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Yuasa Battery
(Thailand)
YUASA
<Bt27.50>
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Recommendation
New : LONG-TERM
BUY
Previous : BUY
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Depreciation
costs and production changes trim 4Q02 earnings
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Yuasa Battery (Thailand) Plc
(YUASA) posted rather disappointing 4Q02 earnings of Bt16.3
(EPS Bt0.76), down 4.5% qoq and 41.33% yoy. Although
the final quarter is traditionally the high season for
battery sales, YUASA’s earnings were hurt by two factors:
1) higher depreciation charges following the opening of its
new plant last month; and, 2) a temporary production
slowdown due to increased emphasis on production of
higher-margin, maintenance-free batteries. For the
full-year 2002, YUASA posted net profit of Bt87mn (EPS
Bt4.62), up 19%.
We expect YUASA’s earnings
to rise by around 18% this year to Bt103mn. Sales are
forecast to grow 15-18%, bolstered by the continuing boom in
auto and motorcycle sales. Toyota Motor Corp expects 2003
car sales to grow by around 15% to 470.000 units. This is
still impressive growth from a much bigger base. In 2002,
vehicle sales increased 37.8% to 409,362 units.
S.P. Honda, meanwhile,
expects sales of motorcycles in 2003 to grow by 38% to 1.8
mn units, following last year's 48% growth to 1.33 mn units.
Since YUASA is very well connected with automotive producers
from Japan, particularly Honda, Hino, Isuzu, Toyota and
Suzuki, its new plant, which opened at the beginning of this
year, should achieve relatively high utilisation rates.
YUASA is trading on an
attractive 2003 PER of 5.7x, EV/EBITDA of 3.56x and P/BV of
0.65x. It also offers a handsome dividend of Bt1.8,
representing a yield of 4.8%. Based on our DCF model, we
have a target price of Bt35 a share for YUASA.
YUASA's
income statement (Mn Bt)
| |
4Q02 |
3Q02 |
QoQ |
4Q01 |
YoY |
2002F |
2001 |
YoY |
|
Sales |
254.1 |
249.5 |
1.8% |
242.5 |
4.8% |
998.0 |
887.0 |
12.5% |
|
Other Income |
3.1 |
4.8 |
-35.1% |
4.2 |
-26.0% |
16.9 |
16.4 |
2.9% |
|
COGs |
188.6 |
176.1 |
7.1% |
156.0 |
20.8% |
692.7 |
597.6 |
15.9% |
|
Depreciation&amortisation |
11.8 |
10.3 |
14.3% |
10.4 |
13.4% |
41.9 |
32.4 |
29.2% |
|
Gross profits |
53.7 |
63.1 |
-14.9% |
76.1 |
-29.4% |
263.4 |
257.0 |
2.5% |
|
Gross margin (%) |
21.1% |
25.3% |
- |
31.4% |
- |
26.4% |
29.0% |
- |
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SG&A |
32.1 |
44.0 |
-26.9% |
37.5 |
-14.2% |
155.1 |
155.7 |
-0.4% |
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EBITDA |
35.8 |
34.6 |
3.4% |
46.6 |
-23.1% |
167.5 |
136.9 |
22.3% |
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EBITDA margin (%) |
14.1% |
13.9% |
- |
19.2% |
- |
16.8% |
15.4% |
- |
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Interest expense |
1.1 |
0.6 |
99.4% |
0.2 |
456.7% |
2.7 |
0.4 |
602.6% |
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Net profit |
16.3 |
17.1 |
-4.5% |
27.8 |
-41.3% |
86.8 |
73.2 |
18.6% |
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EPS (Bt) |
0.76 |
0.86 |
-11.5% |
1.65 |
-54.2% |
4.62 |
4.49 |
2.8% |
Note: COGs does not include Depreciation and Amortisation
- YUASA's 4Q02 sales were
rather disappointing, expanding by only 1.8% qoq and 4.8%
yoy. Although the final quarter is traditionally the high
season for battery sales, YUASA’s sales were hurt by a
temporary production slowdown due to increased emphasis on
production of higher-margin, maintenance-free batteries.
4Q02 gross margin narrowed to
only 21.1% from 25.3% in 3Q02 and 31.4% in 4Q01. Lower gross
margins were due to the company booking depreciation costs
of its new plant, as well as production changes toward the
higher-margin, maintenance-free batteries.
YUASA's financial position is
still quite strong with total debt at the end of December of
Bt352mn, or debt-to-equity ratio of only 0.14x. The company
also has cash on hand of Bt213mn. YUASA spent Bt520mn for
the new battery plant, which was financed by cash flow from
operations, proceeds from its IPO and bank loans. In 4Q02,
interest expenses were just Bt1.1mn, but some of the
company's interest expenses were capitalised into the
investment cost of the plant.
YUASA's older plant is
currently operating at full production capacity of 840,000
auto batteries and 2.4mn motorcycle batteries per year.
Phase one of the new factory, which cost Bt520mn, has
expanded YUASA’s production capacity by 440,000 auto
batteries and 700,000 motorcycle batteries per year.
Management is targeting sales growth this year of 15-18%.
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Income
Statement |
1999 |
2000 |
2001 |
2002 |
2003F |
2004F |
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Sales |
826 |
854 |
887 |
998 |
1,178 |
1,354 |
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Other income |
14 |
12 |
16 |
17 |
21 |
24 |
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Total
revenues |
840 |
866 |
903 |
1,015 |
1,199 |
1,379 |
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Cost of Goods sold |
541 |
604 |
598 |
693 |
800 |
914 |
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Depreciation and
Amortisation |
35 |
29 |
32 |
42 |
54 |
55 |
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SG&A and Others
Expenses |
135 |
140 |
169 |
155 |
195 |
224 |
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EBIT |
129 |
92 |
104 |
126 |
150 |
185 |
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Interest expenses |
0 |
0 |
0 |
3 |
4 |
4 |
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EBT |
128 |
92 |
104 |
123 |
145 |
181 |
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Net
profit |
88 |
64 |
73 |
87 |
103 |
128 |
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EPS |
5.51 |
4.02 |
4.49 |
4.62 |
4.76 |
5.95 |
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EPS Growth |
84.8% |
27.1% |
11.9% |
2.8% |
3.1% |
24.8% |
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PER |
4.99 |
6.85 |
6.12 |
5.95 |
5.77 |
4.62 |
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EV/EBITDA |
3.08 |
1.65 |
2.87 |
3.79 |
3.50 |
2.78 |
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P/BV |
0.73 |
0.67 |
0.68 |
0.61 |
0.65 |
0.59 |
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P/Sale |
0.53 |
0.52 |
0.50 |
0.52 |
0.50 |
0.44 |
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Dividend / Share |
1.00 |
4.67 |
1.03 |
1.80 |
1.91 |
2.38 |
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Gearing |
net
cash |
net
cash |
net
cash |
0.14 |
0.13 |
0.08 |
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Analyst: Surachai P. (Ext. 1420)
Email: Surachai.p@kimeng.co.th
If you have
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Copyright © March 2000,
Kim Eng Securities (Thailand) PLC. All rights reserved.
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