Price (Bt) 4.70
Target (Bt) 6.00
Set Index 533.92
Higher-than-forecast 1Q09 profit, 2H09 upside
1Q09 profit of Bt25mn (-75% qoq, -86% yoy)
Somboon Advanced Technology (SAT) posted a small 1Q09 profit of Bt25mn (EPS Bt0.08), down 75% qoq
and 86% yoy, slightly higher than our forecast of Bt24mn. With many auto firms posting net losses, and with
auto production down by 46% yoy, the results could have been much worse. SAT sales fell by 33% yoy and 35% qoq to Bt939mn, which was less than the industry average, as new orders from Kubota Tractor supported output. Gross margin fell to 13.8% from 16.2% in the previous quarter and 22.6% in the previous year. Output was only 50% of capacity. S.G.& A. was Bt82mn, accounting for 9% of sales compared to 7% in the previous quarter and 6% last year. Interest expenses totaled Bt32mn, down 11%qoq and 17%yoy as total debt fell to Bt2,483mn from Bt2,597mn in the previous quarter and interest rates were near record lows.
1H09 bottom, 2H09 recovery
The recession has hit the Thai auto industry severely as automakers continue to de-stock. Thai
auto production for 1H09 will fall by around 40-50% compared with domestic sales and exports falling by
30%. However, in the second half of 2009, after inventory stocks have been cleared, production should
return to the same level as sales, or down yoy by 30%. We forecast 1H09 SAT earnings to hit a low,
averaging Bt15-30mn per quarter, but 2H09 net profit should recover to around Bt80-100mn. In addition, SAT
will also book the full orders from Kubota Tractor.
Maintain HOLD, share prices already reflect recovery
The current share price of Bt4.70 jumped 42% from the low of Bt3.3 in mid-March on a 2H09
recovery outlook. This was in line with share prices of Japanese auto makers in the same period (Toyota
+28%, Nissan +98%, Mitsubishi +31%, and Isuzu +88%). The current share price is still low compared to book
value per share (Bt8.5). Although 2009 earnings are forecast to fall 60%, SAT is still trading on a low
2009 PER of 5.5x. We estimate SAT’s fair value at Bt6/share based on a 2009 PER of 7x. We maintain our HOLD
recommendation.
Earnings summary
Year End Dec 31 2006 2007 2008 2009F 2010F
Sales (Btmn) 4,252 4,979 5,814 3,800 4,180
EBITDA (Btmn) 853 1,132 1,237 806 905
Normalised earnings (Btmn) 428 585 631 254 364
Earnings (Btmn) 443 591 635 254 364
EPS (Bt) 1.48 1.97 2.12 0.85 1.21
PER (x) 3.2 2.4 2.2 5.6 3.9
EV/EBITDA (x) 3.7 3 3.1 4.2 3.4
CF/share (Bt) 2.9 3.2 3.1 2.3 2.5
BVPS (Bt) 6.3 6.8 8.5 9.1 10
P/BV (x) 0.7 0.7 0.6 0.5 0.5
DPS (Bt) 0.5 0.7 0.3 0.3 0.43
Dividend yield (%) 10.60% 14.90% 6.40% 6.30% 9.00%
Net debt/equity (x) 0.9 1 1 0.7 0.5
ROA (%) 9.60% 11.90% 10.90% 4.20% 6.40%
ROE (%) 25.20% 30.00% 27.60% 9.60% 12.70%
Source : Company reports and KELIVE Research estimates.
By Kim Eng Securities (Thailand) Company Limited on May 18, 2009
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