In this briefing:
- PLAT: Already Priced in the Delay in Opening a New Project
- Confluence of Politics – China Bans Australian Coal Imports (Flash Note)
- Foldable Smartphones to Debut in 2019; Will It Aid an Industry Turnaround?
- MAJOR: Impressive 4Q18 Earnings
- Delta Thailand’s Tender Offer: Updated Timetable
1. PLAT: Already Priced in the Delay in Opening a New Project
PLAT reported 4Q18 net profit of Bt198m (-3%YoY, +6%QoQ) and in-line with our expectation.
- Slow sales growth (+3%YoY) due to the delay in opening The Market Bangkok project from Dec 18 to 14 Feb 2019 caused a YoY drop in 4Q18 performance. In summary, 2018 earnings grew 2%YoY driven by 5%YoY in sales growth. We also believe current share price already priced in this delay.
- Despite a drop in 4Q18 earnings YoY, we expect strong recovery in 1H19 earnings driven by opening The Market Bangkok (70% booked).
- We maintain our positive view toward its outlook back by the rise in average rental rate trend after long term contracts expiration in 2020-2021E.
- Announced an annual dividend payment of Bt0.2 (XD on 4 Mar), which is equivalent to 2.6% upcoming dividend yield.
We maintain BUY rating with a target price of Bt9.4 based on DCF (10.8%WACC, 0% TG)*.
2. Confluence of Politics – China Bans Australian Coal Imports (Flash Note)
- China implements coal import caps specifically targeting Australian producers
- Unclear as to how widespread these restrictions will eventually be
- Thermal and metallurgical coal exports affected
- Impacting ~A$8.4Bn of metallurgical coal exports; or 4.4% of national income
- Thermal coal exports affected worth ~A$3.8Bn; or an additional 2% of national income
- Collectively, thermal and metallurgical exports equate to ~0.9% of Australian annual GDP
- Actions appear to be a response to blocking Huawei bidding for the 5G network
- Recent Chinese cyber-attacks harden Australian Government’s resolve
- Expect similar Chinese measures (in time) to be applied to other commodities and industries
3. Foldable Smartphones to Debut in 2019; Will It Aid an Industry Turnaround?
Plans regarding Samsung and Huawei’s foldable smartphones are out. The companies, which happen to be two of the largest contenders in the smartphone landscape are expected to unveil their foldable smartphone prototypes this month. In 4Q2018, Samsung, coming in first place, held a market share of 18.7% while Huawei, in third place, held a market share of 16.1%. Both companies are following different strategies when it comes to their foldable phone models.
The concept of foldable phones revolves around devices that can be folded into the size of a smartphone or opened up in to the size of a tablet. Huawei is said to be planning to introduce their foldable smartphone with 5G compatibility while Samsung is planning to release their foldable model with 4G compatibility. The market leader aims to leverage the expertise it has gained on its display technologies in its foldable smartphones.
4. MAJOR: Impressive 4Q18 Earnings
MAJOR 4Q18 net profit was Bt259m (+247%YoY, +26%QoQ). The impressive earnings was driven by solid guests admission (+97%YoY).
- 4Q18 revenue was Bt3.0bn (+59%YoY, +44% QoQ). Interesting movies lineup was the factor, pushing admission revenue (+88%YoY) and concession revenue (+70%YoY).
- Gross profit margin was strong at 37.6% from 28.7% in 4Q17 and 30.8% in 3Q18, thank to the higher contribution of concession revenue, which has decent margin.
- SG&A to sales was under control at 27.0%, compared to 34.3% in 4Q17 and 26.7% in 3Q18.
We maintain a BUY rating on MAJOR with 2019E target price of Bt31.00, derived from a PER of 24.2x, which is +1 SD of its 3-year trading average. We expect MAJOR to continuously deliver robust earnings in 2019E, given the fascinating movies lineup and advertising sales model changing from direct selling to selling through agencies.
5. Delta Thailand’s Tender Offer: Updated Timetable
With Form 247-3 (Intention to Make a Tender Offer) and the FY18 dividend (Bt2.30/share) for Delta Electronics Thai (DELTA TB) having been announced, this insight briefly provides an updated indicative timetable for investors.
The next key date is the submission of Form 247-4, the Tender Offer for Securities, which will provide full details of the Offer.
Date | Data in the Date | Comment |
1-Aug-18 | Announcement | |
13-Jan-19 | Pre-approvals fulfilled | |
18-Feb-19 | Form 247-3 submitted | |
18-Feb-19 | FY18 dividend announced | |
22-Feb-19 | Form 247-4 to be submitted | As per announcement |
25-Feb-19 | Tender Offer open | Assume 1 business day after 247-4 is submitted |
28-Feb-19 | Last day to buy to be on the 4 Mar register | T+2 settlement |
1-Mar-19 | Ex-date for dividend | As announced |
4-Mar-19 | Date to be on the registry to receive full-year dividend | As announced |
22-Mar-19 | Last day for revocation of shares | 20th day of Tender Offer1 |
29-Mar-19 | Close of Offer | Assuming 25 business days tender period |
2-Apr-19 | AGM | As announced |
3-Apr-19 | Consideration paid under the Offer | Assume 3 business days after close of Offer |
11-Apr-19 | Payment of FY18 dividend | As announced2 |
1 assuming the shareholder has not forfeited the right to revoke
2 the dividend is subject to a 10% WHT for non-residents.
This above indicative timetable assumes a conditional offer based on a minimum acceptance level of at least 50%. Payment under the offer may indeed be earlier, as explained below, which also ties in with a shareholders’ right to revoke shares tendered.
In addition, investors should not tender once the offer opens – assuming the tender period commences on the 25 February – but wait until their shares are on the registry as at 4 March to receive the FY18 dividend.
Currently trading at a 2.2%/22% gross/annualised spread. Bear in mind the dividend is subject to 10% tax.
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