resorts in Maldives, increased 6.7% yoy to Bt4,323 in 1Q14, driven by strong ARR growth while occupancy dropped to 75.3% (vs 84.3% in 1Q13). Its gross margin from hotel business rose to 67.7% in 1Q14 from 66.7% in 1Q13 due to solid ARR growth of 19% to Bt6,103 in

1Q14.

Gross margin from food business decreased to 50.1% in 1Q14. CENTEL’s revenue from food business increased 6.3% yoy to Bt2,286.4m in 1Q14 driven by outlet expansion, new menu offerings, continued customer loyalty programme, as well as increased advertising and sales promotions. The number of food outlets as at end-1Q14 increased 10.4% yoy to 752. Meanwhile, the average SSS growth in 1Q14 was still negative 1.8% due to a slowdown in domestic consumption. Note that SSS growth of most food brands except KFC (+2.2%) and Ootoya (+5.7%) was negative. Its gross margin from food business declined to 50.1% in 1Q14 compared with 51.5% in 1Q13 but was flat qoq as a result of higher cost of certain raw food ingredients and packaging materials, as well as the increased sales promotions and new menu offerings.

EARNINGS REVISION/RISK

Keep our net profit forecasts for 2014-15 unchanged. Key risks include external risks, deterioration of Thailand’s economic outlook, and the political turmoil.

VALUATION/RECOMMENDATION

Maintain BUY due to its promising long-term outlook and more flexibility in restaurant portfolio management. CENTEL’s normalised profit is expected to grow strongly at a CAGR of 19.8% for 2013-15. We maintain our target price for CENTEL at Bt35.50 based on sum-of-the-parts valuation. We value CENTEL’s hotel business at Bt22.55, pegged at 14.3x 2014F EV/EBITDA, and its restaurant business at Bt12.95, based on 21.9x 2014F PE.

SHARE PRICE CATALYST

The addition of a new food brand.

Acquisition of hotel properties abroad.

Sale of hotel properties in Thailand and overseas to a REIT in 2014.

Refer to last page for important disclosures.

Friday, 16 May 2014

OCCUPANCY, ARR AND REVPAR IN 2008-15F (Bt) 6,000 81.9% 79.8% 75.8% 69.9% 5,000 64.2% 63.9%
OCCUPANCY, ARR AND REVPAR IN 2008-15F
(Bt)
6,000
81.9%
79.8%
75.8%
69.9%
5,000
64.2%
63.9%
60.5%
4,166
58.1%
4,000
3,639
3,486
3,000
2,617
2,340
2,162
1,983
1,979
2,000
1,000
-
2008
2009
2010
2011
2012
2013
2014F
2015F
RevPar
ARR
Occupancy rate

Source: CENTEL, UOB Kay Hian

REVPAR EXCLUDING MALDIVES RESORTS (Bt) 4,500 33.2% 4,000 3,500 3,000 18.2% 14.5% 2,500 11.8% 2,000
REVPAR EXCLUDING MALDIVES RESORTS
(Bt)
4,500
33.2%
4,000
3,500
3,000
18.2%
14.5%
2,500
11.8%
2,000
5.7%
4.4%
-0.2%
1,500
1,000
-8.3%
500
2,162
1,983
1,979
2,340
2,617
3,486
3,639
4,166
-
2008
2009
2010
2011
2012
2013
2014F
2015F
RevPar
RevPar growth

Source: CENTEL, UOB Kay Hian

90.0%

80.0%

70.0%

60.0%

50.0%

40.0%

30.0%

20.0%

10.0%

0.0%

40.0%

35.0%

30.0%

25.0%

20.0%

15.0%

10.0%

5.0%

0.0%

-5.0%

-10.0%

-15.0%

HOTEL REVENUE CONTRIBUTION BY LOCATION IN

1Q14

Bangkok 17% Maldives 23% Hua Hin 10% Hat Yai 2% Mae Sot 0.4% Samui Krabi
Bangkok
17%
Maldives
23%
Hua Hin
10%
Hat Yai
2%
Mae Sot
0.4%
Samui
Krabi
8%
7%
Pattaya
Phuket
15%
19%
Source: CENTEL, UOB Kay Hian

SSSG, TSS GROWTH & NUMBER OF OUTLETS

(outlets) 30.0% 900 795 743 25.0% 677 750 603 20.0% 600 511 512 478 14.8%
(outlets)
30.0%
900
795
743
25.0%
677
750
603
20.0%
600
511
512
478
14.8%
15.0%
14.0%
450
10.0%
300
6.2%