Thai Corporate Day

Investment thesis

Earlier this week, we hosted BLS Thai Corporate Day events for local fund managers. Executives from 11 SET-listed firms and 56 fund managers participated. Several executives offered bullish guidance for FY15 and indicated healthy growth prospects for the next couple of years, so long as the political environment remains reasonably stable and the macro-economic recovery builds steam. 

But even if the domestic macro-economic recovery were to fall short of expectations, some firms would still deliver healthy growth, driven by extended reach/capacity expansion and/or increased market share. The executives of SAMART, WORK, CBG and IFEC were the most upbeat among the companies showcased at the events. Below are synopses of the investment themes of the 11 stocks:

CBG (BUY, TP Bt43): Robust earnings growth, led by both domestic sales and exports (especially to Cambodia and Myanmar). But sales of the new Start Plus electrolyte sports drink will take time to build. 

CK (BUY, TP Bt32.8): CK has the clearest new project visibility of any contractor under our coverage. 

GRAMMY (BUY, TP Bt22.4): A bottom-line recovery is in progress. Long-term growth will be driven by digital TV. The home shopping operation should turn around this year. 

IFEC (BUY, TP Bt17): Capacity expansion of 2,100% is targeted for this year, totaling 252MW of new wind turbine and photo-voltaic solar plant, of which 38MW is secured. 

MONO (BUY, TP Bt6.5): Scope for upside from higher digital ad rates and a shorter timeframe to profitability for the digital TV business. 

PCSGH (BUY, TP Bt11.3): The FY15 operation will recover gradually. PCSGH is diversifying into parts for big bikes, big trucks and eco-cars. 

STEC (HOLD, TP Bt26): The firm has a small chance of winning the MRT Orange Line. Earnings will be subdued till early FY16. 

SAMART (BUY, TP Bt33.9): Value accretion from power plant projects. SAMTEL’s project backlog should increase this year. 

TICON (BUY, TP Bt23.1): The warehousing business will expand in the years ahead, driven by growth in intra-AEC trade and domestic retailing. But factory rental growth will remain weak during 1H15.

TMB (BUY, TP Bt3.5): Ongoing business and profit growth. TMB has an ambitious FY15 ROE target range of 14-15%. 

WORK (BUY, TP Bt60.3): The firm is now more bullish over the growth prospects for digital TV. The bottom-line will jump in FY15. 

Key highlights

- Carabao will introduce an additional 60 cash vans in FY15 in order to help sub-agents resolve stock depletion problems. This will aid the firm in building market share.

- CLMV sales are still expanding, especially in Cambodia. CBG targets 70% sales growth in Cambodia this year (from Bt890m to Bt1,500m).

- Management continues to guide for 50% of CBG’s sales being exports by FY18.

Catalysts

- Additional cash vans will help build domestic revenue, as restocking frequency will increase.

- Growth in higher-margin CLMV sales.

Recommendation 

- Our BUY rating stands. We are fully confident that demand for energy drinks will continue to expand swiftly in CLMV markets, sustaining CBG’s earnings growth momentum for years into the future