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Aapico Hitech Pcl.
AH
<Bt35>
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Recommendation
New
: BUY ON
WEAKNESS
Previous : LONG-TERM BUY
Fair Value : Bt38
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Slump in
jig sales triggers 74% qoq plunge in 4Q02 earnings
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Aapico Hitech (AH) reported
disappointing 4Q02 results, with net profit plunging 74% qoq
to just Bt11.6mn. FY02 earnings came in at Bt132.4mn,
significantly below our estimate of Bt153mn.
Sales in the final quarter
fell 14.3% qoq to Bt439mn while gross margins dived from 11%
to 3.7%. This was due to a fall in high-margin jig sales to
Bt5mn versus Bt131mn the previous quarter.
We expect sales to pick up
over the next two quarters given that AH has new orders
worth Bt175mn on its books. These include jigs worth Bt86mn,
dies Bt35mn and OEM auto parts Bt54mn. This year we expect
AH’s sales to rise 11% to Bt1,863mn, with net profit
jumping 45% to Bt192mn.
AH is currently trading on a
2003 PER of 7.65x, EB/EBITDA of 5.3x and P/BV of 1.95x.
Given its disappointing results and the fact that the stock
is now very close to our target price of Bt38, we can only
recommend AH as a BUY ON WEAKNESS.
AH's Income statement (Mn Bt)
| |
4Q02 |
3Q02 |
QoQ |
4Q01 |
YoY |
2002 |
2001 |
YoY |
|
Sales |
438.9 |
512.0 |
-14.3% |
349.5 |
25.6% |
1,673.8 |
1,200.5 |
39.4% |
|
Other Income |
20.6 |
15.5 |
32.8% |
9.5 |
117.5% |
55.8 |
25.0 |
122.9% |
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COGs |
398.9 |
445.4 |
-10.4% |
318.0 |
25.4% |
1,449.3 |
1,051.4 |
37.8% |
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Depreciation&amortisation |
23.7 |
10.5 |
125.6% |
13.6 |
74.6% |
54.2 |
40.0 |
35.6% |
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Gross profits |
16.4 |
56.1 |
-70.8% |
17.9 |
-8.4% |
170.3 |
109.0 |
56.1% |
|
Gross margin (%) |
3.7% |
11.0% |
- |
5.1% |
- |
10.2% |
9.1% |
- |
|
SG&A |
19.3 |
27.8 |
-30.6% |
31.4 |
-38.6% |
82.9 |
85.6 |
-3.2% |
|
SG&A / Sales |
4.4% |
5.4% |
- |
9.0% |
- |
5.0% |
7.1% |
- |
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EBITDA |
41.3 |
54.3 |
-23.9% |
9.5 |
336.9% |
197.4 |
88.5 |
123.1% |
|
EBITDA margin (%) |
9.4% |
10.6% |
- |
2.7% |
- |
11.8% |
7.4% |
- |
|
Interest expense |
3.3 |
3.2 |
3.1% |
7.8 |
-58.2% |
16.2 |
25.0 |
-35.1% |
|
Net profit before extra item |
10.6 |
46.5 |
-77.3% |
(10.4) |
N.A. |
128.2 |
25.4 |
404.5% |
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Extra ordinary gain (loss) |
1.0 |
(1.8) |
N.A. |
0.9 |
14.0% |
4.2 |
(5.9) |
NA |
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Net profit |
11.6 |
44.6 |
-74.0% |
(9.5) |
N.A. |
132.4 |
19.5 |
579.9% |
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EPS (Bt) before extra item |
0.25 |
1.77 |
-85.8% |
(0.40) |
N.A. |
4.31 |
0.98 |
341.5% |
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EPS (Bt) |
0.28 |
1.70 |
-83.8% |
(0.36) |
N.A. |
4.45 |
0.75 |
494.9% |
Note: COGs does not include Depreciation and Amortisation
- Sales in 4Q02 climbed 25%
yoy to Bt439mn but were down 14% qoq despite strong growth
for Thailand's auto industry in the Oct-Dec period.
AH's revenue structure (Bt mn)
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2001 |
% |
3Q02 |
% |
4Q02 |
% |
2002 |
% |
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Jigs |
93.5 |
7.6% |
131.2 |
25.8% |
5.3 |
1.1% |
233.8 |
13.5% |
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Stamping Dies |
40.3 |
3.3% |
6.0 |
1.2% |
15.8 |
3.3% |
41.0 |
2.4% |
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OEM Autoparts |
315.1 |
25.7% |
161.2 |
31.7% |
156.2 |
32.3% |
534.9 |
30.8% |
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Dealership for Ford sales |
745.6 |
60.8% |
205.0 |
40.3% |
261.4 |
54.0% |
850.0 |
49.0% |
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Other incomes |
32.1 |
2.6% |
5.1 |
1.0% |
45.4 |
9.4% |
55.8 |
3.2% |
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Total Revenue |
1,226.6 |
100.0% |
508.5 |
100.0% |
484.0 |
100.0% |
1,734.4 |
100.0% |
Source: AH
Product Gross Margin
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2000 |
2001 |
2002 |
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Jigs |
30.09% |
21.89% |
38.30% |
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Stamping Dies |
23.23% |
7.60% |
1.80% |
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OEM Autoparts |
23.84% |
17.55% |
16.60% |
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Dealership for Ford sales |
6.39% |
5.37% |
1.65% |
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Total |
13.11% |
9.08% |
10.17% |
Source : AH
- Gross margins in 4Q02
narrowed to only 3.7% versus 11% in the previous quarter
and 5.1% in 4Q01. This was due to a slump in sales of
jigs, which yield gross margins of 38%, to only Bt5mn
compared with Bt131mn the previous quarter. Sales of OEM
auto parts, whose margins average 16.6%, also slipped qoq
despite an increase in sales to new vehicle models
including the Toyota Soluna Vios, Honda City and Isuzu
D-MAX. AH's revenue from sales of Ford vehicles jumped
27.5% qoq but this had little impact on the bottom line
given razor-thin gross margins of 1.65%
Sales and admin costs fell 30%
qoq and 38% yoy while interest expenses were virtually
unchanged qoq at Bt3.3mn. AH's debt to equity ratio was just
0.33x at end-2002 compared with 1.79x at end-2001.
- AH plans to pay a dividend
of Bt0.32/share, representing a yield of just 0.9%. We
expect AH will continue to pay low dividends in 2003-2004
given the company' plans to invest Bt500mn during this
period to expand its new plant.
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Income Statement |
2000 |
2001 |
2002 |
2003F |
2004F |
2005F |
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Sales |
1,018 |
1,200 |
1,674 |
1,863 |
2,067 |
2,253 |
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Other income |
23 |
25 |
56 |
58 |
64 |
70 |
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Total revenues |
1,041 |
1,226 |
1,730 |
1,921 |
2,132 |
2,323 |
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Cost of Goods sold |
844 |
1,051 |
1,449 |
1,566 |
1,724 |
1,879 |
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Depreciation and Amortization |
41 |
40 |
54 |
59 |
77 |
82 |
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SG&A and Others Expenses |
66 |
86 |
83 |
93 |
103 |
112 |
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EBIT |
90 |
48 |
143 |
204 |
228 |
250 |
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Interest expenses |
35 |
25 |
16 |
7 |
1 |
0 |
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EBT |
55 |
23 |
127 |
197 |
228 |
250 |
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Net profit |
22 |
19 |
132 |
192 |
224 |
245 |
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EPS |
0.86 |
0.75 |
4.45 |
4.57 |
5.34 |
5.83 |
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EPS Growth |
N.A. |
12.7% |
494.9% |
2.7% |
16.7% |
9.2% |
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PER |
40.83 |
46.74 |
7.86 |
7.65 |
6.56 |
6.01 |
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EV/EBITDA |
8.76 |
13.47 |
5.11 |
5.30 |
4.48 |
3.39 |
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P/BV |
5.90 |
5.24 |
1.81 |
1.95 |
1.55 |
1.27 |
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P/Sale |
0.89 |
0.76 |
0.62 |
0.79 |
0.71 |
0.65 |
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Dividend / Share |
- |
- |
0.32 |
0.69 |
0.80 |
2.33 |
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Debt / Equity |
1.63 |
1.79 |
0.33 |
0.02 |
0.00 |
0.00 |
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Analyst: Surachai P. (Ext. 1420)
Email: Surachai.p@kimeng.co.th
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Kim Eng Securities (Thailand) PLC. All rights reserved.
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