Please see disclaimer on last page 1 Thailand’s EEC Plays ► EEC to be prime driver for Thailand’s economic growth in the next ten years under ‘Thailand 4.0’ economic development model. ► Government plans to invest at least Bt1.5tn in EEC during 2017-2021 in three eastern provinces, Chonburi, Rayong and Chachoengsao, with combined area of 13,285 square kilometers. ► A new city for the special economic zone is to be established for ten target industries with linking transportation networks. ► EEC offers the most-enticing-ever investment incentives. ► Eastern Special Economic Zone Act, which supersedes more than 100 laws to facilitate FDI, to be enacted in September and implemented in October 2017. ► Notable beneficiaries: AMATA, WIIK, ETE and AOT. The Thai junta government aims to create the Eastern Economic Corridor (EEC) under its ‘Thailand 4.0’ economic development model as the prime driver for the country’s economic growth, at least over the next ten years, and as a world class industrial zone. In the first five years (2017-2021), the government plans to invest at least Bt1.5tn in industrial infrastructure under a public-private-participation scheme, which consists of 15 crucial projects, linking with transportation networks in three eastern provinces, Chonburi, Rayong and Chachoengsao, with a combined area of 13,285 square kilometers. These three provinces will be developed into a new city for a special economic zone for ten target industries. The EEC is actually the enhancement of the highly successful Eastern Seaboard Development Program (ESP) which was launched in 1982 under Gen Prem Tinsulanon’s administration. The ESP had established Thailand as one of the top regional powerhouses of manufacturing and trade for more than 30 years and brought about average economic growth of 7.2% per year during the first twenty years (1982-2002 excluding 1997 and 1998 recession years of the Asian financial crisis, but if we include 1997 and 1998, the average growth rate was 6.2% per year). Thailand’s average annual growth declined to 4.8% during 1999-2008 and 3.1% during 2009-2016. To reignite the country’s growth engine, the junta has come up with the ‘Thailand 4.0’ economic model, with EEC as part of it, and expects the scheme to bring back annual economic growth of 5.0%, create at least 100,000 jobs and attract 10mn more tourist arrivals each year. 4 Core areas 15 Crucial Investment projects Btmn US$bn 1 Transportation & logistic 1 U-Tapao airport and aircraft maintenance 200,000 5.7 2 Sattahip commercial seaport 33,000 0.9 3 Laem Chabang port phase 3 55,000 1.6 4 Map Ta Phut port phase 3 10,150 0.3 5 High-speed rail - ease route 158,000 4.5 6 Double-track railway 64,300 1.8 7 Highways and moterway 35,300 1.0 2 Industry 8 Next-generation automative (EV/AV) 500,000 14.3 + Innovation hub 9 Aviation industry, Robotics, Smart electronics + Digital infrastructure 10 Advanced petrochemical and Bioeconomy 11 Medical hub 3 Tourism 12 Tourism 200,000 5.7 4 New cities/Hospitals 13 Global Business Hub/Free Economic Zone 400,000 11.4 14 New Cities 15 Public Utilities Source: Eastern Economic Corridor Office (EECO), Ministry of Industry Figure 1: EEC's combined Public - Private Investment Bt1.5tn (US$44bn) in the first 5 years Thailand Research Department ----------------------------------------------------------------- Mr. Warut Siwasariyanon (No.17923) Tel: 0-2680-5041 Mrs. Vajiralux Sanglerdsillapachai (No. 17385) Tel: 0-2680-5077 Mr. Narudon Rusme, CFA (No.29737) Tel: 0-2680-5056
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Please see disclaimer on last page 1
Thailand’s EEC Plays
► EEC to be prime driver for Thailand’s economic growth in the next ten years under ‘Thailand 4.0’ economic development model.
► Government plans to invest at least Bt1.5tn in EEC during 2017-2021 in three eastern provinces, Chonburi, Rayong and Chachoengsao, with combined area of 13,285 square kilometers.
► A new city for the special economic zone is to be established for ten target industries with linking transportation networks.
► EEC offers the most-enticing-ever investment incentives.
► Eastern Special Economic Zone Act, which supersedes more than 100 laws to facilitate FDI, to be enacted in September and implemented in October 2017.
► Notable beneficiaries: AMATA, WIIK, ETE and AOT.
The Thai junta government aims to create the Eastern Economic Corridor (EEC) under its ‘Thailand 4.0’ economic development model as the prime driver for the country’s economic growth, at least over the next ten years, and as a world class industrial zone. In the first five years (2017-2021), the government plans to invest at least Bt1.5tn in industrial infrastructure under a public-private-participation scheme, which consists of 15 crucial projects, linking with transportation networks in three eastern provinces, Chonburi, Rayong and Chachoengsao, with a combined area of 13,285 square kilometers. These three provinces will be developed into a new city for a special economic zone for ten target industries.
The EEC is actually the enhancement of the highly successful Eastern Seaboard
Development Program (ESP) which was launched in 1982 under Gen Prem Tinsulanon’s
administration. The ESP had established Thailand as one of the top regional
powerhouses of manufacturing and trade for more than 30 years and brought about
average economic growth of 7.2% per year during the first twenty years (1982-2002
excluding 1997 and 1998 recession years of the Asian financial crisis, but if we include
1997 and 1998, the average growth rate was 6.2% per year). Thailand’s average annual
growth declined to 4.8% during 1999-2008 and 3.1% during 2009-2016. To reignite the
country’s growth engine, the junta has come up with the ‘Thailand 4.0’ economic model,
with EEC as part of it, and expects the scheme to bring back annual economic growth of
5.0%, create at least 100,000 jobs and attract 10mn more tourist arrivals each year.
4 Core areas 15 Crucial Investment projects Btmn US$bn
► To start paying corporate tax from 2017 onwards. ► Expect 2Q17 net profit of approximately Bt42mn. ► Water management projects drive growth. ► Maintain BUY with a target price of Bt6.70.
To start paying corporate tax from 2017 onwards.
WIIK’s tax shield has expired and it will have to begin paying a
corporate tax rate of 15%-20% from 2017 onwards, which we have
included in our 2017 earnings forecast. Despite slightly lowering
our full-year forecast to reflect the tax burden, we believe its 2017
net profit will increase 41% YoY. We reduced our 2017 earnings
forecast to Bt188mn (fully diluted EPS of Bt0.40), from our previous
estimate of Bt198mn.
Expect 2Q17 net profit of approximately Bt42mn
We expect WIIK’s 2Q17 earnings to recover from 1Q17 as
construction of a pipeline between Surat Thani and Samui
restarted after flooding in the South. We expect its 2Q17 net profit
(also after tax) to be Bt42mn, up from Bt38mn in 2Q16. The
company’s backlog at the end of 1Q17 was Bt600mn and there
was additional backlog of Bt200mn during 2Q17 from Provincial
Waterworks Authority (PWA).
Water management projects drive growth
Revenue recognition on Water Management Project #2 for
Wellgrow Industrial Estate is expected to start from June 2017
instead of May 2017, one month late. However, the company is
likely to have at least two additional water management projects
this year. The contract on Water Project #3, a water management
project for PWA, is expected to be signed after June 2017. This
year, we expect total revenue recognition of Bt80mn from these
two water management projects, Bt50mn from the first project and
Bt30mn from the second.
Benefits from EEC
The Eastern Economic Corridor (EEC) will benefit WIIK by
accelerating the creation of public utilities including piping and
water supply for industrial estates and industrial groups to manage
the water supply and sewage systems. This will offer great
potential for WIIK in the future. WIIK’s pipe plant is located in
Rayong, which would be very convenient for transportation to EEC
development areas (Chonburi, Rayong, Chachoengsao).
BUY
TP: Bt6.70 Closing price: Bt5.00
Upside/downside +34%
Sector Construction Materials
Paid-up shares (mn) *fully diluted 475
Market capitalization (Bt mn) 2,375
Free float (%) 65.28
12-mth daily avg. turnover (Bt mn) 85.61
12-mth trading range (Bt) 5.85/2.7
Major shareholders (%)
Sumalee Ongjarit 14.72
Jirayu Assanuwong 12.00
Montira Padungrat 8.00
Financial highlights
Source: SETSMART, AWS
Thailand Research Department
Mrs. Vajiralux Sanglerdsillapachai,
License, No. 17385
Tel: 02 680 5077
Year to 31 Dec 2015 2016 2017E 2018E
Revenue (Bt mn) 1,145 1,214 1,621 1,842
Normalized profit (Bt mn) 83 134 188 216
Net profit (Bt mn) 83 134 188 216
Normalized EPS (Bt) 0.22 0.36 0.40 0.46
EPS (Bt) 0.22 0.36 0.40 0.46
Norm. EPS grow th (%) N.A. 60.5% 10.8% 15.3%
EPS grow th (%) N.A. 60.5% 10.8% 15.3%
P/E (x) 22.5 14.0 12.7 11.0
P/BV (x) 2.5 2.0 1.6 1.5
EV/EBITDA (x) 15.5 11.9 9.8 9.2
DPS (Bt) 0.11 0.20 0.24 0.27
Dividend yield (%) 2.2% 4.0% 4.7% 5.5%
ROE (%) 16.0% 17.4% 15.4% 14.0%
Please see disclaimer on last page
Maintain BUY with a target price of Bt6.70
We revised down our net profit forecasts for 2017-2018 by 5% and 7%, respectively, due to taxes to be paid from
2017 onwards and the one-month delay for Water Management Project #2. However, we foresee potential growth
for WIIK’s HDPE pipe business and management business with the EEC development. Moreover, WIIK plans to
list Wiik Water. We recommend BUY for long-term investment with a target price of Bt6.70 based on the sum-of-
the-parts method; PER of 14.25x for the construction business of Bt6.00 and DCF for two water management
projects of Bt0.70. We expect 2017-2018 earnings to grow 41% YoY and 15% YoY, respectively, even with a
dilution effect from about 100mn shares converted from warrants (WIIK-W1) that will expire on 16 Jun 2018. We
calculate the diluted EPS for 2017 according to full dilution of 475mn shares. EPS in 2017-2018 is expected to
grow 11% and 15%, respectively, and the stock offers an attractive high dividend yield of 4.8% in 2017 and 5.4%
in 2018.
Figure 1: Quarterly earnings
FY December 31 (Bt mn) 1Q16 4Q16 1Q17 %YoY %QoQ
-
Total revenue 291 265 300 3.1% 13.3%
Cost of goods sold (231) (211) (232)
Gross profit 60 53 68 14.2% 28.0%
SG&A expense (31) (35) (34)
Operating profit 28 18 34 20.8% 93.4%
Share of gain (loss) of associates - - -
Other income 7 3 6
EBIT 35 21 40 14.6% 91.0%
Financial costs (4) (5) (5)
Pretax profit 31 16 36 15.3% 118.2%
Income tax expenses (0) 3 (6)
Profit before MI 31 19 30 -2.6% 56.9%
Minority interests - - -
Normalized profit 31 19 30 -2.6% 56.9%
Extra-ordinary items - - -
Net Profit 31 19 30 -2.6% 56.9%
41 30 40
Normalized EPS (Bt) 0.08 0.03 0.08 -2.6% 162.8%
Net EPS (Bt) 0.08 0.03 0.08 -2.6% 163.0%
# share(mn) 375 375 375
Financial ratio (%)
Gross profit margin 20.5% 20.1% 22.7%
SG&A expense 10.8% 13.4% 11.3%
Normalized profit margin 10.7% 7.3% 10.1%
Net profit margin 10.7% 7.3% 10.1%
Please see disclaimer on last page
Income Statement (Btmn)
Year to 31 Dec 2015 2016 2017E 2018E 2019E
Total revenue 1,145 1,214 1,621 1,842 2,135
Cost of goods sold (959) (953) (1,247) (1,398) (1,611)
Gross profit 186 261 374 443 523
SG&A (110) (137) (162) (184) (213)
Operating Profit 76 124 212 259 310
Share of gain (loss) of joint venture 0 0 0 0 0
Other income 19 21 28 32 35
EBIT 95 145 240 291 345
Financial cost (16) (16) (19) (21) (22)
Pretax profit 79 129 221 271 323
Income tax expenses 4 5 (33) (54) (65)
Minority interests 0 0 0 0 0
Normalized profit 83 134 188 216 258
Extraordinaries items 0 0 0 0 0
Net profit 83 134 188 216 258
EBITDA 117 175 270 322 376
Normalized EPS (Bt) 0.22 0.36 0.40 0.46 0.54
Net EPS (Bt) 0.22 0.36 0.40 0.46 0.54
DPS (Bt) 0.11 0.20 0.24 0.27 0.33
Statement of Financial Position (Btmn)
Year to 31 Dec 2015 2016 2017E 2018E 2019E
Current Assets 511 699 775 2,348 2,528
Non-current Assets 411 530 764 1,088 1,093
Total assets 922 1,229 1,539 3,436 3,621
Current Liabilities 472 589 499 815 913
Non-current Liabilities 14 32 114 1,114 1,114
Total liabilities 486 621 613 1,929 2,027
Paid-up capital 300 300 375 475 475
Retained Earnings (19) 71 154 229 316
Total equity 436 608 926 1,507 1,593
Total liabilities and equity 922 1,229 1,539 3,436 3,621
BVPS (Bt) 1.45 2.03 2.47 3.17 3.35
Cash Flow Statement (Btmn)
Year to 31 Dec 2015 2016 2017E 2018E 2019E
Pretax Profit (5) 79 129 240 291
Depreciation & Amortization 28 23 30 30 31
Operating Cash Flow (72) (230) 104 32 146
CAPEX (9) (29) (101) (100) (100)
Investing Cash Flow 14 (27) (255) 133 182
Dividend Payment 0 0 (41) (75) (112)
Financing Cash Flow 3,198 119 209 1,431 (312)
Exchange rate gains(losses) on cash (54) 75 0 0 0
Inc. (Dec.) in cash & equivalents (722) (115) (1,572) 821 1,257
► New expansion under EEC to enhance AOT’s business.
► High potential to increase revenues and businesses.
► Don Muang Phase 3 expansion to boost passenger volumes.
► Recommend BUY with the new target price of Bt49.00 (from
Bt46.00).
New expansion under EEC plan to enhance AOT’s business
AOT has experience and excellent expertise in airport operation
management, airport development planning and airport improvement
to meet required international standards and to be able to respond to
the various needs of clients. We expect AOT to benefit indirectly from
EEC, as Thailand aims to promote the tourism and aviation industries
through revamping U-Tapao Airport to be linked with Suvarnabhumi
Airport and Don Muang Airport. Presently, AOT has six international
airports under its management, Don Muang, Phuket, Chiang Mai, Hat
Yai, Chiang Rai and Suvarnabhumi, all of which accommodate
domestic and international flghts.
High potential to increase revenues and businesses
For AOT’s new 10-year master plan, starting from fiscal year 2017,
the company plans to increase the proportion of commercial rental
area at its airports, which is a stable revenue source due to long-
term agreements and a guaranteed minimum rental income. AOT
was able to accommodate 76mn passengers for the first seven
months of FY17 (Oct 16-Apr 17), +7.36% YoY, while in FY16 it
accommodated 120mn passengers. AOT develops the
infrastructure and airports to support demand and stay competitive
in the Asian Economic Community. In this fiscal year, AOT will see
positive factors from the opening of Terminal 2 at Don Mueang
International Airport on 8 Mar 2016 and the International terminal of
Phuket International Airport on 16 Sep 2016. The projects would
accommodate an increase in passenger volumes and commercial
rental areas at these airports.
Don Muang Phase 3 expansion to boost passenger volumes AOT is expected to invest approximately Bt32bn on the Don Muang Phase 3 expansion to serve 40mn passenger p.a. up from 30-35mn passenger p.a. The expansion plan will be proposed to AOT’s Board of Directors in November 2017. Don Muang accommodated 21.7mn passengers in the first seven months of FY17 during Oct 16-Apr 17.
The disclosure of the survey result of the Thai Institute of Directors
Association (“IOD”) regarding corporate governance is made pursuant
to the policy of the Office of the Securities and Exchange Commission.
The survey of the IOD is based on the information of a company listed
on the Stock Exchange of Thailand and the Market for Alternative
Investment disclosed to the public and able to be accessed by a
general public investor. The result, therefore, is from the perspective of
a third party. It is not an evaluation of operation and is not based on
inside information.
The survey result is as of the date appearing in the Corporate
Governance Report of Thai Listed Companies. As a result, the survey
result may be changed after that date, Asia wealth Securities Company
Limited does not conform nor certify the accuracy of such survey result.
The disclosure of the Anti-Corruption Progress Indicators of a listed company on the Stock Exchange of Thailand, which is assessed by Thaipat
Institute, is made in order to comply with the policy and sustainable development plan for the listed companies of the Office of the Securities and
Exchange Commission. Thaipat Institute made this assessment based on the information received from the listed company, as stipulated in the
form for the assessment of Anti-corruption which refers to the Annual Registration Statement (Form 56-1) , Annual Report (Form 56-2) , or other
relevant documents or reports of such listed company. The assessment result is therefore made from the perspective of Thaipat Institute that is a
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of the date appearing in the assessment result, it may be changed after that date or when there is any change to the relevant information.
Nevertheless, AWS does not confirm, verify, or certify the accuracy and completeness of the assessment result.
Anti-Corruption Progress Indicator 2016
2S APCO BROOK CSS GFPT JMART LVT NCL PLANB SAUCE SR TICON TVD WIIKA APCS BRR DELTA GIFT JMT M NDR PLAT SC SRICHA TIP TVO WINABC APURE BSBM DNA GLOBAL JTS MAKRO NINE PRANDA SCCC STA TKT TVT XOABICO AQUA BTNC EA GPSC JUBILE MALEE NMG PREB SCN STANLY TLUXE TWPC ZMICOACAP AS CEN ECF GREEN JUTHA MBAX NNCL PRG SEAOIL SUPER TMC UAEC ASIA CGH EE GUNKUL K MC NPP PRINC SE-ED SUSCO TMI UBISAF ASIAN CHARAN EFORL HMPRO KASET MCOT NTV PSTC SENA SYMC TMILL UKEMAGE ASIMAR CHO EPCO HOTPOT KBS MEGA NUSA PYLON SGP SYNEX TMT UNIQAH ASK CHOTI ESTAR ICHI KC MFEC OCC QH SITHAI SYNTEC TPA UOBKHAI BCH CHOW EVER IEC KCAR MIDA OGC RML SKR TAE TPP UREKAAIE BEAUTY CI FC IFS KSL MILL PACE ROBINS SMIT TAKUNI TRT UWCAIRA BFIT CM FER ILINK KTECH MJD PAF ROCK SMK TASCO TRU VGIALUCON BH COL FNS INET KYE MK PCA ROH SORKON TBSP TRUE VIBHAAMARIN BIGC CPALL FPI INOX L&E ML PCSGH ROJNA SPACK TEAM TSE VNGAMATA BJCHI CPF FSMART INSURE LALIN MPG PDG RP SPALI TFG TSI VNTANAN BKD CPL FVC IRC LPN MTLS PDI RWI SPCG TFI TSTE WAVEAOT BLAND CSC GC J LRH NBC PIMO SAMCO SPPT THAI TTW WHAAP BROCK CSR GEL JAS LTX NCH PK SANKO SPRC TIC TU WICE
AAV AU CBG CTW GJS KAMART M-CHAI PAP RCL SGF SUC TK TTA VIHACC AUCT CCET CWT GL KCM MCS PATO RICH SHANG SUTHA TKN TTI VPOADAM BA CCN DAII GLAND KDH MDX PERM RICHY SIAM SVH TKS TTL VTEAEONTS BAT-3K CCP DCON GOLD KIAT METCO PF RJH SIM SVOA TM TTTM WGAFC BCPG CGD DCORP GRAMMY KKC MODERN PICO RPC SIMAT SWC TMW TUCC WINNERAHC BDMS CHEWA DRACO GRAND KOOL MPIC PJW RS SIRI T TNDT TWP WORKAIT BEC CHG DSGT GSTEL KTIS NC PL S SLP TACC TNH TWZ WORLDAJ BEM CHUO DTCI GTB KWC NEP PLE S11 SMART TAPAC TNP TYCN WPAJD BGT CIG EARTH GYT KWG NETBAY PMTA SAFARI SMM TC TNPC UAC WRAKR BIG CITY EASON HARN LDC NEW POLAR SALEE SMT TCB TNR UEC YCIALLA BIZ CK EIC HFT LEE NEWS POMPUI SAM SOLAR TCC TOPP UMI YNPALT BJC CKP EKH HPT LH NFC POST SAMART SPA TCCC TPAC UMS YUASAAMA BLISS CMO EMC HTECH LIT NOBLE PPM SAMTEL SPG TCJ TPBI UPAMATAV BM CMR EPG HYDRO LOXLEY NOK PRAKIT SAPPE SPORT TCOAT TPCH UPAAMC BOL CNT ESSO IHL LPH NPK PRECHA SAWAD SPVI TFD TPIPL UPFAPX BPP COLOR F&D IRCP LST NWR PRIN SAWANG SQ TGPRO TPOLY UPOICAQ BR COM7 FANCY IT MACO NYT PRO SCI SSC TH TR UTARIP BRC COMAN FMT ITD MAJOR OHTL PSH SCP SST THANA TRC UTPARROW BSM CPH FN ITEL MANRIN OISHI PTL SEAFCO STAR THE TRITN UVASEFA BTC CPR FOCUS JCT MATCH ORI QTC SELIC STEC THIP TRUBB UVANASN BTW CRANE FORTH JSP MATI OTO RAM SF STHAI THL TSF VAROATP30 BUI CSP GENCO JWD MAX PAE RCI SFP STPI TIW TSR VISource : Thai Institute of Directors
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under Thai Institute of Directors (as of October 28, 2016) are categorised into:
• Companies that have declared their intention to join CAC, and
• Companies certified by CAC.
Companies that have declared their intention to join CAC
Companies certified by CAC
N/A
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