Price (Bt) 1.05
Target (Bt) 0.85
Set Index 540.22
Red bottom line continues in 1Q09 with -Bt119mn loss
Weaker net loss of -Bt119mn for 1Q09
KCE reported a negative 1Q09 result that was even weaker than our
forecast. Sales fell by half from the same period of last year and by 22% from the previous quarter to Bt1,103mn (or US$31mn). Recession in the automotive sector has cut significantly into KCE business as 70% of PCB sales were in the auto sector. The gross margin fell from 15.1% in the same period of last year to only 9.8%. This, however, is slightly improved qoq from better cost controls and the temporary shutdown of one plant. Hence, the company reported a 1Q09 net loss of Bt119mn, the third consecutive quarterly loss.
To improve later this year, but loss expected to continue in 2Q09
Based on our recent discussion with company management, order flows have started to come back in
2Q09. A significant recovery is expected in 3Q09 and onward, as the company will benefit from more market
share after core competitors have suffered severe financial problems. However, we still expect another loss
result for 2Q09.
Remains FULLY VALUED
With this weak results announcement and the expected -Bt117mn loss coming in 2Q09, we are
maintaining our FULLY VALUED rating on KCE. The outlook remains negative until we see a clearer recovery
sign. In addition, we are reiterating our fair value of Bt0.85/share based on a 2010 PER of 6x.
Earnings summary
2006 2007 2008 2009F 2010F
Sales 7,540 8,365 7,667 6,560 7,806
EBITDA (Btmn) 756 1,074 647 734 943
Normalised Profit -90 208 -186 -117 81
Net Profit -116 257 -399 -117 81
Normalised EPS (Bt)* -0.29 0.53 -0.4 -0.25 0.17
EPS (Bt)* -0.37 0.66 -0.86 -0.25 0.17
PER (x) N/A 2 N/A N/A 6
EV/EBITDA (x) 8.1 5.9 10.8 7.7 6.3
CF/share (Bt) 3.2 2.4 2.2 1.6 1.1
BV per shr (Bt) 6.6 6.4 4.5 4.2 4.4
Price/BV (x) 0.6 0.6 0.8 0.2 0.2
DPS (Bt) - 0.08 - - -
Dividend yield (%) 0.00% 7.50% 0.00% 0.00% 0.00%
Gearing 2.4 2 2.6 2.6 2.7
ROA (%) -1.30% 2.60% -4.30% -1.30% 0.80%
ROE (%) -5.40% 11.30% -17.50% -5.80% 4.00%
Source : Company reports and KELIVE Research estimates.
By Kim Eng Securities (Thailand) Company Limited on May 19, 2009
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