Left Brain Right B - the DBS Vickers Securities Equities Research
Left Brain Right B - the DBS Vickers Securities Equities Research Left Brain Right B - the DBS Vickers Securities Equities Research
Regional Equity Strategy 4Q 2009 Thai Airways Income Statement (Bt m) Balance Sheet (Bt m) FY Dec 2008A 2009F 2010F 2011F FY Dec 2008A 2009F 2010F 2011F Turnover 200,118 154,981 167,127 177,404 Net Fixed Assets 207,064 218,297 223,806 218,268 Cost of Goods Sold (190,154) (133,134) (140,029) (148,483) Invts in Associates & JVs 1,337 1,331 1,364 1,398 Gross Profit 9,964 21,846 27,098 28,921 Other LT Assets 9,015 8,865 8,875 8,487 Other Opng (Exp)/Inc (25,342) (15,260) (16,073) (17,034) Cash & ST Invts 8,024 4,975 4,541 4,902 Operating Profit (15,378) 6,586 11,025 11,887 Inventory 6,779 4,419 4,612 4,858 Other Non Opg (Exp)/Inc 1,307 1,695 1,838 1,951 Debtors 15,829 14,745 15,900 16,878 Associates & JV Inc (65) (12) 67 68 Other Current Assets 11,486 11,256 11,031 10,479 Net Interest (Exp)/Inc (4,992) (5,323) (5,107) (4,723) Total Assets 259,535 263,888 270,128 265,271 Exceptional Gain/(Loss) (4,471) 2,617 0 0 Pre-tax Profit (23,600) 5,563 7,823 9,184 ST Debt 40,764 38,280 29,792 17,656 Tax 2,285 (484) (604) (648) Other Current Liab 57,819 60,536 63,517 66,718 Minority Interest (65) (62) (65) (65) LT Debt 106,417 109,957 114,404 111,729 Preference Dividend 0 0 0 0 Other LT Liabilities 8,652 4,153 4,236 4,321 Net Profit (21,379) 5,017 7,154 8,471 Shareholder’s Equity 45,603 50,620 57,773 64,376 Net Profit before Except. (16,908) 2,400 7,154 8,471 Minority Interests 279 341 406 471 EBITDA 5,568 29,030 35,838 38,849 Total Cap. & Liab. 259,535 263,888 270,128 265,271 Sales Gth (%) 1.4 (22.6) 7.8 6.1 Non-Cash Wkg. Capital (23,725) (30,116) (31,974) (34,503) EBITDA Gth (%) (79.8) 421.4 23.5 8.4 Net Cash/(Debt) (139,157) (143,263) (139,655) (124,483) Opg Profit Gth (%) (268.3) nm 67.4 7.8 Net Profit Gth (%) (736.8) nm 42.6 18.4 Effective Tax Rate (%) N/A 8.7 7.7 7.1 Cash Flow Statement (Bt m) Rates & Ratio FY Dec 2008A 2009F 2010F 2011F FY Dec 2008A 2009F 2010F 2011F Pre-Tax Profit (23,600) 5,563 7,823 9,184 Gross Margins (%) 5.0 14.1 16.2 16.3 Dep. & Amort. 19,704 20,761 22,909 24,942 Opg Profit Margin (%) (7.7) 4.2 6.6 6.7 Tax Paid (1,478) 2,285 (484) (604) Net Profit Margin (%) (10.7) 3.2 4.3 4.8 Assoc. & JV Inc/(loss) 65 12 (67) (68) ROAE (%) (37.7) 10.4 13.2 13.9 Chg in Wkg.Cap. (1,506) 3,622 1,737 2,485 ROA (%) (7.9) 1.9 2.7 3.2 Other Operating CF 18,087 (7,104) 9 409 ROCE (%) (7.4) 3.0 5.0 5.5 Net Operating CF 11,273 25,139 31,927 36,348 Div Payout Ratio (%) N/A 0.0 26.1 26.1 Capital Exp.(net) (21,403) (31,925) (28,349) (19,336) Net Interest Cover (x) (3.1) 1.2 2.2 2.5 Other Invts.(net) 18 (5) (2) (2) Asset Turnover (x) 0.7 0.6 0.6 0.7 Invts in Assoc. & JV 131 6 (33) (34) Debtors Turn (avg days) 31.6 36.0 33.5 33.7 Div from Assoc & JV 0 0 0 0 Creditors Turn (avg days) 18.4 23.4 23.2 23.1 Other Investing CF 944 0 0 0 Inventory Turn (avg days) 13.8 18.2 14.1 14.0 Net Investing CF (20,309) (31,924) (28,385) (19,372) Current Ratio (x) 0.4 0.4 0.4 0.4 Div Paid (765) 0 0 (1,869) Quick Ratio (x) 0.2 0.2 0.2 0.3 Chg in Gross Debt 3,661 3,674 (4,042) (14,811) Net Debt/Equity (X) 3.0 2.8 2.4 1.9 Capital Issues 0 0 0 0 Net Debt/Equity ex MI (X) 3.1 2.8 2.4 1.9 Other Financing CF (12,179) 62 65 65 Capex to Debt (%) 14.5 21.5 19.7 14.9 Net Financing CF (9,283) 3,736 (3,977) (16,615) Z-Score (X) 0.5 0.5 0.6 0.8 Net Cashflow (18,319) (3,050) (434) 361 N. Cash/(Debt)PS (Bt) (81.9) (84.3) (82.2) (73.3) Opg CFPS (Bt) 7.5 12.7 17.8 19.9 Free CFPS (Bt) (6.0) (4.0) 2.1 10.0 Quarterly / Interim Income Statement (Bt m) Segmental Breakdown / Key Assumptions FY Dec 3Q2008 4Q2008 1Q2009 2Q2009 FY Dec 2008A 2009F 2010F 2011F Turnover 53,669 41,310 40,683 34,362 Revenues (Bt m) Cost of Goods Sold (52,611) (41,551) (32,482) (32,851) Air Transportation 191,072 146,298 158,270 168,370 Gross Profit 1,058 (241) 8,201 1,511 Business Units 7,948 7,551 7,702 7,856 Other Oper. (Exp)/Inc (4,386) 843 (3,796) (3,774) Other Activities 1,098 1,132 1,155 1,178 Operating Profit (3,328) 602 4,405 (2,263) Total 200,118 154,981 167,127 177,404 Other Non Opg (Exp)/Inc 408 334 513 226 Associates & JV Inc (60) 24 (1) 31 Net Interest (Exp)/Inc (1,242) (1,385) (1,376) (1,382) Exceptional Gain/(Loss) 4,734 (12,230) 4,522 (1,905) Pre-tax Profit 512 (12,654) 8,064 (5,294) Tax (72) (2,102) (177) (92) Minority Interest (14) (12) (18) (17) Net Profit 426 (14,768) 7,869 (5,403) Net profit bef Except. (4,308) (2,538) 3,346 (3,498) EBITDA 2,109 5,565 9,990 3,165 Sales Gth (%) 6.7 (23.0) (1.5) (15.5) EBITDA Gth (%) (33.4) 163.9 79.5 (68.3) Opg Profit Gth (%) 41.3 nm 631.3 nm Net Profit Gth (%) (104.6) nm nm nm Gross Margins (%) 2.0 (0.6) 20.2 4.4 Opg Profit Margins (%) (6.2) 1.5 10.8 (6.6) Net Profit Margins (%) 0.8 (35.7) 19.3 (15.7) Source: Company, DBS Vickers Page 127
Regional Equity Strategy 4Q 2009 Total Access Communication Bloomberg: DTAC TB | Reuters: DTAC.BK BUY Bt42.75 SET : 709.23 Price Target: 12-month Bt54.50 Potential Catalyst: Tariff rate hike and award of 3G licenses Analyst Chirasit Vuttigrai +66 2657 7836 chirasit@th.dbsvickers.com Price Relative 58 . 90 53 . 90 48 . 90 43 . 90 38 . 90 33 . 90 28 . 90 23 . 90 18 . 90 Bt Jun - 07 Dec - 07 Jun - 08 Dec - 08 Jun - 09 Relative Index Total Access Communication ( LHS ) Relative SET INDEX ( RHS ) Forecasts and Valuation 219 169 119 69 19 Best 3G play • Prime beneficiary of a 3G license, expected in 1Q 2010. NPV could be enhanced by 54% from Bt43 to Bt66 • Based on 50% probability of securing a 3G license, DTAC’s target price is Bt54.50, implying an attractive 28% upside potential • Reiterate BUY for DTAC, which remains our top pick in the sector and one of our top 10 picks in the Thai market. Prime beneficiary of 3G license. We estimate DTAC’s NPV will be enhanced by 54% (from Bt43 to Bt66) if it secures a 3G license. First, DTAC is a pure cellular operator. Second, it has more room to reduce regulatory fees than ADVANC (DTAC: from 30% after Oct 2011 to c.6%; ADVANC: from 24% to c.6%), and third, DTAC has higher financial gearing than ADVANC (c. 0.16x vs. 0.24x at end-2009). The increase in cash flow of a highergeared company results in a larger increase in equity value. FY Dec (Bt m) 2008A 2009F 2010F 2011F Turnover 67,695 66,672 68,616 70,154 EBITDA 20,773 19,581 21,602 22,306 Pre-tax Profit 10,122 8,699 10,615 12,114 Net Profit 9,329 6,491 7,922 8,348 Net Pft (Pre Ex.) 7,568 6,491 7,922 8,348 EPS (Bt) 3.94 2.74 3.35 3.53 EPS Pre Ex. (Bt) 3.20 2.74 3.35 3.53 EPS Gth Pre Ex (%) 21.3 (14.2) 22.1 5.4 Diluted EPS (Bt) 3.94 2.74 3.35 3.53 Net DPS (Bt) 1.50 0.82 1.00 1.06 BV Per Share (Bt) 25.1 26.3 28.9 31.4 PE (X) 10.9 15.6 12.8 12.1 PE Pre Ex. (X) 13.4 15.6 12.8 12.1 P/Cash Flow (X) 5.3 6.3 5.6 5.6 EV/EBITDA (X) 5.9 5.9 5.0 4.6 Net Div Yield (%) 3.5 1.9 2.3 2.5 P/Book Value (X) 1.7 1.6 1.5 1.4 Net Debt/Equity (X) 35.3 23.9 11.4 1.3 ROAE (%) 16.8 10.7 12.1 11.7 Earnings Rev (%): - - - Consensus EPS (Bt): 2.6 2.9 2.7 ICB Industry : Telecommunications ICB Sector: Mobile Telecommunications Principal Business: DTAC is the second largest cellular operator in Thailand with a subscriber base market share of 30%. Clearer visibility of 3G license award. The draft 3G Information Memorandum (IM) was approved on 9 Sep. The final IM should be announced in October, and the auction should be carried out in January. The award is expected early 2010. Reiterate BUY. DTAC’s current valuations (12.8x FY10 PE and 5.0x EV/EBITDA) reflect only the value of its 2G operations. Reiterate BUY with a DCF-based target price of Bt54.50, based on a 50% probability of securing a 3G license. At A Glance Issued Capital (m shrs) 2,368 Mkt. Cap (Btm/US$m) 101,224 / 3,003 Major Shareholders Telenor Asia Pte Ltd (%) 35.0 Thai Telco Holdings Limited (%) 30.0 TOT (%) 14.9 Free Float (%) 29.1 Avg. Daily Vol.(‘000) 7,657 Source of all data: Company, DBS Vickers, Bloomberg Page 128 www.dbsvickers.com Refer to important disclosures at the end of this report ed-SGC / sa-CS
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Regional Equity Strategy 4Q 2009<br />
Total Access Communication<br />
Bloomberg: DTAC TB | Reuters: DTAC.BK<br />
BUY Bt42.75 SET : 709.23<br />
Price Target: 12-month Bt54.50<br />
Potential Catalyst: Tariff rate hike and award of 3G licenses<br />
Analyst<br />
Chirasit Vuttigrai +66 2657 7836<br />
chirasit@th.dbsvickers.com<br />
Price Relative<br />
58 . 90<br />
53 . 90<br />
48 . 90<br />
43 . 90<br />
38 . 90<br />
33 . 90<br />
28 . 90<br />
23 . 90<br />
18 . 90<br />
Bt<br />
Jun - 07 Dec - 07 Jun - 08 Dec - 08 Jun - 09<br />
Relative Index<br />
Total Access Communication ( LHS ) Relative SET INDEX ( RHS )<br />
Forecasts and Valuation<br />
219<br />
169<br />
119<br />
69<br />
19<br />
Best 3G play<br />
• Prime beneficiary of a 3G license, expected in<br />
1Q 2010. NPV could be enhanced by 54% from<br />
Bt43 to Bt66<br />
• Based on 50% probability of securing a 3G<br />
license, DTAC’s target price is Bt54.50, implying<br />
an attractive 28% upside potential<br />
• Reiterate BUY for DTAC, which remains our top<br />
pick in <strong>the</strong> sector and one of our top 10 picks in<br />
<strong>the</strong> Thai market.<br />
Prime beneficiary of 3G license. We estimate DTAC’s<br />
NPV will be enhanced by 54% (from Bt43 to Bt66) if it<br />
secures a 3G license. First, DTAC is a pure cellular<br />
operator. Second, it has more room to reduce regulatory<br />
fees than ADVANC (DTAC: from 30% after Oct 2011 to<br />
c.6%; ADVANC: from 24% to c.6%), and third, DTAC<br />
has higher financial gearing than ADVANC (c. 0.16x vs.<br />
0.24x at end-2009). The increase in cash flow of a highergeared<br />
company results in a larger increase in equity<br />
value.<br />
FY Dec (Bt m) 2008A 2009F 2010F 2011F<br />
Turnover 67,695 66,672 68,616 70,154<br />
EBITDA 20,773 19,581 21,602 22,306<br />
Pre-tax Profit 10,122 8,699 10,615 12,114<br />
Net Profit 9,329 6,491 7,922 8,348<br />
Net Pft (Pre Ex.) 7,568 6,491 7,922 8,348<br />
EPS (Bt) 3.94 2.74 3.35 3.53<br />
EPS Pre Ex. (Bt) 3.20 2.74 3.35 3.53<br />
EPS Gth Pre Ex (%) 21.3 (14.2) 22.1 5.4<br />
Diluted EPS (Bt) 3.94 2.74 3.35 3.53<br />
Net DPS (Bt) 1.50 0.82 1.00 1.06<br />
BV Per Share (Bt) 25.1 26.3 28.9 31.4<br />
PE (X) 10.9 15.6 12.8 12.1<br />
PE Pre Ex. (X) 13.4 15.6 12.8 12.1<br />
P/Cash Flow (X) 5.3 6.3 5.6 5.6<br />
EV/EBITDA (X) 5.9 5.9 5.0 4.6<br />
Net Div Yield (%) 3.5 1.9 2.3 2.5<br />
P/Book Value (X) 1.7 1.6 1.5 1.4<br />
Net Debt/Equity (X) 35.3 23.9 11.4 1.3<br />
ROAE (%) 16.8 10.7 12.1 11.7<br />
Earnings Rev (%): - - -<br />
Consensus EPS (Bt): 2.6 2.9 2.7<br />
ICB Industry : Telecommunications<br />
ICB Sector: Mobile Telecommunications<br />
Principal Business: DTAC is <strong>the</strong> second largest cellular operator in<br />
Thailand with a subscriber base market share of 30%.<br />
Clearer visibility of 3G license award. The draft 3G<br />
Information Memorandum (IM) was approved on 9 Sep.<br />
The final IM should be announced in October, and <strong>the</strong><br />
auction should be carried out in January. The award is<br />
expected early 2010.<br />
Reiterate BUY. DTAC’s current valuations (12.8x FY10<br />
PE and 5.0x EV/EBITDA) reflect only <strong>the</strong> value of its 2G<br />
operations. Reiterate BUY with a DCF-based target price<br />
of Bt54.50, based on a 50% probability of securing a<br />
3G license.<br />
At A Glance<br />
Issued Capital (m shrs) 2,368<br />
Mkt. Cap (Btm/US$m) 101,224 / 3,003<br />
Major Shareholders<br />
Telenor Asia Pte Ltd (%) 35.0<br />
Thai Telco Holdings Limited (%) 30.0<br />
TOT (%) 14.9<br />
Free Float (%) 29.1<br />
Avg. Daily Vol.(‘000) 7,657<br />
Source of all data: Company, <strong>DBS</strong> <strong>Vickers</strong>, Bloomberg<br />
Page 128<br />
www.dbsvickers.com<br />
Refer to important disclosures at <strong>the</strong> end of this report<br />
ed-SGC / sa-CS
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