Asiasoft Corporation
Earnings recovery in 2012
Buy; Bt12.10;
Price Target : Bt15.50 (Prev: Bt13.75); AS TB
Floods should dampen 4Q11 earnings; estimate FY11F earnings growth at 6%
Net profit growth should accelerate to 12% in FY12F, boosted by (i) launch of new game, (ii) continued earnings recovery at overseas units, and (iii) tax rate cut.
Given the earnings recovery and attractive valuations (5.4x FY11F EV/EBITDA, 7.8% FY12F dividend yield), reiterate BUY rating with a revised target price of Bt15.50, pegged to 15.5x FY12F PE
Expect weak earnings for 4Q11F. Revenue and earnings are normally strong in the 4Q due to school breaks in Thailand (Oct) and Singapore (Nov-Dec). And the successful launch of “AVA” and “God Emperor” in Sep should boost usage and revenue in 4Q11F. However, the negative impact of the floods and surge in SG&A expenses will cap earnings this quarter.
Overseas unit to remain profitable in FY12. Its overseas operations were its biggest concern in 2009. But following the successful launch of a new game and cost cutting measures, they had been generating profits for seven consecutive quarters, turning around from Bt40m net loss in FY09 to Bt17m net profit in FY10. We forecast they will generate c.Bt75m net profit in FY11F and more than Bt85m in 2012F to boost group earnings next year.
Reiterate BUY. Asiasoft is trading at 5.4x FY12F EV/EBITDA and offering 7.8% dividend yield. Given its attractive valuations and improving earnings outlook, we reiterate our BUY rating for the counter.
