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Malee Sampran (MALEE TB) Summary

Core Content

MALEE Sampran is a Thai company in the Consumer Staples sector, with a BUY rating. The current share price is THB31.50, and the target price is THB37.70, indicating a 20% upside. The company's market capitalization is THB4.4B, and the average daily trading volume (ADTV) is USD0.1M.

Key Financial Metrics

• Revenue: FY13A: THB5,087.6M, FY14A: THB4,767.4M, FY15E: THB5,403.0M, FY16E: THB5,747.8M, FY17E: THB6,113.6M
• EBITDA: FY13A: THB471.7M, FY14A: THB498.5M, FY15E: THB625.3M, FY16E: THB745.2M, FY17E: THB833.5M
• Core Net Profit: FY13A: THB271.6M, FY14A: THB302.5M, FY15E: THB390.2M, FY16E: THB482.0M, FY17E: THB548.9M
• Core EPS (THB): FY13A: 1.94, FY14A: 2.16, FY15E: 2.79, FY16E: 3.44, FY17E: 3.92
• Core EPS Growth (%): FY13A: (50.5), FY14A: 11.4, FY15E: 29.0, FY16E: 23.5, FY17E: 13.9
• Net Dividend Yield (%): FY13A: 3.3, FY14A: 3.5, FY15E: 4.5, FY16E: 5.7, FY17E: 6.6
• ROAE (%): FY13A: 29.4, FY14A: 32.8, FY15E: 35.2, FY16E: 36.6, FY17E: 35.1
• ROAA (%): FY13A: 10.5, FY14A: 11.2, FY15E: 12.3, FY16E: 13.8, FY17E: 14.7
• EV/EBITDA (x): FY13A: 10.0, FY14A: 9.9, FY15E: 8.6, FY16E: 7.1, FY17E: 6.3
• Net Debt/Equity (%): FY13A: 64.0, FY14A: 104.4, FY15E: 80.8, FY16E: 62.9, FY17E: 48.6

3Q15 Performance

• Net Profit: Expected to reach THB90M, up 36.5% YoY
• Sales Growth: 22% YoY in sales, with 15% YoY growth in domestic sales and 42% YoY in export sales
• Total Sales: Expected to reach THB1.3B, up 22% YoY
• Gross Margins: Domestic at 31.3%, Export at 39%, Blended GM at 33.5%
• EBITDA Margin: 10.8%
• Net Profit Margin: 6.7%
• Market Share: Reached nearly 30% in 3Q15 in the premium fruit juice segment
• Performance Ratios: MALEE is expected to outperform TIPCO in terms of performance ratios

Outlook and Drivers

• Positive Outlook: Strong brand recognition, growing market share in Thailand, and expansion in overseas markets
• Export Growth: Continued strong performance, especially with the resumption of coco water sales to the US and expansion to CLMV countries
• JV Impact: The joint venture with Monde Nissin Corp in the Philippines is expected to boost export volumes and provide upside to estimates
• Utilization Rate: Expected to rise from 56% in 3Q15 to 62% in 2016, which could improve profitability
• 4Q15 Expectations: High season for sales due to festivals and gift-giving, with new SKUs expected to drive growth

Valuation and Recommendation

• Fair Value: Based on the Gordon growth model, the fair value is THB37.70, with a 27% upside from the current share price
• P/E Ratio: Trading at 9x 2016E PE, close to its 12-year average
• P/BV Ratio: Trading at 3x PBV, close to its 12-year average
• Recommendation: BUY, as the company is undervalued relative to peers and has strong growth potential

Peers Comparison

• P/E (2016): MALEE at 12.2x, compared to peers at 22.7x
• P/BV (2016): MALEE at 3.2x, compared to peers at 3.5x
• ROE (2016): MALEE at 32.6%, compared to peers at 19.8%
• Yield (2016): MALEE at 5.7%, compared to peers at 1.4%
• Beta: MALEE at 0.6, TIPCO at 1.4

Company Profile

• Major Shareholders:
  • Abico Holdings Public Co. Ltd. - 25.5%
  • CHUENGRUNGRUEANGKIT KAMONCHAT - 16.3%
  • CHIRATHIVAT PICHAI - 9.4%
• Free Float: 40.0%
• Issued Shares: 140 million
• Brand/CMG Ratio: Target is 50/50, but brand exports may be less than 50% in 3Q15 due to US coco water sales

Conclusion

MALEE is well-positioned to outperform the market due to its strong brand recognition, growing market share in Thailand, and successful expansion in overseas markets. The company is expected to report strong results in 3Q15 and maintain this performance into 4Q15. Despite the current economic outlook, MALEE's performance is anticipated to be relatively strong. The company is undervalued compared to peers and offers a BUY recommendation based on its potential for growth and strong performance ratios.