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Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

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Sahamitr Pressure Container / Equity Bottom-Up

SMPC reported 3Q18 net profit of Bt172m (+10%YoY, +5%QoQ). The 9M18 accounted for 74% of our 2018E full year forecast. <ul>
<li>3Q18 earnings is the record quarter driven by sales growth and lower SG&amp;A.</li>
<li>9M18 result was 10% lower than our forecast due to worse-than-expected gross margin. Rising raw material pressures gross margin to drop to 22.7% compared with 24.4% in 9M17. Meanwhile, Sales grew 19%YoY to Bt4.53bn.</li>
</ul>We maintain our positive view toward SMPC’s 2019-2020 outlook backed by growing market penetration in Asia and Africa along with capacity expansion.  However, we revise down our 2018-20E earnings forecast by 16%, 14% and 27% respectively to factor in lower margin than our previous expectation.  We also maintain our BUY rating and a target price of Bt18 (13.5xPE’19).Background: Sahamitr Pressure Container Public Company Limited is in the top-three of global LPG cylinder manufacturers and is the number one in Asia with the largest production capacity of 10 million cylinders per year. Its customer base comprises large multinational companies in the global market, such as Total, Shell, Exxon Mobil, PTT, World Gas and Caltex. The  company has also received  various global-standards accreditations from US and global institutions such as ISO, AS, BS,  DOT, EN and TPED.  Its major competitors include Aygaz (Turkey), Amtrol-Alfa (Portugal) and Huanri (China).

SMPC reported 3Q18 net profit of Bt172m (+10%YoY, +5%QoQ). The 9M18 accounted for 74% of our 2018E full year forecast. 
3Q18 earnings is the record quarter driven by sales growth and lower SG&amp;A.
9M18 result was 10% lower than our forecast due to worse-than-expected gross margin. Rising raw material pressures gross margin to drop to 22.7% compared with 24.4% in 9M17. Meanwhile, Sales grew 19%YoY to Bt4.53bn.
We maintain our positive view toward SMPC’s 2019-2020 outlook backed by growing market penetration in Asia and Africa along with capacity expansion.  However, we revise down our 2018-20E earnings forecast by 16%, 14% and 27% respectively to factor in lower margin than our previous expectation.  We also maintain our BUY rating and a target price of Bt18 (13.5xPE’19).Background: Sahamitr Pressure Container Public Company Limited is in the top-three of global LPG cylinder manufacturers and is the number one in Asia with the largest production capacity of 10 million cylinders per year. Its customer base comprises large multinational companies in the global market, such as Total, Shell, Exxon Mobil, PTT, World Gas and Caltex. The  company has also received  various global-standards accreditations from US and global institutions such as ISO, AS, BS,  DOT, EN and TPED.  Its major competitors include Aygaz (Turkey), Amtrol-Alfa (Portugal) and Huanri (China).

Sahamitr Pressure Container

SMPC: 3Q18 Result Hit New Record