Price (Bt) 3.88
Target (Bt) 5.00
Set Index 561.41
1Q09 earnings still down on weak auto performance
1Q09 earnings slump to Bt10mn (-43% qoq, -82% yoy)
Thai Steel Cable (TSC) announced weaker 1Q09 earnings of just Bt10mn
(EPS Bt0.04), a slump of 43% qoq and 82% yoy. The impact of the weak automotive industry, from production cuts and temporary shutdowns, has hit TSC earnings. Sales have fallen to Bt360mn, down 33% qoq and 39% yoy. This fall was inline with auto and motorcycle production falls of 46% and 42%, respectively, in the first quarter. The gross margin was down to 12% from 16% in the previous quarter and 20% last year from the lower utilisation. The S. G. & A. was down to Bt43mn (-40% qoq, -31% yoy). This lesser figure is derived from a decrease in royalty fees, sales promotion expenses and employee charges. The company is focussing on cost control activities in order to improve earnings. Interest was zero as TSC is a debt free operation.
2Q09 earnings will continue poor with 2H09 to improve
The current world economic crisis has widened and has severely affected auto demand and is more severe than our previous forecast. First quarter auto and motorcycle production slumped by 46% and 42%, respectively. The second quarter performance will likely still slump by 40-50%. However, in the second
half, we expect production will improve to only –30% result after inventory stocks have been cleared. Thus,
we have further revised down our earnings projections. We forecast the 2009 TSC sales to fall 30% to
Bt1,600mn and the net profit to reach Bt78mn (EPS Bt0.30), down 59%.
Expect next year to recover with a debt-free, maintained HOLD
The current TSC share price of Bt3.88 is moving at a base level after slumping from Bt7-8 before
the US financial crisis. The current share price has not recovered inline with other auto stocks. The
current share price is trading on a rather high 2009 PER of 12.9x with an EV/EBITDA of 4.5x and we see next year’s PER down to just 6x from a recovering auto sector. In addition, TSC has a very strong financial
status, as they are debt-free with cash of Bt323mn. We estimate the TSC fair value at Bt5 based on a 2010
PER of 7-8x. Overall, we are maintaining our recommendation of HOLD.
Earnings summary
Year End Dec 31 2006 2007 2008 2009F 2010F
Sales (Btmn) 2,180 2,201 2,311 1,600 1,840
EBITDA (Btmn) 353 279 275 151 244
Earnings (Btmn) 223 200 192 78 169
EPS (Bt) 0.86 0.77 0.74 0.3 0.65
PER (x) 4.5 5 5.3 12.9 6
EV/EBITDA (x) 2.3 2.7 2.7 4.5 2.3
CF/share (Bt) 1.2 1 0.7 1 0.8
BVPS (Bt) 5.2 5.5 5.7 5.5 6
P/BV (x) 0.7 0.7 0.7 0.7 0.6
DPS (Bt) 0.5 0.5 0.47 0.18 0.39
Dividend yield (%) 12.90% 12.90% 12.00% 4.60% 10.00%
Net debt/equity (x) Cash Cash Cash Cash Cash
ROA (%) 12.80% 10.70% 10.20% 4.40% 9.30%
ROE (%) 17.30% 14.40% 13.20% 5.30% 11.20%
Source : Company reports and KELIVE Research estimates.
By Kim Eng Securities (Thailand) Company Limited on May 21, 2009
USA Cities
Chula Vista California ,Oklahoma City Oklahoma ,Lincoln Nebraska,Hialeah Florida,Columbus Ohio,Bakersfield California,Stockton California,Glendale Arizona,Oyster Bay New York,Indianapolis Indiana,Islip New York ,Corpus Christi Texas ,Tampa Florida,Long Beach California ,St. Louis Missouri ,Fort Worth Texas ,Riverside California,Newark New Jersey ,Jersey City New Jersey,Lexington-Fayette Kentucky,Buffalo New York ,Mesa Arizona,San Diego ,Austin Texas,Houston Texas ,Albuquerque New Mexico ,Birmingham Alabama,Las Vegas Nevada ,Santa Ana California ,Madison Wisconsin,Greensboro North Carolina ,Honolulu Hawaii,Henderson Nevada,Cleveland Ohio,Tucson Arizona,San Antonio Texas,Babylon New York ,Cincinnati Ohio,Aurora Colorado,Colorado Springs Colorado ,Oakland California,Memphis Tennessee,El Paso Texas ,Reno Nevada,Milwaukee Wisconsin,Orlando Florida,San Jose California ,Laredo Texas,Los Angeles California,Virginia Beach Virginia ,Rochester New York ,Philadelphia Pennsylvania ,Baltimore Maryland,Brookhaven New York ,Sacramento California,Wichita Kansas ,Durham North Carolina ,Pittsburgh Pennsylvania,Chandler Arizona,Phoenix Arizona ,Jacksonville Florida,Akron Ohio,Washington District of Columbia,Omaha Nebraska,Anchorage Alaska,New Orleans Louisiana ,Fort Wayne Indiana ,Hempstead New York ,Fresno California,Miami Florida,Toledo Ohio,Anaheim California,San Francisco California ,Boston Massachusetts,St. Petersburg Florida ,Detroit Michigan,Portland Oregon ,North Hempstead New York,Charlotte North Carolina ,Plano Texas,Baton Rouge Louisiana ,St. Paul Minnesota ,Norfolk Virginia,Arlington Texas ,Chesapeake Virginia,Lubbock Texas,Dallas Texas ,Denver Colorado,Chicago Illinois ,Seattle Washington,Kansas City Missouri ,Nashville-Davidson Tennessee,Minneapolis Minnesota,Scottsdale Arizona,Modesto California,Tulsa Oklahoma,New York New york,Garland Texas,Raleigh North Carolina ,Atlanta Georgia
