20180313-辉立证券-CK._Karnchang_A_good_bet_for_2HFY18_positive_catalysts_13页_406kb
报告摘要
CK Karnchang Summary
Core Content
CK Karnchang (CK) is a major player in Thailand's construction services sector, with a diverse portfolio that includes investments in utilities and power businesses. The report outlines the company's strategic outlook for FY18 and FY19, focusing on upcoming infrastructure projects and its investment arm, which helps mitigate risks from construction business volatility.
Key Projects in 2HFY18
CK is anticipated to participate in several high-value infrastructure projects in the second half of FY18, including:
- Rama III Road-Dao Khanong expressway: Bt31bn, with bidding in 2QFY18.
- Two motorways under the fast-track PPP scheme:
- Bang Pa-in-Korat: Bt33bn, with Bt7bn earmarked for civil works.
- Bang Yai-Kanchanaburi: Bt27bn, with Bt6bn for civil works.
- High-speed train project linking three airports: Initial cost estimated at Bt236bn (construction only), possibly up to Bt300bn including consultancy.
- Southern Purple Line (Tao Poon-Rat Burana): Bt101bn, with auction and contract signing in 2HFY18.
- Seven double-track rail routes: Total value of Bt394bn, divided into small contracts.
- Regional airports development (Krabi and Khon Kaen): Bt6.7bn, awaiting TORs.
- Bangkok-Korat high-speed rail second phase: Bt2.7bn, auction uncertain.
- Suvarnabhumi airport expansion: Bt38bn, with TORs expected in 4QFY18.
Revenue and Profit Outlook
- Revenue: Expected to remain flat in FY18 at Bt35bn, but grow by 8% in FY19.
- Net Profit: Projected to increase from Bt279mn in FY17 to Bt288mn in FY18 and Bt426mn in FY19.
- EPS: Expected to remain around Bt1.09 in FY18 and reach Bt1.18 in FY19.
- GPM: Maintained well, with a slight increase in FY19.
- Net Profit Margin: Expected to be around 5.2% for FY19.
Investment Business
CK's investment business in TTW, BEM, and CKP is a key diversifier, contributing to revenue and profit.
- TTW: Projected profit to increase by 8% y-y.
- BEM: Expected to grow profit by 13% y-y.
- CKP: Anticipated improvement in operating results due to no negative impact from low water supplies.
- Investment Revenue: Forecast to reach Bt1,561mn in FY18, helping to offset potential softness in construction services.
Valuation and Investment Thesis
- Current Price: Bt23.60.
- Target Price: Bt35.00, indicating a potential 50.16% increase.
- P/B Ratio: Currently at 1.6x, trading at a discount to historical levels.
- Valuation Method: SOTP (Sum of the Parts).
- Investment Rating: "Buy (Maintain)".
Risk Factors
- Government policy on infrastructure spending: Uncertainty in project timelines and funding.
- Fluctuations in construction material prices: Particularly steel prices and global supply issues.
- Political instability: Could impact project progress and profitability.
Financial Highlights
Income Statement (Btmn)
| Metric | FY16 | FY17 | FY18E | FY19E |
|---|---|---|---|---|
| Sales | 45,929 | 36,225 | 35,518 | 38,342 |
| Net Profit | 2,002 | 1,810 | 1,850 | 2,000 |
| EPS (Bt) | 1.18 | 1.07 | 1.09 | 1.18 |
| P/E (X) | 20.0 | 22.1 | 21.6 | 20.0 |
| BVPS (Bt) | 12.90 | 14.09 | 14.71 | 14.39 |
| P/B (X) | 1.8 | 1.7 | 1.6 | 1.6 |
| DPS (Bt) | 0.50 | 0.50 | 0.44 | 0.47 |
| Dividend Yield (%) | 2.1 | 2.1 | 1.9 | 2.0 |
| ROE (%) | 9.55 | 8.05 | 7.71 | 7.98 |
Key Financial Summary
| Metric | 4Q17 | 3Q17 | 2Q17 | 1Q17 | 4Q16 |
|---|---|---|---|---|---|
| Sales | 6,874 | 8,758 | 12,225 | 8,065 | 7,557 |
| Gross Profit | 546 | 687 | 978 | 623 | 518 |
| Net Profit | 215 | 625 | 668 | 302 | 342 |
| Assets | 79,274 | 78,146 | 90,246 | 90,874 | 94,928 |
| Liabilities | 55,401 | 55,638 | 68,005 | 68,875 | 73,074 |
| Equities | 23,873 | 22,507 | 22,242 | 21,998 | 21,854 |
Peer Comparison (as of 12 March 2018)
| Company Name | Mkt Cap. (Btmn) | P/E (X) | P/BV (X) | Div Yield (%) |
|---|---|---|---|---|
| CK TB | 39,976 | 22.1 | 1.7 | 2.1 |
| ITD TB | 16,579 | 40.2 | 1.3 | 0.3 |
| STEC TB | 28,977 | n.m. | 3.1 | 1.2 |
| UNIQ TB | 14,161 | 15.9 | 1.9 | 2.5 |
Corporate Governance - 2017
CK is listed on the SET and is part of the broader construction services sector. The report includes a list of other companies in the same sector for comparison, indicating CK's position within the industry.
Conclusion
CK is viewed as a strong investment in the construction services sector due to its diverse operations and growth potential from upcoming infrastructure projects. The company's current valuation is considered attractive, offering an opportunity to benefit from the expected positive catalysts in the second half of FY18. The investment business provides a buffer against construction risks, and the company is projected to see improved profitability in FY19.
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