ILM: Leader in Home Furnishing Shows Resilience
We have a BUY recommendation on ILM based on a target price of Bt15.20, implying an upside of 22% from the current price. We derive our target price from a DCF-based valuation using a WACC of 6.7% and a terminal growth rate of 2%.
Investment thesis:
- Customized furniture brand Younique captures modern customer demand
- Improved inventory management leads to significant cost cut
- Overseas expansion provide future growth opportunities
Interim: Despite the temporary closure of its branches following the government’s order to limit the COVID-19 outbreak, ILM’s 2Q20 result was in the black. The 6M20 reported revenue constituted 47% of our previous full year forecast.
Risks: Slowdown in Thai consumer spending, increased competition puts pressure on margins, worsening inventory management, disruptions in supply chain.
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