Left Brain Right B - the DBS Vickers Securities Equities Research

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Regional Equity Strategy 4Q 2009 MISC Income Statement (RM m) Balance Sheet (RM m) FY Mar 2009A 2010F 2011F 2012F FY Mar 2009A 2010F 2011F 2012F Turnover 15,783 13,543 15,034 16,025 Net Fixed Assets 27,385 27,994 28,841 28,421 Cost of Goods Sold (12,986) (10,699) (11,693) (12,435) Invts in Associates & JVs 315 409 499 562 Gross Profit 2,797 2,844 3,342 3,590 Other LT Assets 1,673 1,698 1,853 1,988 Other Opng (Exp)/Inc (836) (774) (933) (1,027) Cash & ST Invts 3,725 1,847 1,175 1,927 Operating Profit 1,961 2,070 2,409 2,563 Inventory 442 327 363 387 Other Non Opg (Exp)/Inc 0 0 0 0 Debtors 3,217 2,202 2,445 2,606 Associates & JV Inc 37 94 90 63 Other Current Assets 0 0 0 0 Net Interest (Exp)/Inc (403) (450) (433) (413) Total Assets 36,757 34,479 35,177 35,891 Exceptional Gain/(Loss) 0 0 0 0 Pre-tax Profit 1,595 1,713 2,066 2,213 ST Debt 3,104 3,104 3,104 3,104 Tax (68) (112) (115) (110) Other Current Liab 3,482 2,987 3,316 3,535 Minority Interest (123) (170) (161) (147) LT Debt 8,748 6,641 6,228 5,802 Preference Dividend 0 0 0 0 Other LT Liabilities 129 153 286 406 Net Profit 1,405 1,432 1,789 1,956 Shareholder’s Equity 20,953 21,083 21,570 22,224 Net Profit before Except. 1,405 1,432 1,789 1,956 Minority Interests 341 511 672 819 EBITDA 3,668 3,848 4,323 4,558 Total Cap. & Liab. 36,757 34,479 35,177 35,891 Sales Gth (%) 21.9 (14.2) 11.0 6.6 Non-Cash Wkg. Capital 177 (458) (509) (542) EBITDA Gth (%) (11.6) 4.9 12.3 5.4 Net Cash/(Debt) (8,127) (7,897) (8,157) (6,980) Opg Profit Gth (%) (26.9) 5.5 16.4 6.4 Net Profit Gth (%) (42.0) 1.9 25.0 9.3 Effective Tax Rate (%) 4.2 6.5 5.6 4.9 Cash Flow Statement (RM m) Rates & Ratio FY Mar 2009A 2010F 2011F 2012F FY Mar 2009A 2010F 2011F 2012F Pre-Tax Profit 1,595 1,713 2,066 2,213 Gross Margins (%) 17.7 21.0 22.2 22.4 Dep. & Amort. 1,707 1,779 1,914 1,995 Opg Profit Margin (%) 12.4 15.3 16.0 16.0 Tax Paid (68) (112) (115) (110) Net Profit Margin (%) 8.9 10.6 11.9 12.2 Assoc. & JV Inc/(loss) (37) (94) (90) (63) ROAE (%) 7.1 6.8 8.4 8.9 Chg in Wkg.Cap. (157) 635 50 34 ROA (%) 4.3 4.0 5.1 5.5 Other Operating CF 368 368 368 368 ROCE (%) 6.3 6.0 7.2 7.6 Net Operating CF 3,409 4,289 4,193 4,437 Div Payout Ratio (%) 92.7 90.9 72.8 66.6 Capital Exp.(net) (3,982) (2,358) (2,730) (1,543) Net Interest Cover (x) 4.9 4.6 5.6 6.2 Other Invts.(net) 23 23 23 23 Asset Turnover (x) 0.5 0.4 0.4 0.5 Invts in Assoc. & JV (22) 0 0 0 Debtors Turn (avg days) 64.6 73.0 56.4 57.5 Div from Assoc & JV 3 3 3 3 Creditors Turn (avg days) 100.8 132.4 117.6 119.8 Other Investing CF 48 75 37 23 Inventory Turn (avg days) 13.6 15.7 12.9 13.1 Net Investing CF (3,930) (2,258) (2,667) (1,494) Current Ratio (x) 1.1 0.7 0.6 0.7 Div Paid (1,367) (1,352) (1,352) (1,352) Quick Ratio (x) 1.1 0.7 0.6 0.7 Chg in Gross Debt 3,264 (2,107) (413) (425) Net Debt/Equity (X) 0.4 0.4 0.4 0.3 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 0.4 0.4 0.4 0.3 Other Financing CF 384 (450) (433) (413) Capex to Debt (%) 33.6 24.2 29.3 17.3 Net Financing CF 2,282 (3,909) (2,198) (2,191) Z-Score (X) 2.6 2.5 2.6 2.7 Net Cashflow 1,761 (1,878) (673) 752 N. Cash/(Debt)PS (sen) (218.5) (212.3) (219.3) (187.6) Opg CFPS (sen) 95.9 98.2 111.4 118.4 Free CFPS (sen) (15.4) 51.9 39.3 77.8 Quarterly / Interim Income Statement (RM m) Segmental Breakdown / Assumptions FY Mar 2Q2009 3Q2009 4Q2009 1Q2010 FY Mar 2009A 2010F 2011F 2012F Turnover 4,456 3,679 3,999 3,893 Revenues (RM m) Cost of Goods Sold (3,983) (3,318) (3,807) (3,633) Shipping 8,024 7,668 8,495 8,627 Gross Profit 473 362 192 260 Integrated Liner Logistics 4,550 2,023 2,487 3,371 Other Oper. (Exp)/Inc 124 49 101 95 FPSO/FSO 692 807 807 782 Operating Profit 597 411 293 355 Heavy Engineering 2,518 3,045 3,245 3,245 Other Non Opg (Exp)/Inc 0 0 0 0 Others 0 0 0 0 Associates & JV Inc 1 6 31 16 Total 15,784 13,543 15,034 16,025 Net Interest (Exp)/Inc (100) (104) (99) (88) Pre-tax profit (RM m) Exceptional Gain/(Loss) 0 0 0 (8) Shipping 2,038 1,829 1,855 1,904 Pre-tax Profit 498 312 225 273 Integrated Liner Logistics (877) (724) (422) (285) Tax (14) (32) (12) (2) FPSO/FSO 251 382 380 341 Minority Interest (34) (30) (32) (38) Heavy Engineering 349 365 389 389 Net Profit 450 250 182 233 Others (166) (139) (136) (136) Net profit bef Except. 450 250 182 242 Total 1,595 1,713 2,066 2,213 Pre-tax profit Margins (%) Sales Gth (%) 22.1 (17.4) 8.7 (2.6) Shipping 25.4 23.9 21.8 22.1 Opg Profit Gth (%) (9.5) (31.1) (28.6) 20.9 Integrated Liner Logistics (19.3) (35.8) (17.0) (8.4) Net Profit Gth (%) (13.9) (44.6) (27.1) 28.4 FPSO/FSO 36.3 47.4 47.1 43.6 Gross Margins (%) 10.6 9.8 4.8 6.7 Heavy Engineering 13.9 12.0 12.0 12.0 Opg Profit Margins (%) 13.4 11.2 7.3 9.1 Others N/A N/A N/A N/A Net Profit Margins (%) 10.1 6.8 4.5 6.0 Total 10.1 12.7 13.7 13.8 Key Assumptions New LNG ships 3.0 0.0 0.0 1.0 Change in tanker rate (%) 34.3 (54.4) 25.4 4.6 Change in container rate (33.3) (42.0) 0.0 5.0 MYR/USD 3.4 3.6 3.4 3.3 Source: Company, DBS Vickers Page 109
Regional Equity Strategy 4Q 2009 Country Assessment Thailand Liquidity driven rally There could be a consolidation in the near term following the SET Index’s 85% surge from its trough and 58% rise YTD (up to 17 Sep). But the magnitude should be limited due to an improving economic outlook and ample liquidity. We tracked the market back to 1982, and found that SET rallies post-economic crisis always ended close to the first interest rate hike of each cycle, implying possible further market appreciation until 2Q10. For 4Q09, we recommend increasing exposure in Banks, Property, upstream Energy and Construction Materials. We believe the macro conditions are quite favorable for the Thai equity market. While the economy has bottomed out, benign inflationary pressure should keep interest rates low for another two to three quarters at least. We recommend investors increase exposure in Banks. Our top picks are KASIKORNBANK (KBANK TB) and Bangkok Bank (BBL TB). We maintain our Overweight positions on Property, where our top picks include Preuksa Real Estate (PS TB), Quality Houses (QH TB), Supalai (SPALI TB) and Asian Property (AP TB). We also remain Overweight on upstream Energy stocks, with PTT Exploration & Production (PTTEP) and PTT (PTT) as our top picks. We upgrade Construction Material to Overweight with Siam Cement (SCC TB) and Tata Steel Thailand (TSTH TB) as our top picks for the sector. Chirasit Vuttigrai +662 657 7836 chirasitv@th.dbsvickers.com Page 110 www.dbsvickers.com Refer to important disclosures at the end of this report ed-SGC / sa-TW
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