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Thai
Stanley Electric
STANLY
<Bt119>
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Recommendation
New
: BUY
Previous : BUY
Fair Value : Bt150
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Margin
squeeze leads to disappointing earnings in final quarter
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Thai Stanley Electric
(STANLY) this morning announced disappointing 4Q03 earnings
of Bt111.6mn for the period ending January 31. This was down
29.3% qoq and well short of our estimate of Bt153.9mn. For
its full year, STANLY posted net profit of Bt483mn, up 42.8%
yoy.
Sales fell 1.8% qoq in 4Q03
while gross margins narrowed to 17.9% from 22.9% in the
previous quarter. STANLY also suffered a forex loss of Bt4mn
in the final quarter.
Margins were squeezed due to
production problems and high rejection rates on new car
models of the Toyota Soluna Vios and Honda City. These
production snags have now been solved and we expect a
recovery in margins in 1Q04 given that STANLY is now
receiving full orders for lighting equipment for both saloon
models.
STANLY remains attractive on
a prospective PER of 7.40x and EV/EBITDA of 3.79x. The
company also announced it will pay a dividend of
Bt4.20/share, representing a yield of 3.5%. Given our fair
value estimate of Bt150 a share, we maintain our BUY rating
on STANLY.
STANLY's income statement (Mn
Bt)
| |
4Q03 |
3Q03 |
QoQ |
4Q02 |
YoY |
2003 |
2002 |
YoY |
|
Sales |
1,208.7 |
1,231.3 |
-1.8% |
908.7 |
33.0% |
4,403.5 |
3,731.9 |
18.0% |
|
Other Income |
26.6 |
23.6 |
12.6% |
14.5 |
83.5% |
120.7 |
83.9 |
43.8% |
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COGs |
878.1 |
859.4 |
2.2% |
678.1 |
29.5% |
3,135.3 |
2,800.8 |
11.9% |
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Depreciation&amortisation |
114.0 |
89.8 |
27.0% |
84.1 |
35.5% |
379.8 |
316.1 |
20.2% |
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Gross profits |
216.5 |
282.1 |
-23.2% |
146.4 |
47.9% |
888.4 |
615.0 |
44.5% |
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Gross margin (%) |
17.9% |
22.9% |
- |
16.1% |
- |
20.2% |
16.5% |
- |
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SG&A |
90.7 |
95.1 |
-4.5% |
80.3 |
12.9% |
356.5 |
287.5 |
24.0% |
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SG&A / Sales |
7.5% |
7.7% |
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8.8% |
|
8.1% |
7.7% |
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EBITDA |
265.9 |
300.0 |
-11.4% |
164.2 |
61.9% |
1,030.6 |
725.7 |
42.0% |
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EBITDA margin (%) |
22.0% |
24.4% |
- |
18.1% |
- |
23.4% |
19.4% |
- |
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Interest expense |
1.5 |
3.4 |
-54.5% |
2.2 |
-30.2% |
8.9 |
6.4 |
38.5% |
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Net profit before tax |
150.3 |
206.8 |
-27.3% |
77.9 |
93.1% |
641.9 |
403.2 |
59.2% |
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Net profit before extra item |
115.6 |
154.9 |
-25.4% |
44.4 |
160.2% |
493.6 |
290.6 |
69.9% |
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Extra ordinary gain (loss) |
(4.0) |
3.0 |
N.A. |
29.5 |
N.A. |
(10.4) |
47.7 |
NA |
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Net profit |
111.6 |
157.8 |
-29.3% |
73.9 |
50.9% |
483.2 |
338.3 |
42.8% |
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EPS (Bt) before extra item |
3.02 |
4.04 |
-25.4% |
1.16 |
160.2% |
12.88 |
7.58 |
69.9% |
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EPS (Bt) |
2.91 |
4.12 |
-29.3% |
1.93 |
50.9% |
12.61 |
8.83 |
42.8% |
Note: COGs does not include Depreciation and Amortization
- STANLY's sales in 4Q03
totaled Bt1,209mn, down 1.8% qoq but up 33% yoy. This
mirrored Thailand's car production in the Nov 02-Jan 03
period of a 5.6% qoq decrease but up 41.1% yoy.
As the country's leading auto
and motorcycle lighting manufacturer, STANLY is a direct
beneficiary of the strong growth in domestic auto sales as
well the trend by major US and Japanese car producers to
make Thailand their regional hub for auto exports. This year
Toyota plans to begin producing its Soluna Vios model in
Thailand for the Asian export market. Isuzu is also using
Thailand as a production base for exporting its Isuzu D-Max
pick-up. The company plans to export around 8,000-10,000
units per month, slightly higher than its its domestic sales
target of about 8,000 units. Honda, meanwhile, is mass
producing its new City and Accord models which were launched
in the last three months.
- At the last analyst meeting
last December, STANLY's management said it expected sales
growth of 20% this year. Toyota is estimating domestic
vehicle sales to grow 15% this year while S.P. Honda
expects motorcycle sales growth of 35%. STANLY's sales in
value terms is broken down as 75-80% cars and 20-25%
motorcycles. Using a more conservative projection, we
expect STANLY's sales to increase 15% to Bt5,090mn for its
FY/04, with earnings rising 19% to Bt625mn (EPS of
Bt16.32).
- STANLY spent Bt675mn on
expanding capacity last year. As the company used funds
from operating cash flow, interest expenses in FY03 were
only Bt5mn. Management has no immediate plans to further
boost capacity, believing that its existing plants can
cope with current demand for auto lighting equipment.
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Income Statement |
00/01 |
01/02 |
02/03 |
03/04F |
04/05F |
05/06F |
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Sales |
3,382 |
3,732 |
4,404 |
5,090 |
5,599 |
6,047 |
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Other income |
75 |
84 |
121 |
137 |
151 |
163 |
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Total revenues |
3,456 |
3,816 |
4,524 |
5,227 |
5,750 |
6,210 |
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Cost of Goods sold |
2,565 |
2,801 |
3,135 |
3,614 |
3,975 |
4,293 |
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Depreciation and Amortization |
349 |
316 |
380 |
377 |
372 |
368 |
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SG&A and Others Expenses |
287 |
289 |
358 |
417 |
457 |
494 |
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EBIT |
256 |
410 |
651 |
820 |
946 |
1,055 |
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Interest expenses |
13 |
6 |
9 |
5 |
0 |
0 |
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EBT |
242 |
403 |
642 |
814 |
946 |
1,055 |
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Equity Acc. + Extraordinary Gains |
4 |
48 |
(10) |
- |
- |
- |
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Net profit |
236 |
338 |
483 |
626 |
728 |
808 |
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EPS |
6.16 |
8.83 |
12.61 |
16.35 |
19.00 |
21.09 |
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EPS Growth |
109.6% |
43.3% |
42.8% |
29.6% |
16.2% |
11.0% |
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PER |
19.64 |
13.70 |
9.59 |
7.40 |
6.37 |
5.74 |
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EV/EBITDA |
8.01 |
6.63 |
4.84 |
3.79 |
3.04 |
2.51 |
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P/BV |
2.88 |
2.48 |
2.06 |
1.71 |
1.43 |
1.22 |
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Dividend / Share |
2.0 |
2.9 |
4.2 |
5.4 |
6.3 |
7.0 |
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Gearing |
0.13 |
0.09 |
0.16 |
net cash |
net cash |
net cash |
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Analyst: Surachai P. (Ext. 1420)
Email: Surachai.p@kimeng.co.th
If you have
any questions or suggestions please feel free to email our Research
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Copyright © March 2000,
Kim Eng Securities (Thailand) PLC. All rights reserved.
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