Earnings Preview
16 January 2018
Commerce
Big Camera Corporation
BIG Current
Previous
Close
2018 TP
Exp Return
THAI CAC
CG 2017
BUY
BUY
3.04
4.30
+ 41.5%
N/A
3
Consolidated earnings BT (mn)
2015
2016
2017E
2018E
Normalized profit
460
846
777
833
Net profit
460
846
777
833
0.13
0.24
0.22
0.24
EPS (Bt)-Norm EPS (Bt)
0.13
0.24
0.22
0.24
235.32
84.19
-8.22
7.22
Dividend (Bt)
0.06
0.14
0.13
0.17
BV/share (Bt)
0.26
0.36
0.45
0.52
EV/EBITDA (x)
1.5
0.9
0.9
0.6
PER (x) - Norm
23.5
12.8
13.9
13.0
PER (x)
23.5
12.8
13.9
13.0
PBV(x)
11.9
8.5
6.8
5.9
2.0
4.6
4.3
5.4
67.4
77.4
54.2
48.6
3,529
3,529
3,529
3,529
0.10
0.10
0.10
0.10
% EPS growth
Dividend yield (%) YE No. of shares (mn) No. of shares- full dilution Par (Bt)
Source: Company data, FSS estimates
Close (15/01/2018)
3.04
SET Index
1,822.66
Foreign limit/actual (%)
40.00/1.14
Paid-up shares (million)
3,528.88
Free float (%)
30.63
Market cap (Bt m)
10,727.79
Avg daily T/O (Bt m) (2018 YTD )
26.92 3.18, 3.04, 3.10
Source: Setsmarts
SET Index
Price (Bt)
2,050.00
10.00
1,900.00
9.00
1,750.00
8.00
7.00
1,600.00
6.00
1,450.00
5.00
1,300.00
4.00
1,150.00
3.00
1,000.00 SET
850.00
BIG
700.00
2.00 1.00
Mar-15 Mar-15 Apr-15 May-15 Jun-15 Jun-15 Jul-15 Aug-15 Sep-15 Sep-15 Oct-15 Nov-15 Nov-15 Dec-15 Jan-16 Feb-16 Feb-16 Mar-16 Apr-16 May-16 Jun-16 Jun-16 Jul-16 Aug-16 Aug-16 Sep-16 Oct-16 Nov-16 Nov-16 Dec-16 Jan-17 Jan-17 Feb-17 Mar-17 Apr-17 May-17 May-17 Jun-17 Jul-17 Jul-17 Aug-17 Sep-17 Oct-17 Oct-17 Nov-17 Dec-17 Jan-18
0.00
Source: SET
Analyst: Natapon Khamthakrue Register No.: 026637 Tel.: +662 646 9820 email:
[email protected] www.fnsyrus.com
BIG has dropped by 52% from its one-year peak due to its 9M17 earnings performance which decreased in line with purchasing power. However, the Mirrorless market continues to grow strong at a rate of 10-15% annually. This implies the sharp improvement in smartphones simply cannot replace the camera market. By contrast, we have seen profit recover since 4Q17 thanks to (1) the recovery in purchasing power, (2) the change in its strategy to do more exclusive marketing with camera makers, (3) BIG Mobile which started to be profitable, and (4) a rise in the popularity of digital prints. In this regard, we view that the sharp fall in the company’s share price which is much larger than its 2017 net profit which is predicted to fall 8% Y-Y to Bt777mn is overdone. For 2018, our forecast now calls for net profit to turn to increase 7% Y-Y to Bt833mn. Given such cut, we also lower our TP to Bt4.3 (from Bt5) after we have decreased our PE multiplier to 18x. However, we retain our BUY rating on BIG. Expect 4Q17 profit to jump 90% Q-Q but fall 17% Y-Y
Share data
Hi, lo, avg (Bt) (2018 YTD)
Substitute products are less worrisome than decline in purchasing power
Our forecast calls for BIG’s 4Q17 net profit to amount to Bt251mn. It implies a jump of 90% Q-Q because 4Q is the tourism industry’s high season. Moreover, it’s supported by the government’s shopping stimulus. In the October – December quarter, we expect revenues to surge 30% Q-Q to Bt1.7bn. Gross margin is anticipated to widen to 31% (from 29% in 3Q17) thanks to a rise in the company’s bargaining power, an increase in rebate in line with the rise in sales, and BIG Mobile which saw positive development and started to be profitable. However, our profit forecast represents a fall of 17% Y-Y due to a slowdown in both purchasing power and new product launches. As a result, BIG needed to do more aggressive promotion to stimulate the market, which resulted in sharply narrower gross margin than the 34.4% in 4Q16. Expect recovery to continue in 2018 Taking from a report from the CIPA (Camera & Imaging Products Association) in November 2017, it’s found that the Mirrorless market in Asia has turned to grow since September 2017 after it slowed in July – August last year because there were not many new product launches. In 11M17, the market continued to grow 54.4% Y-Y to US$790mn. More interestingly, U.S. and European markets recorded a jump of 83.8% Y-Y and 50.8% Y-Y, respectively. This implies that the Mirrorless market continued to grow strong, even though smartphones continued to upgrade its camera. Meanwhile, the Mirrorless market in Asia also surged by 15.8% Y-Y to US$445mn during the period. Hence, we are not worried about substitute products. What concerns us most is the slowdown in domestic purchasing power, which has significant impacts in 2017. However, if the economy and purchasing power have recovered, we can assume that BIG has also passed its bottom in 2017.
Page 1 of 6
BIG Trim 2018E net profit after margins estimate decreased We have trimmed our 2018E gross margin to 30.7% (from 31.5%) to reflect the change in product mix after BIG has changed both brands and product positioning. To elaborate, high-end cameras normally give narrower margin and lower rebate than mass-market ones. Although we have lowered our 2018E net profit to Bt833mn (from Bt892mn), our new forecast still implies a gain of 7% Y-Y. Such gain should be supported by the followings. First, we expect the Mirrorless market to turn to grow in line with purchasing power. Second, BIG has adopted more exclusive strategy with camera makers. Third, BIG Mobile will realize profit for full year. Fourth, its digital print business will expand to online market. At the current share price, BIG implies 2018 PE of just 13x, lower than the retail IT sector’s forward PE of 20x. Assuming 2019-2021 average growth rate, it is equal to prospective PEG of just 1.1x, lower than the retail IT sector’s prospective PEG of 1.7x. Following our profit estimate cut, we also revise down our 2018 TP to Bt4.3 after we have decreased our PE multiplier to 18x (from 20x), in line with our lower growth forecast. However, we retain our BUY rating on BIG because the counter implies an upside of 40% and we expect it to offer an annual dividend yield of 5%. Risks – A slowdown in domestic purchasing power
4Q17 earnings forecast (Bt m)
4Q17E
3Q17
%Q-Q
4Q16
%Y -Y
Sales
1,718
1,322
30%
1,789
-4%
Cost of sales
1,186
938
26%
1174
1%
Gross profit
533
384
39%
615
-13%
SG&A costs
223
220
1%
243
-8%
Interest charge
0
0
na
0
na
Norm profit
251
132
90%
301
-17%
Net profit
251
132
90%
301
-17%
EPS
0.07
0.04
90%
0.09
-17%
Gross margin (%)
31.0%
29.0%
2.0%
34.4%
-3.4%
SG&A of Sales (%)
13.0%
16.7%
-3.7%
13.6%
-0.6%
Net profit margin (%)
14.6%
10.0%
4.6%
16.8%
-2.2%
Source: FSS Research
Asia’s monthly orders for Mirrorless camera
Source: CIPA
9M17 orders for Mirrorless camera in each region
Source: CIPA
Page 2 of 6
BIG Price movement vs. latest 12-month EPS
Source: setsmart, FSS Research
Page 3 of 6
BIG Income Statement (Consolidated)
Cash Flow Statement (Consolidated)
(Bt mn)
2014
2015
2016
2017E
2018E
Revenue
3,45
4,768
5,663
5,948
6,246
Net profit
3,455
3,832
4,130
4,329
Depreciation &
me Statement Costs of ales (Consolidated) 2,557 Gross profit
895
1,313
1,831
1,819
1,917
SG&A costs
693
733
808
848
875
Operating profit
201
580
1,024
971
1,041
Other income
(Bt mn)
2014
2015
2016
2017E
2018E
137
460
846
777
833
62
60
71
75
79
amortization Change in working capital
-40
18
-144
-298
-42
Other adjustments
-30
54
58
-101
1
Cash flow from operation
130
592
832
453
871
0
0
0
0
0
Capital expenditure
-44
-59
-97
58
-27
EBIT
201
580
1,024
971
1,041
Others
-23
-60
-44
-64
-22
EBITDA
263
640
1,095
1,046
1,120
Cash flow from investing
-67
-120
-140
-6
-48
17
16
4
0
0
Free cash flow
63
472
691
448
822 4
Interest charge Tax on income
47
105
173
194
208
Net borrowings
141
-284
-151
70
Earnings after tax
137
460
846
777
833
Equity capital raised
236
0
12
0
0
Minority interests
0
0
0
0
0
0
-3
-490
-466
-583
137
460
846
777
833
-446
0
0
0
0
-69
-287
-630
-396
-579
-6
185
62
52
244
2015
2016
2017E
2018E
Normalized earnings Extraordinary items Net profit
0
0
0
0
0
137
460
846
777
833
Balance Sheet (Consolidated) (Bt mn)
Dividends paid Others Cash flow from financing Net change in cash
Important Ratios (Consolidated) 2014
2014
2015
2016
2017E
2018E
Cash& equivalents
77
262
324
375
619
Growth (%)
Account receivable
206
242
312
350
367
Revenues
8.8
38.1
18.8
5.0
5.0
1,013
1,051
1,251
1,487
1,561
Net profit
-15.8
235.3
84.2
-8.2
7.2
Other current asset
18
4
5
30
31
Norm profit
-15.8
235.3
84.2
-8.2
7.2
Total current asset
1,314
1,559
1,891
2,242
2,579
Inventory
Profitability Ratios (%)
0
0
0
0
0
Gross profit margin
25.9
27.5
32.3
30.6
30.7
PPE
162
161
186
54
2
EBIT margin
5.8
12.2
18.1
16.3
16.7
Other asset
266
326
369
433
455
Normalized profit margin
4.0
9.6
14.9
13.1
13.3
Total assets
1,742
2,046
2,447
2,729
3,035
Net profit margin
4.0
9.6
14.9
13.1
13.3
433
0
0
59
62
Normalized ROA
9.4
25.1
37.9
30.0
28.9
1,041
Normalized ROE
28.0
67.4
77.4
54.2
48.6
Investment
Short term loan loans Accounts payable
798
890
1,014
991
6
36
0
7
7
Risk (x)
Other current liabilities
36
76
135
59
62
D/E (x)
2.84
1.25
0.91
0.72
0.65
Total current liabilities
1,273
1,002
1,150
1,117
1,173
Net D/E (x)
0.54
cash
cash
cash
cash
4
118
1
5
5
11
16
18
18
19
Reported EPS
0.04
0.13
0.24
0.22
0.24
Norm EPS
0.04
0.13
0.24
0.22
0.24
FCF
2.26
7.00
8.93
8.26
16.92
Current maturities
Long-term debt Other LT liabilities Total LT liabilities
Per share data (Bt)
15
134
19
23
24
1,288
1,137
1,169
1,140
1,197
Registered capital
882
353
353
353
353
Book value
0.13
0.26
0.36
0.45
0.52
Paid up capital
882
353
353
353
353
Dividend
0.00
0.06
0.14
0.13
0.17
Share premium
-431
0
0
0
0
Par
0.10
0.10
0.10
0.10
0.10
P/E
78.80
23.50
12.76
13.90
12.96
Norm P/E
78.80
23.50
12.76
13.90
12.96
P/BV
23.82
11.87
8.45
6.80
5.87
EV/EBTDA
4.68
1.50
0.86
0.88
0.61
Dividend yield (%)
0.00
1.96
4.58
4.32
5.40
Total liabilities
Legal reserve Retained earnings
12
30
35
35
35
100
538
890
1,201
1,450
0
0
0
0
0
453
909
1,278
1,588
1,838
Minority Interest Shareholders' equity
Source: Company data, FSS research
Page 4 of 6
Valuations (x)
Finansia Syrus Securities Public Company Limited Head Office
Thaisummit Tower
Alma Link
Amarin Tower
Central Pinklao 1
999/9 The offices at Central World 18th, 25th Fl., Rama 1 Rd., Patumwan, Bangkok
1768 Thaisammit Tower Building, 5th, 31th Fl., New Petchburi Road, Bangkapi, Huaykwang, Bangkok
9th, 14th, 15th Fl., Alma Link Building 25 Soi Chidlom, Ploenchit, Lumpini, Patumwan, Bangkok
496-502 Amarin Tower 20th Floor, Pleonchit, Lumpini, Pathumwan, Bangkok
7/129-221 Central Pinklao Office Building, Room 2160/1, 16th Fl., Baromratchonnanee Road, Arunamarin, Bangkoknoi, Bangkok
Bangkapi
Bangna
Sindhorn 1
Kian Gwan (Sindhorn 2)
Sindhorn 3
3105 N Mark Building, 3rd Floor, Room A3R02, Ladprao Road, Klongjan, Bangkapi, Bangkok
589 Tower 1 Office, 19th Floor, Room 589/105 Moo 12, Bangna-Trad Road, Bangna, Bangkok
130-132 Sindhorn Building 1, 2rd Floor, Wireless Road, Lumpini, Pathumwan, Bangkok
140/1 Kian Gwan House II 18th Floor, Wireless Road, Lumpini, Pathumwan, Bangkok
130-132 Sindhorn Building 3, 19th Floor, Wireless Road, Lumpini, Pathumwan, Bangkok
Ladprao
Prachachuen
Rang sit
Abdulrahim
Rattanatibet
555 Rasa Tower 2, 11st Floor, Unit 1106, Phaholyothin Road, Chatuchak, Bangkok
105/1 B Building, 4th Floor, Thessabansongkhrao Road, Ladyao, Jutujak, Bangkok
1/832 Moo 17 Kukod, Lumlookka Pratumtanee
990, Abdulrahim Place, 12nd Fl., Room 1210, Rama IV Road, Silom, Bangrak, Bangkok
576 Rattanatibet Road, Tumbon Banggrasor, Aumphoe Muang, Nonthaburi
Sriracha
Khonkaen 1
Khonkaen 2
Khonkaen 3
Udonthani
135/99 (G fl.) Sukumvit Road, Tumbon Sriracha Aumphoe Sriracha, Chonburi
311/16 2nd Floor, Klangmeung Road, Tumbon Nai Meung, Aumphoe Meung, Khonkaen
26/9 Moo 7, 2nd Floor Sri Chant Mai Road, Tumbon Nai Meung, Aumphoe Meung Khonkaen, Khonkaen
311/1 Khang Meung Road, Tumbon Nai Meung, Aumphoe Meung Khonkaen, Khonkaen
197/29, 213/3 Udon Dusadee Road, Tumbon Mak Khaeng, Aumphoe Muang Udon Thani, Udon Thani
Chiangmai 1
Chiangmai 2
Chiangmai 3
Chiangrai
Measai
308 Chiang Mai Land,
310 Chiang Mai Land,
Maliplace Building 32/4 moo 2
Chang Klan R., Chang Klan
Chang Klan R., Chang Klan
1 fll., Room B1-1, B1-2
Muang Chiangmai
Muang Chiangmai
Tumbon Maehia Chiangmai
353/15 Moo 4, Tumbon Rimkok Aumphoe Muang, Cheangrai
119 Moo 10, Tumbon Maesai, Aumphoe Muang, Cheangrai
Nakornratchasima
Samutsakorn
Phuket
Hatyai 1
Hatyai 2
1242/2 Room A3, 7 fl., The Mall Ratchasima
813/30 Norrasing Road, Tumbon Maha Chai, Aumphoe Meungsamutsakorn, Samutsakorn
22/18 Luangporwatchalong Road, Tumbon Talad Yai, Amphoe Muang Phuket, Phuket
200/221, 200/223 Juldis Hadyai Plaza, 2rd Floor, Building, Niphat Uthit 3 Road, Aumphoe Hadyai, Songkhla
106 Prachathipat Road, Aumphoe Hadyai, Songkhla
Hatyai 3
Trang
Suratthani
Pattane
200/222, 200/224, 200/226 Juldis Hadyai Plaza, 2rd Floor, Building, Niphat Uthit 3 Road, Aumphoe Hadyai, Songkhla
59/28 Huaiyod Road, Tumbon Thaptieng, Aumphoe Meungtrang, Trang
173/83-84 Moo 1 Watpho-Bangyai Road., Tumbon Makamtia, Aumphoe Mueang, Suratthani
300/69-70 Moo 4, Tumbon Rusamirae, Aumphoe Meung, Pattane
Mittraphap rood Tumbon Nai Muang Aumphoe Muang Nakornratchasima
Nakornratchasima
Recommendation Definitions BUY HOLD SELL TRADING BUY OVERWEIGHT NEUTRAL UNDERWEIGHT
The The The The The The The
latest close is below our target price and the estimated upside is 10% or more. latest close is below our target price and the estimated upside is 0-10%. latest close is above our target price. latest close is above our target price but the price is expected to be driven by short-term positive factors estimated return is higher than the market average. estimated return is the same as the market average. estimated return is lower than the market average
Note: The expected return may change as market risks increase or decline. DISCLAIMER: This report has been prepared by Finansia Syrus Securities Public Company Limited (FSS). The information herein has been obtained from sources believed to be reliable and accurate; however FSS makes no representation as to the accuracy and completeness of such information. Information and opinions expressed herein are subject to change without notice. FSS has no intention to solicit investors to buy or sell any security in this report. In addition, FSS does not guarantee returns nor price of the securities described in the report nor accept any liability for any loss or damage of any kind arising out of the use of such information or opinions in this report. Investors should study this report carefully in making investment decisions. All rights are reserved. This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of FSS. Investment in securities has risks. Investors are advised to consider carefully before making investment decisions. Finansia Syrus Securities Public Company Limited may act as market maker and issuer of DWs. The company may prepare the research reports on those underlying securities. Investors should carefully read the details of the derivative warrants in the prospectus before making investment decisions.
Page 5 of 6
Thai Institute of Directors Association (IOD) – Corporate Governance Report Rating 2017
Sc ore Range
Rating
Desc ription
100-90
Excellent
80-89
Very Good
70-79
Good
60-69
Satisfactory
50-59
Pass
<50
no logo given
n/a
IOD (IOD Disclaimer) The Corporate Governance Report (CGR) of Thai listed Companies is based on a survey and assessment of information which companies listed on the Stock Exchange of Thailand and the Market for Alternative Investment (“listed companies”) disclose to the public. The CGR is a presentation of information from the perspective of outsiders on the standards of corporate governance of listed companies. It is not any assessment of the actual practices of the listed companies, and the CGR does not use any non-public information. The CGR is not therefore an endorsement of the practices of the listed companies. It is not a recommendation for investment in any securities of any listed companies or any recommendation whatsoever. Investors should exercise their own judgment to analyze and consider any information relating to the listed companies presented in this CGR report. No representation or warranty is made by the Institute of Directors or any of its personnel as to the completeness or accuracy of the CGR report or the information used.
---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) 1 CG Score 2017 from Thai Institute of Directors Association (IOD) 2 Companies participating in Thailand's Private Sector Collective Action Coalition Against Corruption programme (Thai CAC) under Thai Institute of Directors (as of July 31, 2017) are categorised into: - companies that have declared their intention to join CAC, and - companies certified by CAC.
Page 6 of 6
