Bualung Securities reports after AAPICO Opportunity Day 29.11.2012:
Profit in line with estimate
AH reported a 3Q12 net profit of Bt168m, up 24% YoY but down 40% QoQ. The result was in line with our estimate but below 22% the Bloomberg consensus. 9M12 earnings jumped 98% YoY to Bt543m (boosted by insurance payouts and stronger other income than assumed), which represents 94% of our earlier FY12 projection.
Sales rose by 42% YoY and 9% QoQ to Bt4.3bn. The 3Q12 top-line expansion was due to capacity expansion at AH's main plant in Hitech Industrial Estate in order to supply rising demand from car makers for component parts to manufacture vehicles for both domestic and export sale. Gross margin fattened further to 6.6percent from 6.3% the previous quarter. But AH's net margin fell to 4.0percent from 7.1% in 2Q12 and 4.5% in 3Q11 because of higher OPEX, mostly related to the new capacity.
We anticipate that the firm will deliver weaker QoQ core earnings for 3Q12 (excluding insurance payouts), as its new capacity entails higher OPEX during the commissioning stages.
We have revised up our FY12 earnings projection by 17% to Bt677m to factor in gains from insurance payouts of about Bt100m during 9M12. We maintain our FY13 and FY14 forecasts unchanged at Bt600m and Bt690m, respectively.
Our YE13 target price stands at Bt27.5, pegged to a PER of 12x. AH currently trades at an undemanding FY13 PER at 8.4x, which is significantly below its long-term mean of Bt12.3x. Given 46% upside to our YE13 target price and scope for further earnings forecast upgrades on new orders from Toyota and Isuzu in 2H13, we maintain our BUY rating.
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