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THAILAND EQUITY RESEARCH
Page | 1 | PHILLIP SECURITIES (THAILAND)
Closing Price(Bt) 23.60
Target Price(Bt) 29.00 (+22.88%)
COMPANY DATA
O/S Shares (mn) : 4,814
Market Cap. (Btmn) :
Market Cap. (USDmn) :
52‐WK Hi/Lo (Bt) : 28.5/18.2
3M Average Daily T/O (mn) : 15.23
Par Value (Bt) : 1.00
MAJOR SHAREHOLDERS (%)
1. INDORAMA RESOURCES LTD 63.7
2. BBL 4.8
3. THAI NVDR CO LTD 4.3
PRICE PERFORMANCE (%)
1MTH 3MTH 1YR
ABS 0% ‐5% 7%
REL TO SET INDEX 2% ‐3% 22%
PRICE VS SET INDEX
Source: Bloomberg, PSR
KEY FINANCIALS
FYE Dec FY13 FY14 FY15E FY16E
Sales(Btmn) 229,120 243,907 307,966 357,120
Net Profit(Btmn) 1,326 1,485 7,381 7,631
EPS (Bt) 0.28 0.31 1.32 1.38
P/E (X) 85.7 76.5 17.9 17.1
BVPS (Bt) 12.57 15.26 16.15 17.20
P/B (X) 1.9 1.5 1.5 1.4
DPS (Bt) 0.28 0.38 0.36 0.42
Dividend Yield (%) 1.2 1.6 1.5 1.8
ROE (%) 2.21 2.22 9.76 9.50
Debt/Equity (X) 2.11 1.63 1.80 1.80
Source: Company, PSR Est.
**Multiples and yields are based on latest closing price
VALUATION METHOD
P/B'16 (2x)
Ornmongkol Tantitanatorn
Capital Market Investment Analyst # 34100
Tel: 66 2 635 1700 # 491
25 August 2015
113,617
3,170
Buy (Maintain)
13 November 2015
0
10
20
30
40
50
Nov‐13 Nov‐14 Nov‐15
IVL TB EQUITY SETI (rebased)
Indorama Ventures Acquisition of Cepsa Spain in motion
THAILAND | SET | PETRO | COMPANY RESULTS BLOOMBERG IVL TB l REUTERS IVL.BK
Acquisition of 100% stake in Cepsa in motion IVL announced to acquire a Spanish company. Cepsa has production capacity of 720k tons per year, dividing to purified isopthalic acid (PIA) of 220k tons, polyethylene terephthalate (PET) of 175k, and purified terephthalic acid (PTA) of 325k. The acquisition procedures will likely finish in 2QFY16. IVL made its first‐ever acquisition of PIA business, which is feedstock for PET. Such move will reinforce IVL to be the biggest PIA manufacturer in Europe or the world’s second largest, after “Lotte” that has an annual capacity of 260k tons. The acquisition of PIA business will ensure supplies to IVL. The world demand for PIA usually grew by 6%‐7% per annum. We estimate additional profit from the deal approx. Bt850mn per annum. 3QFY15 net profit down to Bt475mn IVL reported downbeat results in 3QFY15. Pre‐ex profit was Bt490mn vs Bt2,714mn in 2QFY15 while net profit dropped to B475mn from Bt5,365mn reported in 2QFY15. Much of the declines was attributable to: 1) A lack of massive gains of Bt2,651mn IVL recorded in 2QFY15, thanks to its bargaining power in
buying Cepsa, Bangkok Polyester, and Polyplex in Turkey. 2) Inventory loss of Bt1,588mn vs a profit of Bt1,420mn as the price of paraxylene softened
following a surge on an explosion in China’s petrochemical plant. 3) Flat sales at 1.8mn tons due to unexpected MEG plant overhauls, which completely offset a full‐
quarter consolidated production from Bangkok Polyester and CEPSA. 4) Flat EBITDA margin with core EBITDA per ton standing at US$96 per ton—PET unit with a 48%
sales volume to the total, saw a 1% wider spread to US$213 in Asian markets and to US$213 in western markets, but it was offset by feedstock business (33% of total sales volume) that suffer a 17% narrower PTA spread in Asia to US$89 per ton and a 2% decline in MEG spread to US$585.
Revise FY15 earnings forecast by 12% In the first nine months of 2015, net profit grew by 154% to Bt6,203mn as (1) sales volume rose by 11% to 5.2mn tons; (2) IVL recorded the sizable gains from its acquisitions in 2QFY15; and (3) EBITDA margin widened with core EBITDA per ton increased to US$96 vs US$94 in 9MFY14. We foresee a continued growth in 4QFY15 as its MEG plant operation is to return and we do not think IVL will face severe headwinds, like the prior quarter. However, a deep loss in its inventory prompts us to revise down our FY15 net profit forecast by 12% to Bt7,381mn. ‘BUY’ rating with Bt29/share target price Given revising down FY15 earnings estimate, FY16 sales volume are likely to grow at a robust pace, given a full‐year consolidated production from its past acquisitions even 25‐day MEG plant maintenance for catalyst changing. Its PET production capacity increased to 252k tons in March, which ramps up polyplex output, and fabric capacity reached 41k tons in late April and thereby propels output of performance fibers higher. The acquisitions of Bangkok Polyester in May with a 105k tons PET capacity will indeed boost PET production, and of Cepsa Canada with a 600k ton PTA capacity in June and Cepsa Spain with 720k ton capacity in June. In sum, we forecast total sales volume to rise by 10% y‐y to 7.8mn tons.
Ref. No.: CO2015_0824
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 2 | P a g e
Indorama Ventures COMPANY RESULTS
Income Statement
Btmn 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐
Sa l e s and s e rvi ces 62,334 61,225 63,606 2% ‐2% 177,219 189,283 ‐6%
Cos ts of s a l e s 55,588 52,834 57,984 5% ‐4% 156,581 171,758 ‐9%
Gross profit 6,745 8,391 5,622 ‐20% 20% 20,638 17,525 18%
Se l l i ng expens es 3,501 2,887 2,795 21% 25% 9,153 8,371 9%
Admini s tra ti ve expense s 1,501 2,034 1,534 ‐26% ‐2% 4,904 4,061 21%
Operating profit 1,743 3,470 1,293 ‐50% 35% 6,581 5,093 29%
Other i ncome 282 505 404 ‐44% ‐30% 1,087 1,035 5%
Ga in/los s from a ffi l i a te s ‐124 ‐32 ‐132 ‐290% 6% ‐248 ‐571 57%
Other expens e 0 0 0 n.m. n.m. 0 0 n.m.
EBIT 1,901 3,943 1,565 ‐52% 21% 7,420 5,556 34%
Inte re s t expense 918 867 904 6% 2% 2,627 2,687 ‐2%
EBT 983 3,076 661 ‐68% 49% 4,793 2,869 67%
Ta xa ti on 541 1,059 318 ‐49% 70% 1,960 1,299 51%
EAT 442 2,017 344 ‐78% 29% 2,833 1,570 80%
Minori ty ‐38 ‐93 ‐31 59% ‐23% ‐221 ‐222 0%
Net profit before extra 404 1,924 313 ‐79% 29% 2,612 1,348 94%
FX 71 81 275 ‐12% ‐74% 29 547 ‐95%
Extraordina ry i tems 0 3,360 0 ‐100% n.m. 3,561 543 556%
Net profit 475 5,365 587 ‐91% ‐19% 6,203 2,438 154%
EPS (Bt) 0.10 1.11 0.12 ‐91% ‐19% 1.32 0.72 84%
Key Financial Ratio
% 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐
Cos t of s a l e s /s a le s 89.18% 86.29% 91.16% 3% ‐2% 88.35% 90.74% ‐3%
SG&A exp/s a l e s 8.03% 8.04% 6.81% 0% 18% 7.93% 6.57% 21%
Gros s margin 10.82% 13.71% 8.84% ‐21% 22% 11.65% 9.26% 26%
Opera ti ng profi t margin 2.80% 5.67% 2.03% ‐51% 37% 3.71% 2.69% 38%
Net profi t margin 0.76% 8.76% 0.92% ‐91% ‐17% 3.50% 1.29% 172%
Balance Sheet
Btmn 3Q15 2Q15 3Q14 q‐q+/‐ y‐y+/‐ 9M15 9M14 y‐y+/‐
As s e ts 229,427 218,685 191,413 5% 20% 229,427 191,413 20%
Li abi l i ti e s 144,513 138,571 130,241 4% 11% 144,513 130,241 11%
Pa id ‐up (mn s hrs ) ‐ Pa r Bt1 4,814 4,814 4,814 0% 0% 4,814 4,814 0%
Equi ti e s 66,826 63,169 59,111 6% 13% 66,826 59,111 13%
BVPS (Bt) 13.88 13.12 12.28 6% 13% 13.88 12.28 13%
Debt/equi ty (x) 2.16 2.19 2.20 ‐1% ‐2% 2.16 2.20 ‐2%
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 3 | P a g e
Corporate Governance ‐2014
BAFS BCP BTS CPN EGCO GRAMMY HANA INTUCH IRPC TOP
KBANK KKP KTB MINT PSL PTT PTTEP PTTGC SAMART IVL
SAT SC SCB SE‐ED SIM SPALI TISCO TMB THCOM SAMTEL
AAV ACAP ADVANC ANAN AOT ASIMAR ASK ASP BANPU BAY
BBL BECL BIGC BKI BLA BMCL BROOK CENTEL CFRESH CIMBT
CK CNT CPF CSL DELTA DRT DTAC DTC EASTW EE
ERW GBX GC GFPT GUNKUL HEMRAJ HMPRO ICC KCE KSL
LANNA LH LHBANK LOXLEY LPN MACO MC MCOT NBC NCH
NINE NKI NMG NSI OCC OFM PAP PE PG PHOL
PJW PM PPS PR PRANDA PS PT QH RATCH ROBINS
RS S & J SAMCO SCC SINGER SIS SITHAI SNC SNP SPI
SSF SSI SSSC STA SVI TCAP TF THAI THANI TSTE
TIP TIPCO TK TKT TNITY TNL TOG TRC TRUE
TSTH TTA TTW TVO UAC VGI VNT WACOAL
2S AF AH AHC AIT AJ AKP AKR AMANAH AMARIN
AMATA AP APCO APCS AQUA ARIP AS ASIA AYUD BEAUTY
BEC BFIT BH BJC BJCHI BOL BTNC BWG CCET CGD
CGS CHOW CI CKP CM CMR CSC CSP CSS DCC
DEMCO DNA EA ESSO FE FORTH FPI GENCO GL GLOBAL
GLOW GOLD HOTPOT HTC HTECH HYDRO IFS IHL INET IRC
IRCP ITD KBS KGI KKC KTC L&E LRH LST MAJOR
MAKRO MATCH MBK MBKET MEGA MFC MFEC MJD MODERN MONO
MOONG MPG MTI NC NTV NUSA NWR NYT OGC OISHI
PACE PATO PB PDI PICO PPM PPP PREB PRG PRIN
PTG QLT QTC RCL SABINA SALEE SCBLIF SCCC SCG SEAFCO
SEAOIL SFP SIAM SIRI SKR SMG SMK SMPC SMT SOLAR
SPC SPCG SPPT SST STANLY STEC STPI SUC SWC SYMC
SYNEX SYNTEC TASCO TBSP TEAM TFD TFI THANA THIP THREL
TIC TICON TIW TKS TLUXE TMI TMT TNDT TPC TPCORP
TRT TRU TSC TTCL TUF TVD TWFP UMI UP UPF
UPOIC UT UV UWC VIH WAVE WHA WIN WINNER YUASA
ZMICO
Score Range
< 50%
50‐59%
60‐60%
70‐79%
80‐89%
90‐100%
The disclosure of the survey result of the Thai Institute of Directors Association (IOD)
regarding corporate governance is made pursuant to the Office of the Securities and
Exchange Commission. The survey of the IOD is based on the information of a company
l isted on the Stock Exchange of Thai land and the Market for Alternative disclosure to the
public and able to be accessed by a general public investor. The results, therefore, is from
the perspective of a third party. It is not an evaluation of operation and is not based on
inside information.
The survey result is as of the date appearing in the Corporate Governance Report of Thai
Listed Companies. As a result, the survey result may be changed after that data. Phil l ip
Securities (Thai land) of securities company does not confirm nor certify the accuracy of
such survey result.
No logo given
Number of Logo
Results Presentation
THAILAND EQUITY RESEARCH
PHILLIP SECURITIESS (THAILAND) | 4 | P a g e
Industry Group Name Sector Name Sector Index
Agro & Food Industry[AGRO] Agribusiness AGRI
Food & Beverage FOOD
Consumer Products[CONSUMP] Fashion FASHION
Home & Office Products HOME
Personal Products & Pharmaceuticals PERSON
Financials [FINCIAL] Banking BANK
Finance & Securities FIN
Insurance INSUR
Industrials [INDUS] Automotive AUTO
Industrial Materials & Machinery IMM
Packaging PKG
Paper & Printing Materials PAPER
Petrochemicals & Chemicals PETRO
Steel STEEL
Property & Construction[PROPCON] Construction Materials CONMAT
Construction Services CONS
Property Development PROP
Property Fund & REITs PF&REIT
Resources [RESOURC] Energy & Utilities ENERG
Mining MINE
Services [SERVICE] Commerce COMM
Media & Publishing MEDIA
Health Care Services HELTH
Tourism & Leisure TOURISM
Professional Services PROF
Transportation & Logistics TRANS
Technology [TECH] Electronic Components ETRON
Information & Communication Technology ICT
PSR Rating SystemCapital Gain Recommendation
> +10% Buy
0% to + 10% Neutral
< 0% Sell
Remarks
We do not base our recommendations entirely on the above quantitative return bands. We consider qualitative factors like (but not limited to) a
stock's risk reward profile, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative
undertones surrounding the stock, before making our final recommendation
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