PDF《Appico Hitech - AH》

MICA (P) 012/01/2012 Ref.

No.: SG2012_0258

1 of

8 Appico Hitech - AH 2QCY12 profit tops estimates Bloomberg Reuters AH TB AH.BK Phillip Securities Research Pte Ltd

17 August

2012 Report type: Company Results Company Overview AH is engaged in designing, manufacturing and installation of car assembly jigs, stamping dies, and OEM auto parts. ? AH posted much better-than-expected results in 2QCY12. Net profit for the quarter skyrocketed as much as 456% y-y and 194% q-q to Bt279.88mn. ? Thanks to burgeoning growth in 2QCY12, 1HCY12 net profit swelled 171% y-y to Bt374.98mn. ? We upgrade AH shares to '

BUY'

with a target price of Bt20.40/ share. What is the news? AH posted much better-than-expected results in 2QCY12. Net profit for the quarter jumped as much as 456% y-y and 194% q-q to Bt279.88mn, beating our forecast of Bt135.75mn by a wide margin. Sales fared better in this period on the back of a recovery in auto industry. Quarterly sales surged as much as 51% y-y and 31% q-q to Bt3,935.15mn. Soaring sales side, volume growth also drove gross margin for the quarter higher to 6.29% from 5.80% in 2QCY11. In q-q terms, gross margin however shrank from 7.67% in 1QCY12. How do we view this? Earnings came in much better than what we had expected in 2QCY12 on insurance claims of Bt90mn for flood damages and better-than-expected sales growth especially for production of domestic auto parts. Thanks to burgeoning growth in 2QCY12, AH generated a 1HCY12 net profit of Bt374.98mn, up as much as 171% y-y. We believe a further pickup in domestic auto production would continue to be a positive catalyst for earnings growth in 2HCY12. Domestic vehicle output in Thailand is estimated to be up 7.90% h-h to 1.14mn units in line with the Federation of Thai Industries (FTI)'

s forecast that full-year auto output will reach 2.20mn units. On this basis, we raise our CY12 net profit outlook for AH by 92% to Bt730.20mn. Investment Actions? Earnings grew substantially in 2QCY12. Following results announcement, AH declared a 1HCY12 dividend of Bt0.488/ share, translating into an un-annualized yield of 3.0%. The stock will trade ex-dividend (XD) on Aug 27, and the dividend is scheduled to be paid on Sep 12, 2012. In our view, higher vehicle output would continue to be a positive catalyst for earnings growth in 2HCY12. We upgrade AH shares to '

BUY'

with a target price of Bt20.40/share based on an adjusted P/E multiple of 9x. Analyst Phillip Research Team +65

65311240 +65

63367607 research@phillip.com.sg Appico Hitech - AH Thailand Equities Research

17 August

2012 2 of

8 2QCY12 profit tops estimates AH racked up 2QCY12 net profit growth of 456% y-y and 194% q-q to Bt27 9.88mn, beating our forecast of Bt135.75mn by a wide margin on insurance claims of Bt90mn for flood damages and better-than-expected sales growth, especially for production of domestic auto parts, which contributed up to 77% of its total revenue. In this period, revenue from production of domestic auto parts jumped as much as 71% y-y due to the absence of the impact from supply chain disruption caused by Japan'

s Mar

2011 triple disasters and leapt 23%q-q thanks to normalization of production by all carmakers after last year'

s severe floods in Thailand and new orders for Suzuki New Swift. Sales in this period accordingly surged up to 51% y-y and 31% q-q to Bt3,935.15mn. Soaring sales aside, volume growth and resumption of production for the full quarter at the flood-hit plant in Hi Tech Industrial Estate also drove gross margin for the quarter higher to 6.29% from 5.80% in 2QCY11. In q-q terms, gross margin shrank from 7.67% in 1QCY12 due to the impact of the daily minimum wage hike effective Apr 2012. Figure 1: Revenue breakdown by business segment in 2QCY12 92% upgrade to CY12 earnings outlook to Bt730.20mn Thanks to burgeoning growth in 2QCY12 AH achieved a 1HCY12 net profit of Bt374.98mn, up as much as 171% y-y. We believe a further pickup in domestic auto production would continue to be a positive catalyst for earnings growth in 2HCY12. Domestic vehicle output in Thailand is estimated to be up 7.90% h-h to 1.14mn units in line with the Federation of Thai Industries (FTI)'