0815 TH Morning Matters...The third-quarter net profit of Airports of Thailand Plc (AoT) rocketed more than four-fold, driven primarily by robust growth in air traffic and foreign

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15-Aug-2013

Morning Matters

WHAT’S INSIDEOn The Platter

Berli Jucker ( BJC TB; FVTHB57.0-Trading Buy): Turning a Corner

Despite BJC’s weaker-than-expected 2QFY13 earnings, we see some positives – its loss-making aluminium can plant in Vietnam turned a profit with capacity utilisation (CAPU) rising to 70%, while its subsidiary Danone Dairy incurred lower losses. We expect continued improvement in its Vietnam operation, given the current 80% CAPU. Upgrade to TRADING BUY.

Better World Green (BWG TB; FVTHB 3 - Buy): Outstanding Performance

BWG’s 2QFY13 net profit rose 102% y-o-y and 12% q-o-q to THB39.4m, 9% above our forecast, mainly due to rising amounts of industrial waste and a higher average selling price. We believe the positive momentum should continue into 2HFY13, as the company continues with its refusederived fuel (RDF) project amidst the Government’s increasing focus on the illegal dumping issue. Maintain BUY, with a TP of THB3.00. Sriracha Construction ( SRICHA TB; FVTHB50-Trading Buy): Performance On Track

Sricha’s 2QFY13 net profit came in at THB157m, up 15.9% q-o-q but down 43% y-o-y. We believe Sricha’s earnings will continue to improve in 2HFY13 as the company has started to realise revenue from Thai Oil’s project. We maintain our BUY recommendation on the stock, with a TP of THB50.0. MEDIA HIGHLIGHTS

Banpu sees revenue crumble

Centel's Q2 profit up 67% on sales gains

Samart hungry for three more firms for its group

CK signs on for B20bn Laos plant

Delta eyes German factory park

AoT flies high with 350% Q3 profit leap

ECONOMIC HIGHLIGHTS

India: India Fighting Worst Crisis Since ’91 Seeks to Buoy Rupee

India: India Inflation Tops Estimates as Rupee Plunge Tests Rajan

U.S.: Producer Prices in U.S. Little Changed as Car Costs Decline

E.U.: Euro Area Exits Record Slump Led by Largest Economies

Portugal: Portugal’s Economy Grows for First Time Since 2010 on Trade

SET Intra-Day Graph

Source: Bloomberg

Key Market Indices (14 August 2013)

Value Chg % Chg % YTD

SET 1460.63 28.38 2.0% 4.9%

SET50 992.98 23.28 2.4% 5.0%

SET100 2187.27 48.99 2.3% 5.2%

Dow Jones 15337.66 -82.02 -0.5% 17.0%

S&P500 1685.39 -4.08 -0.2% 18.2%

Nasdaq 3669.27 -0.68 0.0% 21.5%

FTSE 6587.43 13.09 0.2% 11.7%

FSSTI 3248.66 16.42 0.5% 2.6%

Hang Seng 22541.13 269.85 1.2% -0.5%

Nikkei 13881.33 158.24 1.2% 33.7%

KLCI 1793.73 9.16 0.5% 6.2%

SHANGHAI SE 2100.14 -1.15 -0.1% -7.4%

JCI 4699.73 101.95 2.2% 8.9%

SET 5-yr avg 2012 2013F

PE (x) 14.1 16.0 14.0

P/BV (x) 1.8 2.3 2.2

Yield (%) 4.1 3.0 3.2

Key Statistics

SET Value by investor Type: Daily Buy (THBm) Sell (THBm) Net (THBm) Institution 4,563.03 3,436.84 1,126.19 Proprietary 5,153.97 5,290.20 -136.23 Foreign 9,379.94 9,159.35 220.59 Retail 17,876.55 19,087.10 -1,210.56 SET Value by investor Type MTD (THBm) YTD (THBm) Institution 27,466.30 18,467.72 8,998.58 Proprietary 50,093.77 48,845.68 1,248.08 Foreign 79,284.61 89,966.49 -10,681.88 Retail 145,146.30 144,711.07 435.22 SET50 Index Future Long Short Net MTD YTD Institution 5,222 5,412 -190 10,027 5,222 Foreign 2,939 4,276 -1337 -15,977 2,939

Local 10,529 9,002 1527 5,950 10,529

See important disclosures at the end of this report 2

Media Highlights

Banpu sees revenue crumble SET-listed Banpu Plc expects revenue will miss this year's target of US$3 billion due to a dip in coal output, while weakening coal prices will continue to pressure its financial results in the second half. Chanin Vongkusolkit, the chief executive of Asean's leading coal miner, yesterday said the financial performance will possibly weaken during the rest of the year, but coal prices are projected to start recovering gradually early next year. Company revenue will likely edge down for a third consecutive year, from 120 billion baht in 2011 and 110 billion last year to 100 billion this year. In US-dollar terms, the $3-billion target will be missed, he said. This year's output is projected at 46 million tonnes, down from 47-48 million previously forecast, in line with lower supply from Australia and China. In the first half, Banpu produced 22.86 million tonnes of coal ; 14.4 million from Indonesian mines, 7 million from Australia and 1.46 million from China. (Bangkok Post) Centel's Q2 profit up 67% on sales gains Central Plaza Hotel Plc (CENTEL) delivered a 66.8% year-on-year surge in its second-quarter net profit thanks to higherrevenue from both hotel and food businesses. The company posted a quarterly consolidated net profit of 189 million baht, up by 75.6 million. Its revenue from April-June rose by 19% from the same period last year to 4.24 billion baht. The hotel business contributed 43% of quarterly revenue, while the food business made up the lion's share. Chairman Suthikiati Chirathivat said during the second quarter, the company's hotel business generated revenue of 1.81 billion baht, up by 29.2% year-on-year. Its average occupancy rate was 75% compared with 64.8% in the corresponding period last year. (Bangkok Post) Samart hungry for three more firms for its groupSamart Corporation is planning to invest in three more companies this year in a bid to foster competitiveness and synergy within the group. "We're in talks with three companies for minority stakes worth a combined 1 billion baht. At least two deals are expected this year," said president Watchai Vilailuck. One of the three prospective companies is M Link Asia Corporation, the Wongsawat family's handset and mobile accessory retailer. Samart wants to buy into M Link to expand its third-generation (3G) mobile service under the mobile virtual network operator (MVNO) provision of TOT Plc. An MVNO is a company that provides mobile service but does not have its own licensed frequency allocation or infrastructure. The other two companies are a utility and a transport business. (Bangkok Post) CK signs on for B20bn Laos plant

The SET-listed Ch. Karnchang Plc (CK), Thailand's third-largest contractor by market value, has signed a contract with the Laotian government to develop the 20-billion-baht Nam Bak hydroelectric power plant. Nam Ngum 2 Power Co, a subsidiary of CK Power Plc, signed a project development agreement last week for the plant, which is to have an installed capacity of 160 megawatts. It can produce electricity of up to 744 gigawatt-hours per year or half that of Bhumibol Dam in Thailand. Construction costs are estimated at 17 billion baht, said chief executive Plew Trivisvavet in a statement. "We are working full-speed on finalising the power purchase agreement and construction contract. For the construction work, Nam Ngum 2 will engage CK as the contractor," said the statement. CK has a track record of building large-scale hydropower projects in Laos including Nam Ngum 2 and Xayaburi. (Bangkok Post) Delta eyes German factory park The SET-listed Delta Electronics (Thailand) will pay 12 million euros (498 million baht) for an industrial estate in Germany that will serve as a production base for its latest product, wind turbines. The company is considering a financing package for thedeal. Anusorn Muttaraid, a company director, yesterday said among the is paying 10 billion baht cash from company operations or borrowing from a financial institution offering attractive interest. The company also set up a wholly owned unit, Delta Energy Systems Property (Germany), registered in that country with capital of 12 million euros. The new subsidiary, headquartered in Soest, will invest in projects and manage business activities in that country. Mr Anusorn expressed confidence the company is on track to post a record net profit for the second year in a row. (Bangkok Post) AoT flies high with 350% Q3 profit leap The third-quarter net profit of Airports of Thailand Plc (AoT) rocketed more than four-fold, driven primarily by robust growth in air traffic and foreign exchange gain. The state-controlled airport operator posted a net profit of 3.15 billion baht from April-June, up by 349% year-on-year, resulting in earnings per share rising to 2.21 baht from 49 satang in the same period last year. Revenue surged 16.8% to 8.87 billion baht on 19% growth in aeronautical revenue to 5.39 billion and a 13.6% rise in non-aeronautical receipts to 3.48 billion, AoT said in a filing to the Stock Exchange of Thailand (SET) yesterday. Supaporn Burapakusolsri, a senior executive vice-president, said AoT recorded 437 million baht in foreign exchange gains compared with 814 million in losses reported in the same quarter last year. AoT witnessed a surge in air traffic volume through the six airports it operates including Suvarnabhumi, with aircraft movement and passenger throughput rising by 16.6% and 18.5%, respectively, although cargo movements fell by 112% in the period. (Bangkok Post)


Economic Highlights

India: India Fighting Worst Crisis Since ’91 Seeks to Buoy Rupee India increased efforts to stem the rupee’s plunge and stop capital outflows that are pushing the economy towards its biggest crisis in more than two decades. The Reserve Bank of India, whose Governor Duvvuri Subbarao steps down next month, cut the amount local companies can invest overseas without seeking approval to 100 percent of their net worth, from 400 percent, according to a statement late yesterday. Residents can remit $75,000 a year versus the previous $200,000 limit. Rupee forwards rose for the first time in three days. Policy makers’ moves since July to tighten cash supply, restrict currency derivatives and curb gold imports have failed to arrest the rupee’s slump to record lows as they struggle to attract capital to fund a record current account deficit. The rupee has weakened 28 percent in the past two years, the biggest tumble since the government pledged gold reserves in exchange for loans from the International Monetary Fund in 1991. (Bloomberg) India: India Inflation Tops Estimates as Rupee Plunge Tests RajanIndian inflation accelerated more than economists estimated in July as a plunging rupee stoked import costs, with the central bank today announcing curbs on foreign-exchange outflows to try and support the currency. The wholesale-price index rose 5.79 percent from a year earlier, a five-month high that exceeded the median 5 percent estimate in a Bloomberg News survey of 34 analysts, a government report showed today. The Reserve Bank of India later reduced the amount some companies can invest overseas, as well as the limit on resident individuals’ remittances abroad. The central bank raised two interest rates last month and the government this week stepped up efforts to curb a record current-account deficit, striving to stem the rupee’s 10.5 percent drop versus the dollar in 2013. Costlier credit imperils economic expansion and poses a policy challenge for incoming central bank head Raghuram Rajan, according to Credit Analysis & Research Ltd. in Mumbai. (Bloomberg) U.S.: Producer Prices in U.S. Little Changed as Car Costs DeclineWholesale prices in the U.S. unexpectedly were little changed in July, reflecting the biggest drop in auto costs in four years. The steady reading in the producer price index followed a 0.8 percent gain in June, a Labor Department report showed today in Washington. The median estimate in a Bloomberg survey of 73 economists projected a 0.3 percent rise. The so-called core measure, which excludes volatile food and fuel, climbed less than forecast. Lower prices for raw materials are weighing on cost pressures at the production stage as slower growth abroad restrains demand. Federal Reserve policy makers continue to see inflation running below the central bank’s 2 percent goal even as the expansion picks up in the second half of the year.(Bloomberg) E.U.: Euro Area Exits Record Slump Led by Largest EconomiesThe euro area’s economy emerged from a record-long recession in the second quarter, led by Germany and France, amid the first sustained period of financial-market calm since the start of the debt crisis. Gross domestic product in the 17-nation euro area rose 0.3 percent in the April-June period after a 0.3 percent contraction in the previous three months, the European Union’s statistics office in Luxembourg said today. That exceeded the median estimate of 0.2 percent growth in a Bloomberg News survey of 41 economists and brought to a close six straight quarters of contraction, the longest slump since the euro’s debut in 1999. Germany and France, the euro area’s two largest economies, both showed faster-than-projected expansions in the quarter. While the overall outlook has improved, the recession pushed the unemployment rate to a record and parts of southern Europe remain mired in a slump, with more than half of young people in Spain and Greece out of work. (Bloomberg) Portugal: Portugal’s Economy Grows for First Time Since 2010 on TradePortugal’s economy expanded in the second quarter for the first time since 2010 as export growth accelerated. Gross domestic product rose 1.1 percent from the first quarter, when it fell 0.4 percent, the Lisbon-based National Statistics Institute said in a preliminary report today. That follows ten consecutive quarters of contraction. Economists predicted an increase of 0.1 percent, according to the median of 10 estimates in a Bloomberg News survey. GDP dropped 2 percent from a year earlier, after declining a revised 4.1 percent the previous quarter. The lower annual rate of contraction reflects a slowdown in the reduction of investment and a sharp acceleration in exports, the statistics institute said. Portugal’s trade deficit narrowed in the three months through June as exports rose more than imports. (Bloomberg)


Outperform

Current Target Upside/

Rec. Price Price Downside PE (x) Yield (%) Remarks

(Bt) (Bt) (%) 2013F 2013F

ADVANC Buy 283.00 319.00 12.7 22.3 4.5

AOT Buy 182.00 188.00 3.3 24.1 1.7

BTS Trading Buy 8.60 10.20 18.6 39.7 6.3

INTUCH Trading Buy 90.25 104.00 15.2 19.1 4.8 .

PTT Buy 329.00 388.00 17.9 8.4 4.2

PTTGC Buy 73.75 82.10 11.3 9.9 4.6

Underperform

Current Target Upside/

Rec. Price Price Downside PE (x) Yield (%) Remarks

(Bt) (Bt) (%) 2013F 2013F

AP Neutral 5.90 6.30 14.0 6.8 3.2

KTB Buy 18.70 28.30 51.3 8.7 4.1

TCAP Neutral 35.75 41.00 14.7 4.7 3.7

TISCO Sell 40.75 41.00 0.6 7.6 6.3

Rank Symbol Rank Symbol14-Aug 13-Aug 9-Aug 8-Aug 7-Aug 14-Aug 13-Aug 9-Aug 8-Aug 7-Aug

1 ADVANC 293.1 (281.3) (29.5) 79.0 (114.4) 1 TOP (90.9) 59.6 (53.3) 17.2 (21.3)

2 KBANK 248.7 254.7 109.3 12.5 (154.1) 2 BBL (66.3) (70.3) (36.0) (106.3) (7.1)

3 SCB 213.5 (25.4) (473.3) (6.3) (41.1) 3 CPF (63.9) 133.7 (82.8) 52.5 (23.7)

4 BAY 157.9 18.4 403.6 435.9 383.9 4 CPALL (52.2) 267.2 33.9 (16.7) (6.1)

5 PTTGC 138.6 209.1 199.4 621.7 (31.6) 5 JAS (32.0) 3.2 (11.7) 17.5 9.8

6 KTB 104.2 463.4 56.7 (86.5) (14.8) 6 INTUCH (30.9) (707.6) (162.1) (367.1) 77.8

7 BANPU 79.7 207.7 81.4 (1.6) (21.3) 7 MINT (27.9) 9.3 30.2 53.3 13.3

8 TCAP 68.3 30.1 5.8 (5.3) (0.9) 8 SCC (15.8) 281.0 9.6 (176.1) (385.8)

9 TRUE 55.4 45.5 (29.0) (25.1) 130.7 9 OISHI (15.7) 0.3 (20.9) (5.8) 0.0

10 HEMRAJ 42.7 9.3 46.0 (4.7) 6.8 10 BH (14.5) 18.1 (6.1) (7.0) 37.5

11 AOT 42.0 (46.4) (26.6) 74.1 (9.8) 11 PTT (10.0) 128.2 (76.5) 3.4 (28.9)

12 PS 38.1 26.1 (5.8) (0.8) 2.7 12 BCP (9.4) 2.9 (2.3) (11.2) (0.9)

13 DTAC 37.8 (16.5) (111.4) (57.7) (75.9) 13 STEC (9.1) 8.8 21.9 (14.8) 0.3

14 CSC 31.4 - - - - 14 CGD (8.0) (0.5) (0.0) (0.0) 0.8

15 SPALI 30.7 (6.0) (12.1) (48.0) (35.7) 15 LPN (7.3) 52.0 30.8 (1.6) (5.8)

16 CPN 24.6 34.8 (19.4) (0.9) (29.9) 16 THAI (6.5) 8.8 (4.2) (5.3) (1.7)

17 BEC 23.4 52.4 (10.1) (43.5) (58.8) 17 MALEE (6.2) (7.4) (0.4) (0.0) (0.3)

18 TUF 21.6 (8.4) (48.5) (72.8) (57.7) 18 DSGT (6.1) (5.1) (0.1) (1.0) (0.0)

19 QH 21.2 0.4 (5.5) 1.6 56.1 19 MAJOR (5.6) 6.5 (6.8) (4.2) (1.8)

20 TISCO 17.0 46.2 20.7 (8.3) (17.9) 20 CK (5.6) 9.6 (7.9) (229.0) (91.1)

% No.of Shars

Symbol BUY SELL Total NET Turnover Symbol In Hand

1 BBL 640.9 707.3 1,348.2 (66.3) 52.0 1 TISCO-P 0.02 0.03 66.2

2 KBANK 586.0 337.3 923.3 248.7 32.4 2 BBL 586.0 1,908.8 30.7

3 INTUCH 327.8 358.6 686.4 (30.9) 19.2 3 KBANK 654.2 2,393.3 27.3

4 ADVANC 455.0 161.9 616.9 293.1 17.4 4 INTUCH 768.8 3,206.4 24.0

5 SCB 333.3 119.8 453.1 213.5 16.7 5 SPALI 386.0 1,716.6 22.5

6 BAY 247.0 89.1 336.1 157.9 46.0 6 E-W1 74.5 347.0 21.5

7 SCC 152.2 168.0 320.2 (15.8) 33.7 7 GOLD-W1 74.2 392.1 18.9

8 KTB 202.6 98.4 301.1 104.2 16.9 8 THRE 661.9 3,512.5 18.8

9 PTT 133.5 143.5 277.0 (10.0) 16.1 9 LH 1,840.6 10,025.9 18.4

10 PTTGC 177.4 38.9 216.3 138.6 13.5 10 NMG-W3 300.4 1,647.7 0.0

11 DELTA 86.0 83.5 169.6 2.5 42.1 11 LPN 255.2 1,475.7 17.3

12 CPALL 58.1 110.3 168.4 (52.2) 5.5 12 TWFP 1.6 9.5 16.5

13 TRUE 107.1 51.7 158.7 55.4 3.4 13 DTAC 373.4 2,367.8 15.8

14 TOP 28.4 119.2 147.6 (90.9) 15.8 14 TCAP 194.7 1,277.8 15.2

15 CPF 41.5 105.5 147.0 (63.9) 9.8 15 AP 423.3 2,859.9 14.8

16 LH 76.1 59.9 136.0 16.2 22.9 16 THIP 1.2 8.0 14.5

17 BANPU 105.2 25.6 130.8 79.7 5.4 17 BAY 850.0 6,074.1 14.0

18 TCAP 94.9 26.6 121.5 68.3 26.2 18 PRANDA 56.3 406.7 13.9

19 PTTEP 66.6 51.2 117.8 15.4 9.0 19 LALIN 112.6 825.0 13.7

20 DTAC 77.5 39.7 117.2 37.8 20.3 20 GBX 138.7 1,089.1 12.7

Source: SET,RHB OSK

Capital Shares

Paid Up Capital % of Paid Up

--------------NVDR Most Active Values (Bt m)--------------- -----------NVDR Outstanding Share (m shares)-----------

Top 20 Net SellNVDR Net Sell Value (Bt mn)

NVDR Daily Trading by Stock

Top 20 Net BuyNVDR Net Buy Value (Bt mn)

See important disclosures at the end of this report Powered by Enhanced Datasystems’ EFATM Platform 1

Company Update, 14 August 2013

Berli Jucker (BJC TB) Trading Buy (from NR)

Consumer Cyclical - Distribution & Wholesale Target Price: THB57.0

Market Cap: USD2,419m Price: THB47.5

Turning a Corner

Macro

Risks

Growth

Value

75

98

122

145

168

192

215

35

45

55

65

75

85

95

Berli Jucker (BJC TB)Price Close Relative to Stock Exchange of Thailand Index (RHS)

10

20

30

40

50

60

70

Aug

-12

Oct

-12

De

c-12

Feb

-13

Apr

-13

Jun-

13

Vol

m

Source: Bloomberg

Avg Turnover (THB/USD) 177m/5.79m

Cons. Upside (%) 4.2

Upside (%) 20.0

52-wk Price low/high (THB) 40.3 - 91.0

Free float (%) 25

Shareholders (%)

TCC Holding 70.1

DBS Vickers (Singapore) 4.9

Thai NVDR 2.5

Shariah compliant

Chalie Kueyen 66 2862 9745 [email protected]

Forecasts and Valuations Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Total turnover (THBm) 26,082 31,235 37,429 45,071 55,671

Reported net profit (THBm) 1,905 2,178 2,415 3,112 4,034

Recurring net profit (THBm) 1,905 2,178 2,415 3,112 4,034

Recurring net profit growth (%) 51.0 14.3 10.9 28.9 29.7

Core EPS (THB) 1.20 1.37 1.52 1.96 2.54

Core P/E (x) 39.6 34.6 31.2 24.2 18.7

Return on average equity (%) 17.5 18.2 18.4 21.3 24.1

P/B (x) 6.61 6.01 5.50 4.86 4.20

P/CF (x) 13.4 17.4 18.0 11.8 13.0

EV/EBITDA (x) 22.2 20.7 22.6 18.9 15.9

Net debt to equity (%) 53.0 63.9 68.5 66.6 64.4

Our vs consensus EPS (%) 2.6 12.9

Source: Company data, RHB estimates

Despite BJC’s weaker-than-expected 2QFY13 earnings, we see some positives – its loss-making aluminium can plant in Vietnam turned a profit with capacity utilisation (CAPU) rising to 70%, while its subsidiaryDanone Dairy incurred lower losses. We expect continued improvement in its Vietnam operation, given the current 80% CAPU. Upgrade to TRADING BUY.

2QFY13 earnings at THB633m (-5% q-o-q, +14% y-o-y). Quarterly earnings were in line with consensus estimates, but below our forecast by around 10% – due to lower-than-expected net profit contribution from its medical and healthcare equipment business. The aluminiumpackaging segment in Thailand and Vietnam performed well in terms ofvolume and margins, but other segments remained weak. 1HFY13 earnings rose 8% y-o-y to THB1.3bn, accounting for 42% of our FY13forecast.

BJC’s packaging business (45% of revenue) improved significantly.This was mainly bolstered by its aluminium can operations under its subsidiary (TC Ball) because of: i) lower production cost as a result of a 10% y-o-y drop in aluminium prices, and ii) its Vietnam operation turninga profit this quarter. Thus, revenue contribution from this segment grew by 10% y-o-y while net profit surged 58% y-o-y. Note that BJC holds a 50% equity stake in TC Ball, which manufactures its cans in Thailand and Vietnam. The significant improvement from this unit resulted in a significant increase in minority interest in 2QFY13.

Negative growth for consumer and healthcare equipment. BJC’sconsumer segment (36% of revenue)’s y-o-y sales and earningsimproved by 39% and 28% respectively, following the full consolidation of Thai-An (a trading consumer products BU in Vietnam) in March. Excluding this, consumer segment should report a slight negative growth. Meanwhile, the medical and healthcare segment (16% of revenue) saw its y-o-y sales and net profit falling by 20% and 30%respectively, due to inconsistent revenue recognition.

Berli Jucker (BJC TB) 14 August 2013


Figure 1: BJC’s quarterly performance

THBm 1Q12 2Q12 3Q12 4Q12 1Q13 2Q13 QoQ YoY 1H12 1H13 YoY

Sales 8,841 9,214 9,758 9,616 10,359 10,477 1% 14% 18,055 20,835 15%

Cost of sales 6,589 7,054 7,415 7,344 7,759 7,936 2% 13% 13,643 15,695 15%

Gross profit 2,252 2,160 2,343 2,272 2,600 2,540 -2% 18% 4,412 5,140 17%

Selling exp 919 951 1,098 1,066 1,108 1,135 2% 19% 1,870 2,243 20%

Admin exp 473 507 506 595 600 574 -4% 13% 981 1,174 20%

Operating profit 860 702 739 611 892 831 -7% 18% 1,561 1,723 10%

Other income 103 100 85 250 85 101 19% 1% 204 186 -9%

Equity income 22 19 15 10 5 23 397% 17% 41 27 -35%

EBIT 985 821 838 871 981 955 -3% 16% 1,807 1,936 7%

EBITDA 1,381 1,247 1,264 1,266 1,432 1,387 -3% 11% 2,629 2,820 7%

Interest Expenses 136 118 132 116 139 133 -4% 12% 255 272 7%

Pretax profit 849 703 706 754 843 822 -2% 17% 1,552 1,664 7%

FX gain/loss 18 23- 56 36 8 86 926% -478% 5- 95

Pretax profit 867 680 762 791 851 908 7% 34% 1,547 1,759 14%

Income Tax 175 166 161 103 153 151 -1% -9% 341 303 -11%

Profit before MI 692 514 601 688 698 758 8% 47% 1,206 1,456 21%

Minority Interest 47 40- 12- 87 33 125 276% -407% 6 158 2432%

Net profit 645 555 614 601 665 633 -5% 14% 1,200 1,298 8%

EPS (THB) 0.41 0.35 0.39 0.38 0.42 0.40 -5% 14% 0.76 0.82 8%

Key figures and ratios

Net debt/Equity (net cash) (Bt 8,681 9,284 10,630 11,156 12,316 13,668 9,284 13,668

D/E ratio(net debt) 0.57 0.60 0.69 0.69 0.70 0.78 0.60 0.78

Gross margin (%) 25.5% 23.4% 24.0% 23.6% 25.1% 24.2% 24.5% 24.7%

Gross margin (exclude depre) 30.0% 28.1% 28.4% 27.7% 29.5% 28.4% 29.0% 28.9%

EBIT margin (%) 9.7% 7.6% 7.6% 6.4% 8.6% 7.9% 8.7% 8.3%

Operating margin (%) 11.1% 8.9% 8.6% 9.1% 9.5% 9.1% 10.0% 9.3%

EBITDA margin (%) 15.6% 13.5% 13.0% 13.2% 13.8% 13.2% 14.6% 13.5%

Net margin (%) 7.3% 6.0% 6.3% 6.3% 6.4% 6.0% 6.7% 6.2%

SG&A/sales (%) excl depre 5.9% 5.7% 6.9% 7.0% 6.3% 6.7% 5.8% 6.5%

SG&A/sales (%) 15.8% 15.8% 16.4% 17.3% 16.5% 16.3% 15.8% 16.4%

Effective tax rate 20.6% 23.6% 22.8% 13.6% 18.1% 18.3% 22.1% 18.2%

ROA (%) 7.5% 6.3% 6.6% 6.3% 6.6% 6.0% 6.9% 6.3%

ROE (%) 16.9% 14.4% 15.9% 14.8% 15.2% 14.4% 15.6% 14.8%

By segment Sales (THBm)Packaging 4,092 4,062 4,175 4,536 4,457 4,459 0% 10% 8,154 8,916 9%Consumer product 2,672 2,661 2,863 2,844 3,286 3,696 12% 39% 5,333 6,982 31%Healthcare 1,648 2,181 2,375 1,843 1,931 1,678 -13% -23% 3,829 3,609 -6%

Net profit (THBm)Packaging 335 262 368 345 389 413 6% 58% 597 802 34%Consumer product 208 145 111 135 139 186 34% 28% 353 325 -8%Healthcare 117 191 191 132 171 134 -22% -30% 308 305 -1%

Net margin Packaging 8.2% 6.5% 8.8% 7.6% 8.7% 9.3% 7.3% 9.0%Consumer product 7.8% 5.4% 3.9% 4.7% 4.2% 5.0% 6.6% 4.7%Healthcare 7.1% 8.8% 8.0% 7.2% 8.9% 8.0% 8.0% 8.5%

Source: RHB estimates



Financial Exhibits

Profit & Loss (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Total turnover 26,082 31,235 37,429 45,071 55,671

Cost of sales (18,940) (23,454) (28,402) (34,043) (41,966)

Gross profit 7,142 7,781 9,027 11,028 13,705

Gen & admin expenses (4,392) (4,826) (6,116) (7,189) (8,771)

Operating profit 2,750 2,954 2,911 3,839 4,935

Operating EBITDA 4,166 4,735 4,554 5,613 6,851

Depreciation of fixed assets (1,416) (1,781) (1,643) (1,774) (1,916)

Operating EBIT 2,750 2,954 2,911 3,839 4,935

Net income from investments 62 46 66 85 120

Other recurring income 234 444 539 630 756

Interest expense (227) (366) (503) (584) (654)

Exchange gains 43 30 87 50 50

Pre-tax profit 2,863 3,108 3,100 4,020 5,207

Taxation (668) (693) (605) (804) (1,041)

Minority interests (289) (238) (80) (105) (131)

Profit after tax & minorities 1,905 2,178 2,415 3,112 4,034

Reported net profit 1,905 2,178 2,415 3,112 4,034

Recurring net profit 1,905 2,178 2,415 3,112 4,034


Cash flow (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Operating profit 2,750 2,954 2,911 3,839 4,935

Depreciation & amortisation 1,416 1,781 1,643 1,774 1,916

Change in working capital 728 (192) 421 570 (1,425)

Other operating cash flow 302 913 378 (25) (29)

Operating cash flow 5,196 5,456 5,353 6,158 5,397

Interest paid (227) (366) (503) (584) (654)

Tax paid 668 (762) (660) 804 1,041

Cash flow from operations 5,637 4,328 4,190 6,378 5,784

Capex (3,923) (3,841) (3,808) (4,000) (3,500)

Other investing cash flow (64) 468 (84) - -

Cash flow from investing activities (3,987) (3,373) (3,892) (4,000) (3,500)

Dividends paid (809) (1,000) (1,223) (1,087) (1,400)

Increase in debt 1,021 2,321 2,080 25 1,000

Other financing cash flow (255) (432) (352) (584) (654)

Cash flow from financing activities (43) 889 505 (1,645) (1,054)

Cash at beginning of period 841 1,224 1,828 2,015 1,539

Total cash generated 1,607 1,844 804 733 1,229

Forex effects (87) (66) (85) (84) (83)

Implied cash at end of period 2,361 3,001 2,547 2,665 2,685




Financial Exhibits

Balance Sheet (THBm) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Total cash and equivalents 1,224 1,828 2,015 1,539 1,170

Inventories 4,466 5,124 6,864 7,662 9,464

Accounts receivable 5,769 7,126 7,998 8,564 10,578

Other current assets 234 232 95 185 275

Total current assets 11,692 14,310 16,972 17,949 21,486

Total investments 412 416 432 420 420

Tangible fixed assets 12,460 14,143 16,583 18,708 20,833

Total other assets 3,113 4,110 4,273 4,507 5,075

Total non-current assets 15,985 18,669 21,288 23,635 26,328

Total assets 27,677 32,979 38,260 41,584 47,814

Short-term debt 4,111 3,198 4,828 4,075 3,457

Accounts payable 4,179 5,638 7,052 5,447 6,715

Other current liabilities 1,279 338 347 2,028 3,305

Total current liabilities 9,568 9,174 12,227 11,550 13,477

Total long-term debt 3,965 7,912 8,344 9,844 11,644

Other liabilities 1,210 1,363 1,406 1,595 1,064

Total non-current liabilities 5,175 9,275 9,750 11,439 12,708

Total liabilities 14,743 18,449 21,976 22,989 26,185

Share capital 1,588 1,588 1,588 1,588 1,588

Retained earnings reserve 6,653 7,673 8,810 10,766 13,187

Other reserves 3,174 3,282 3,330 3,174 3,174

Shareholders' equity 11,415 12,543 13,728 15,528 17,949

Minority interests 1,520 1,987 2,556 3,067 3,680

Total equity 12,934 14,530 16,284 18,595 21,629

Total liabilities & equity 27,677 32,979 38,260 41,584 47,814


Key Ratios (THB) Dec-10 Dec-11 Dec-12 Dec-13F Dec-14F

Revenue growth (%) 14.4 19.8 19.8 20.4 23.5

Operating profit growth (%) 69.5 7.4 (1.5) 31.9 28.5

Net profit growth (%) 51.0 14.3 10.9 28.9 29.7

EPS growth (%) 51.0 14.3 10.9 28.9 29.7

Bv per share growth (%) 10.3 9.9 9.4 13.1 15.6

Operating margin (%) 10.5 9.5 7.8 8.5 8.9

Net profit margin (%) 7.3 7.0 6.5 6.9 7.2

Return on average assets (%) 7.5 7.2 6.8 7.8 9.0


Net debt to equity (%) 53.0 63.9 68.5 66.6 64.4

Recurrent cash flow per share 3.55 2.73 2.64 4.02 3.64




SWOT Analysis

The company has its own distribution and logistics network nationwide

It has the largest market share in several consumer products, such as tissue paper and snacks

Vietnam’s economy is highly volatile, which could lead to fluctuations in its operation there

It owns Vietnam's largest distribution and logistics network, in a country where the production of consumer goods remains low

It has plants of various product types in different locations with high growth potential

As its Vietnam operation is still in the early stages, business volume is low and net profit contribution remains insignificant

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P/BV (x) vs ROAE

P/B (x) (lhs) Return on average equity (rhs)

Source: Company data, RHB estimates Source: Company data, RHB estimates

Company Profile Berli Jucker (BJC) is an integral part of Thailand Beverage Plc (ThaiBev)’s operations. It has three business lines, namely: i) packaging products (glass bottles and aluminium cans) for major clients such as ThaiBev, Red Bull and Coca Cola; ii) consumer products like tissue paper and snacks; and iii) technical and healthcare products.



Recommendation Chart

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Recommendations & Target Price

Buy Neutral Sell Trading Buy Take Profit Not Rated

Source: RHB estimates, Bloomberg

Date Recommendation Target Price Price

2013-05-20 Neutral 57.0 65.0

2013-04-02 Buy 57.0 72.8

2012-08-01 Buy 50.0 40.0


See important disclosures at the end of this report Powered by Enhanced Datasystems’ EFATM

Platform 1

Results Review, 15 August 2013

Better World Green (BWG TB) Buy (Maintained) Industrial - Environment Control Target Price: THB3.00

Market Cap: USD54.8m Price: THB2.40

Outstanding Performance

Macro

3.00

Risks

2.00

Growth

3.00

Value

3.00

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Better World Green PCL (BWG TB)Price Close Relative to Stock Exchange of Thailand Index (RHS)

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Source: Bloomberg

Avg Turnover (THB/USD) 32.9m/1.08m


Upside (%) 29.2


Free float (%) 92

Shareholders (%)

Suwat Luengviriya 5.7

Sippakorn Kaosa-ard 3.6

Charassri Pongpirodom 2.9

Shariah compliant

Kowit Pongwinyoo +662 862 9743

[email protected]

Chun Phokaisawan +66 2862 2029

[email protected]


Total turnover (THBm) 713 1,051 1,057 1,333 1,934

Reported net profit (THBm) 41 97 76 110 168

Recurring net profit (THBm) 41 97 76 110 168

Recurring net profit growth (%) na 137.4 (22.1) 45.3 52.2

Core EPS (THB) 0.13 0.19 0.11 0.15 0.22

DPS (THB) 0.02 0.04 0.04 0.03 0.04

Dividend Yield (%) 0.8 1.5 1.7 1.3 1.7

Core P/E (x) 18.7 12.4 22.2 15.6 10.8


P/B (x) 1.11 1.34 1.35 1.26 1.22

P/CF (x) 6.9 12.0 4.9 4.7 4.8

EV/EBITDA (x) 6.48 5.03 6.08 5.29 3.76

Net debt to equity (%) 24.7 8.7 4.4 7.9 net cash



BWG’s 2QFY13 net profit rose 102% y-o-y and 12% q-o-q to THB39.4m, 9% above our forecast, mainly due to rising amounts of industrial waste and a higher average selling price. We believe the positive momentum should continue into 2HFY13, as the company continues with its refuse-derived fuel (RDF) project amidst the Government’s increasing focus on the illegal dumping issue. Maintain BUY, with a TP of THB3.00.

THB39.4m 2QFY13 net profit. BWG reported net profit of THB39.4m in

2QFY13, an increase of 102% y-o-y and 12% q-o-q. Its strong performance was the combined result of a higher amount of industrial waste and a 30% increase in the average selling price (ASP). 2QFY13 gross margin rose 17% y-o-y, but dropped 3.4% q-o-q, primarily due to higher sales volume and higher ASPs. Selling, general and administrative expenses (SG&A) to sales ratio declined to 15.2%, down 24% q-o-q due to increasing sales volume. Net profit margin increased 56% y-o-y on the back of higher sales volume and lower SG&A.

Sales and earnings momentum to continue into 2HFY13. The

amount of industrial waste in the country is expected to decline slightly in 2HFY13, as the Thai economy has started to slow down. However, given that BWG is the biggest player in the industry and only processed around 0.4m tonnes of industrial waste per year, or 1.3% of the nation’s total, we believe there is room aplenty for the company to expand its business. Moreover, the Government is focusing more on the issue of illegal dumping of industrial waste and is planning to dish out more severe penalties to offenders. Hence, we believe BWG will benefit from a stricter Government environmental policy.

Maintain BUY. We have a BUY recommendation on the stock, with a TP

of THB3.00, based on DCF using terminal growth rate of 1% and WACC of 10.19%. Our TP is based on a target P/E of 19.5x. We like BWG as: i) it has the largest market share in the waste management industry, but processes only around 1% of the country’s total industrial waste (allowing it plenty of room to grow); and ii) its new RDF project will boost its income from FY14 onwards.

Thai Institute of Directors Association (IOD) – Corporate Governance Report Rating 2012

ADVANC BCP DRT IRPC NOBLE QH SC SYMC TOP AOT BECL EASTW KBANK PHOL RATCH SCB THAI TSTE ASIMAR BKI EGCO KK PS ROBINS SCC TIP TTA BAFS BMCL ERW KTB PSL RS SE-ED TIPCO

BANPU BTS GRAMMY LPN PTT SAMART SIM TISCO BAY CPN HEMRAJ MCOT PTTEP SAMTEL SIS TKT BBL CSL ICC NKI PTTGC SAT SNC TMB

2S BROOK DTAC HMPRO MACO OFM S&J SSSC THRE TSC ACAP BWG DTC HTC MAKRO OGC S&P STANLY TIC TSTH AF CENTEL ECL IFEC MBK OSIHI SABINA STEC TICON TTW AIT CFRESH EE INTUCH MBKET PAP SAMCO SUC TIW TUF AKR CGS EIC ITD MFC PDI SCCC SUSCO TK TVO AMATA CHOW ESSO IVL MFEC PE SCG SVI TLUXE UAC AP CIMBT FE JAS MINT PG SCSMG SYNTEC TMT UMI ASK CK FORTH KCE MODERN PHATRA*** SFP TASCO TNITY UP ASP CM GBX KGI MTI PJW SITHAI TCAP TNL UPOIC AYUD CPALL GC KSL NBC PM SMT TCP TOG UV BEC CPF GFPT L&E NCH PR SPALI TFD TPC VIBHA BFIT CSC GL LANNA NINE PRANDA SPCG TFI TRC VNT BH DCC GLOW LH NMG PRG SPI THANA TRT WACOAL BIGC DELTA GUNKUL LRH NSI PT SPPT THCOM TRU YUASA BJC DEMCO HANA LST OCC PYLON SSF THIP TRUE ZMICO *** PHATRA was voluntarily delisted from the Stock Exchange of Thailand effectively on September 25, 2012.

AEONTS BGT CMO GENCO JTS LHBANK NC PTL SGP SWC TPAC UT AFC BLA CNS GFM JUBILE LHK NNCL Q-CON SIAM SYNEX TPCORP VARO AGE BNC CNT GLOBAL JUTHA LIVE NTV QLT SIMAT TBSP TPIPL WAVE AH BOL CPL GOLD KASET LOXLEY OSK QTC SINGER TCB TPP WG AHC BROCK CRANE HFT KBS MAJOR PAE RASA SIRI TEAM TR WIN AI BSBM CSP HTECH KC MATCH PATO RCL SKR TF TTCL WORK AJ BTNC CSR HYDRO KDH MATI PB RICH SMIT TGCI TWFP

ALUCON BUI CTW IFS KIAT MBAX PICO ROJNA SMK THANI TYCN AMANAH CCET DRACO IHL KKC M-CHAI PL RPC SOLAR TKS UBIS APCO CEN EASON ILINK KTC MDX POST SAM SPC TMD UEC APCS CHUO EMC INET KWC MJD PPM SCBLIF SPG TMI UIC APRINT CI EPCO IRC KWH MK PREB SCP SSC TNH UMS ARIP CIG FNS IRCP KYE MOONG PRECHA SEAFCO SST TNPC UOBKH AS CIMBI*** FOCUS IT LALIN MPIC PRIN SENA STA TOPP UPF ASIA CITY FSS JMART LEE MSC PSAAP SF SVOA TPA US

*** CIMBI was voluntarily delisted from the Stock Exchange of Thailand effectively on September 25, 2012.

IOD (IOD Disclaimer)

การเปิดเผลผลการส ารวจของสมาคมส่งเสริมสถาบันกรรมการบรษิัทไทย (IOD) ในเรื่องการก ากับดูแลกิจการ (Corporate Governance) นี้เป็นการด าเนินการตามนโยบายของส านักงานคณะกรรมการก ากับหลักทรัพย์และตลาดหลักทรัพย์ โดยการส ารวจของ IOD เป็นการส ารวจและประเมินจากข้อมูลของบรษัทจดทะเบียนในตลาดหลักทรัพย์แห่งประเทศไทยและตลาดหลกัทรัพย์เอ็มเอไอ ที่มีการเปิดเผยต่อสาธารณะและเป็นข้อมูลที่ผูล้งทุนทั่วไปสามารถเข้าถงึได้ ดังนั้นผลส ารวจดังกล่าวจึงเป็นการน าเสนอในมุมมองของบุคคลภายนอกโดยไม่ได้เป็นการประเมินการปฏิบัติและมิได้มีการใช้ข้อมูลภายในในการประเมิน

อนึ่ง ผลการส ารวจดังกล่าว เป็นผลการส ารวจ ณ วนัที่ปรากฎในรายงานการก ากับดแูละกิจการบริษัทจดทะเบียนไทยเท่านั้น ดังนั้นผลการส ารวจจึงอาจเปลี่ยนแปลงได้ภายหลังวันดังกล่าว ทัง้นี้บริษัทหลักทรัพย์ อาร์เอสบี โอเอส เค จ ากัด (มหาชน) มิได้ยืนยันหรือรับรองถึงความถูกต้องของผลการส ารวจดงักล่าวแต่อย่างใด

Better World Green (BWG TB)

15 August 2013


Figure 1: 2QFY13 results Consolidated 2Q13 2Q12 yoy 1Q13 qoq 1H13 yoy

year to 31 Dec (THBm) (THBm) %chg (THBm) % chg (THBm) %chg

Sale 326.9 251.4 30.0 289.1 13.1 616.0 19.8

Gross Profit 105.0 69.0 52.1 96.1 9.2 201.1 34.0

EBITDA 99.3 69.0 43.8 103.2 (3.8) 202.5 44.5

Pre-tax Profit 52.0 28.8 80.6 46.8 11.2 98.7 71.7

Tax (10.7) (5.1) 110.6 (6.6) 61.1 (17.3) 93.8

Net Profit 39.4 19.4 102.8 35.2 11.8 74.6 82.6

Net Profit (Ex EI) 39.4 19.4 102.8 28.4 38.6 67.8 66.0

EPS(Bt) 0.1 0.03 102.4 0.05 11.6 0.10 82.3

Gross margin(%) 32.1 27.5 17.0 33.2 (3.4) 32.6 11.8

EBITDA margin(%) 30.4 27.5 10.6 35.7 (14.9) 32.9 20.6

Net margin(%) 12.0 7.7 56.0 12.2 (1.1) 12.1 52.4 Source: Company data, RHB estimates


15 August 2013


Financial Exhibits


Total turnover 713 1,051 1,057 1,333 1,934

Cost of sales (505) (734) (756) (926) (1,341)

Gross profit 208 317 301 407 593

Gen & admin expenses (81) (92) (105) (133) (193)

Selling expenses (45) (67) (33) (57) (83)

Other operating costs (21) (27) (34) (43) (62)

Operating profit 60 131 129 173 254

Operating EBITDA 134 251 287 353 471

Depreciation of fixed assets (74) (120) (158) (180) (217)

Operating EBIT 60 131 129 173 254


Interest expense (16) (18) (19) (25) (32)

Pre-tax profit 48 119 114 153 228

Taxation (6) (9) (21) (15) (26)


Profit after tax & minorities 41 97 76 110 168

Reported net profit 41 97 76 110 168

Recurring net profit 41 97 76 110 168



Operating profit 60 131 129 173 254

Depreciation & amortisation 74 120 158 180 217

Change in working capital (11) (134) 75 37 (53)

Other operating cash flow 15 19 24 13 15

Operating cash flow 138 136 385 402 433

Interest paid (16) (18) (19) (25) (32)

Tax paid (10) (17) (21) (15) (26)

Cash flow from operations 112 101 345 362 375

Capex (47) (476) (145) (400) (200)

Other investing cash flow 0 38 20 4 11

Cash flow from investing activities (47) (438) (125) (396) (189)

Dividends paid - (6) (36) (22) (34)

Proceeds from issue of shares - 410 0 - 86

Increase in debt (28) 39 (39) 60 114

Other financing cash flow (22) 5 (43) 34 74

Cash flow from financing activities (50) 448 (118) 72 240

Cash at beginning of period 35 50 160 264 303

Total cash generated 15 111 103 39 426

Implied cash at end of period 50 160 263 303 729



15 August 2013


Financial Exhibits


Total cash and equivalents 50 160 264 303 729

Inventories 35 - - - -

Accounts receivable 160 253 290 360 522


Total current assets 322 637 574 690 1,292


Tangible fixed assets 717 1,138 1,223 1,444 1,427

Total non-current assets 789 1,223 1,289 1,509 1,492

Total assets 1,110 1,860 1,863 2,200 2,784

Short-term debt 188 198 218 276 400

Accounts payable 89 107 118 200 290

Other current liabilities 99 150 39 71 103

Total current liabilities 376 455 375 546 793

Total long-term debt 33 74 105 141 205

Other liabilities 8 50 45 58 78

Total non-current liabilities 41 123 150 199 283

Total liabilities 416 578 525 746 1,076

Share capital 320 688 714 714 800

Retained earnings reserve 212 296 336 424 558

Other reserves 159 245 219 218 218

Shareholders' equity 690 1,229 1,269 1,357 1,577

Minority interests 4 53 70 97 131

Other equity (0) (0) - - -

Total equity 694 1,281 1,338 1,454 1,708




Revenue growth (%) 21.3 47.4 0.6 26.1 45.1


Net profit growth (%) 0.0 137.4 (22.1) 45.3 52.2

EPS growth (%) 0.0 50.7 (44.0) 42.7 43.6

Bv per share growth (%) 6.3 (17.2) (0.5) 7.0 3.8





Net debt to equity (%) 24.7 8.7 4.4 7.9 (7.2)

DPS 0.02 0.04 0.04 0.03 0.04




15 August 2013


SWOT Analysis

The largest industrial waste management company in Thailand

A new renewable energy project, refuse-derived fuel (RDF), will account for 16% of sales in 2014

Legal issues brought up by the community surrounding its site

Dilutive effect from BWG-W1

To expand into the electric power plant business

Diversifying into the community waste management business

Limited landfill space

The Government’s inability to enforce regulations

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Company Profile Better World Green (BWG) provides non-hazardous and hazardous industrial waste management services.


15 August 2013



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2013-06-19 Buy 3.10 2.14


See important disclosures at the end of this report Powered by Enhanced Datasystems’ EFATM

Platform 1

Results Review, 15 August 2013

Sriracha Construction (SRICHA TB) Buy (Maintained) Industrial - Engineering & Construction Target Price: THB50.0

Market Cap: USD361m Price: THB37.0

Performance On Track

Macro

3.00

Risks

2.00

Growth

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Value

3.00

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Sriracha Construction (SRICHA TB)Price Close Relative to Stock Exchange of Thailand Index (RHS)

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Avg Turnover (THB/USD) 41.9m/1.36m


Upside (%) 35.1


Free float (%) 32

Shareholders (%)

Sriracha Holding Company Limited

47.7

Mr. Boonkrua Khemapiratana 13.9

Mr. Gridsada Potisomporn 3.3

Shariah compliant

Kowit Pongwinyoo +662 862 9743

[email protected]

Chun Phokaisawan +66 2862 2029

[email protected]


Total turnover (THBm) 2,383 2,832 2,098 2,508 3,261

Reported net profit (THBm) 1,190 1,108 1,023 1,104 1,399

Recurring net profit (THBm) 1,190 1,108 796 1,104 1,399

Recurring net profit growth (%) 67.1 (6.9) (28.1) 38.7 26.8

Core EPS (THB) 8.65 4.92 3.01 3.63 4.60

DPS (THB) 0.00 0.00 0.00 2.54 3.22

Dividend Yield (%) 0.0 0.0 0.0 6.9 8.7

Core P/E (x) 4.3 7.5 12.3 10.2 8.0


P/B (x) 6.85 7.76 5.14 4.45 3.81

P/CF (x) 5.6 11.1 25.3 8.2 6.9

EV/EBITDA (x) 2.61 5.26 8.96 7.22 5.39

Net debt to equity (%) net cash net cash net cash net cash net cash



Sricha’s 2QFY13 net profit came in at THB157m, up 15.9% q-o-q but down 43% y-o-y. We believe Sricha’s earnings will continue to improve in 2HFY13 as the company has started to realise revenue from Thai Oil’s project. We maintain our BUY recommendation on the stock, with a TP of THB50.0.

THB157m net profit. Sricha’s 2QFY13 net profit increased 15.9% q-o-q

but declined 43% y-o-y. Sales increased 19% q-o-q to THB569m as the company started to realise revenue from Thai Oil’s projects (TOP TB; NEUTRAL, FV: THB69.10). Gross profit margin declined to 38.6% in 2QFY13 from 42% in 1QFY13 due to lower service income. However, this was partially mitigated by lower SG&A-to-sales of 7.8% and a lower effective tax rate of 12%.

Strong earnings ahead. We expect Sricha’s earnings to substantially

increase in 2H13, as we expect the company to realise the remaining revenue from Thai Oil’s emission improvement and PSA-3 project, valued at THB1.4bn, by end-4QFY13. In addition, Sricha is currently bidding for six new projects with a total value of THB15.5bn, namely two module projects in Australia, two piping projects in Thailand, and two mines in Africa and Panama respectively. Results of the bidding process are expected to be announced in 4QFY13. Given its backlog in hand and upcoming project wins, we believe the group will be able to deliver total revenue of THB2,508m in FY13 and THB3,261m in FY14, up 19% and 30% y-o-y respectively.

Interim dividend. Sricha announced that it will pay an interim dividend

of THB1.15/share for 1HFY13, or THB351m in total. This represents a 3.1% dividend yield at the current price. The interim dividend shall be payable to shareholders on 12 Sept 2013.

Maintain BUY. We rate the stock a BUY, with a TP of THB50.00. Our

TP is based on a target P/E of 14x, which is pegged to 1SD above its five-year P/E mean. Note that Sricha is currently trading at a 11x FY13 P/E, which is a 40% discount to the industry average of 18x.











Sriracha Construction (SRICHA TB)

15 August 2013


Figure 1: 2Q13 results Consolidated 2Q13 2Q12 yoy 1Q13 qoq 1H13 yoy

year to 31 Dec (THBm) (THBm) %chg (THBm) % chg (THBm) %chg

Sale 569.3 517.7 10.0 477.5 19.2 1046.8 (5.6)

Gross Profit 219.6 345.2 (36.4) 200.9 9.3 420.5 (44.5)

EBITDA 194.4 321.1 (39.4) 177.9 9.3 372.3 (47.5)

Pre-tax Profit 184.0 312.5 (41.1) 168.0 9.5 352.1 (49.1)

Tax (22.5) (36.3) (38.1) (24.3) (7.5) (46.8) (26.1)

Net Profit 156.9 275.1 (43.0) 135.3 15.9 292.3 (53.4)

Net Profit (Ex EI) 156.9 275.1 (43.0) 135.3 15.9 292.3 (53.4)

EPS(Bt) 0.52 1.20 (56.7) 0.45 15.6 0.97 (64.7)

Gross margin(%) 38.6 66.7 (42.2) 42.1 (8.3) 40.2 (41.2)

EBITDA margin(%) 34.2 62.0 (44.9) 37.3 (8.3) 35.6 (44.4)

Net margin(%) 27.6 53.1 (48.1) 28.3 (2.8) 27.9 (50.7) Source: Company data, RHB estimates


15 August 2013


Financial Exhibits


Total turnover 2,383 2,832 2,098 2,508 3,261

Cost of sales (969) (1,292) (944) (1,079) (1,402)

Gross profit 1,415 1,541 1,154 1,430 1,859

Selling expenses (111) (212) (237) (176) (261)

Operating profit 1,304 1,328 916 1,254 1,598

Operating EBITDA 1,340 1,370 952 1,295 1,644

Depreciation of fixed assets (36) (42) (35) (41) (46)

Amortisation of intangible assets - - (1) (1) (1)

Operating EBIT 1,304 1,328 916 1,254 1,598


Interest expense - (0) (0) (0) (0)

Other non-recurring income - - 227 - -

Pre-tax profit 1,336 1,385 1,193 1,312 1,663

Taxation (142) (267) (156) (197) (249)


Profit after tax & minorities 1,190 1,108 1,023 1,104 1,399

Reported net profit 1,190 1,108 1,023 1,104 1,399

Recurring net profit 1,190 1,108 796 1,104 1,399



Operating profit 1,304 1,328 916 1,254 1,598

Depreciation & amortisation 36 42 36 41 46

Change in working capital 20 (585) (540) 207 157

Other operating cash flow (146) 89 255 62 76

Operating cash flow 1,214 875 668 1,565 1,878

Interest paid - (0) - (0) (0)

Tax paid (310) (127) (283) (197) (249)

Cash flow from operations 904 748 386 1,368 1,628

Capex (273) (53) (150) (150) (150)

Other investing cash flow (98) 100 111 (5) (5)

Cash flow from investing activities (371) 47 (39) (155) (155)

Dividends paid (1,220) (1,250) (1,075) (773) (980)

Proceeds from issue of shares 175 - 1,174 19 -

Increase in debt - (0) (0) (1) 0

Other financing cash flow - (10) (42) (10) (13)

Cash flow from financing activities (1,045) (1,261) 57 (765) (992)

Cash at beginning of period 1,685 1,172 706 1,337 1,786

Total cash generated (512) (466) 404 449 481

Implied cash at end of period 1,172 706 1,110 1,786 2,267



15 August 2013


Financial Exhibits


Total cash and equivalents 1,467 1,037 1,577 2,030 2,516

Inventories 15 12 17 22 28

Accounts receivable 179 188 237 301 391


Total current assets 1,908 1,640 1,878 2,403 3,001


Tangible fixed assets 417 424 539 648 753

Intangible assets - - 17 17 16

Total other assets 98 63 60 61 61

Total non-current assets 686 523 620 729 833

Total assets 2,594 2,163 2,498 3,132 3,834

Short-term debt 0 0 1 0 1

Accounts payable 45 47 41 54 70

Other current liabilities 1,306 971 211 477 730

Total current liabilities 1,352 1,018 253 532 801

Total long-term debt 0 0 1 1 1

Other liabilities - 46 31 38 49

Total non-current liabilities 0 46 33 38 50

Total liabilities 1,352 1,064 286 570 851

Share capital 225 225 303 304 304

Retained earnings reserve 990 848 796 1,128 1,547

Other reserves - - 1,084 1,100 1,100

Shareholders' equity 1,215 1,073 2,183 2,532 2,952

Minority interests 26 26 29 30 31

Other equity - - 0 (0) -

Total equity 1,242 1,099 2,212 2,562 2,983




Revenue growth (%) 20.7 18.8 (25.9) 19.6 30.0


Net profit growth (%) 67.1 (6.9) (7.6) 7.9 26.8

EPS growth (%) (39.3) (43.1) (21.3) (6.2) 26.6

Bv per share growth (%) (74.8) (11.7) 51.0 15.6 16.6





Net debt to equity (%) (118.1) (94.3) (71.2) (79.2) (84.3)

DPS 0.00 0.00 0.00 2.54 3.22




15 August 2013


SWOT Analysis

Top piping fabricator in Thailand

Boasts of efficient operation management and has the highest gross profit margin in the industry

Competition from international companies

Dilutive effect from Sricha’s warrant exercise

To expand into the modular fabrication business

Volatility in revenue is highly related to the world’s business cycle

A loss of capable employees

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Company Profile Sriracha Construction PCL is a full-service construction company. The company is engaged in every aspect of construction, particularly in piping fabrication, erection and mechanical equipment installation including heavy lift, structural steel fabrication and erection.


15 August 2013



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2013-08-01 Buy 50.0 35.8


7

RHB Guide to Investment Ratings Buy: Share price may exceed 10% over the next 12 months Trading Buy: Share price may exceed 15% over the next 3 months, however longer-term outlook remains uncertain Neutral: Share price may fall within the range of +/- 10% over the next 12 months Take Profit: Target price has been attained. Look to accumulate at lower levels Sell: Share price may fall by more than 10% over the next 12 months Not Rated: Stock is not within regular research coverage Disclosure & Disclaimer All research is based on material compiled from data considered to be reliable at the time of writing, but RHB does not make any representation or warranty, express or implied, as to its accuracy, completeness or correctness. No part of this report is to be construed as an offer or solicitation of an offer to transact any securities or financial instruments whether referred to herein or otherwise. This report is general in nature and has been prepared for information purposes only. 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8

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