Price (Bt) 2.06
Target (Bt) 2.30
Set Index 533.92
1Q09 recovery with sales and profit maintained
1Q09 earnings recover to Bt102mn (+219% qoq, -20% yoy)
Diamond Roofing Tiles’ (DRT) announced a recovering result with an
impressive 1Q09 net profit of Bt102mn (EPS Bt0.10), up 219% qoq, while down 20% yoy. This improvement came from sales recovering 32% qoq to a rather high level of Bt725mn, although down from last year by 9% as 2008 was an abnormally high sales year. The 1Q09 sales were impressive although pressured by a slow economy in the first quarter with more market promotions and a new warehouse improving distribution. A storm in the North and Northeast also boosted roofing demand. The gross margin was up to 35% from 31% in the previous quarter and 32% in the previous year. DRT was at full utilisation this period and had lower cost pressures. The S.G.& A. expenses were up to Bt128mn (+13% qoq, +14% yoy) inline with sales and market promotion expenses. Interest was low at only Bt3mn compared with Bt2mn in the previous quarter. Although DRT has debt payments in this quarter of Bt69mn, the total debt was lower at Bt207mn from Bt304mn compared with high equity of Bt1,556mn.
Revised earnings with sales and profit maintained
DRT management maintains its 2009 sales target despite the economic slowdown impacting housing
construction as 80% of DRT product sales are in the provinces where demand remains high. With strong 1Q09
earnings of 39% of our full year forecast, we have revised up this year’s sales and earnings to nearly the
level of last year. However, our new forecast is still rather conservative with 1Q09 earnings accounting
for 36% of our full year 2009 forecast. We expect the 2Q09 earnings will continue to be impressive with a
net profit of Bt70-80mn from sales in Apr – May at a good level although slower than the first quarter.
Expect dividends of Bt0.12-0.14, upgrade to BUY
DRT is a dividend stock with a twice a year dividend at more than 70% of net profit. We expect
DRT will pay a dividend of around Bt0.12-0.14 based on an EPS of Bt0.17-0.18 for 1H09 earnings. The current
DRT share price of Bt2.06 has consolidated above Bt2 for some time and is trading on a 2009 PER of 7.3x
with an EV/EBITDA of 4.4x and a dividend yield of 11%. We estimate the DRT fair value at Bt2.3 based on a
2009 PER of 8.5x, which is lower than the market PER of 13.87x. We have upgraded our recommendation to BUY
from HOLD.
Earnings summary
Year End Dec 31 2006 2007 2008 2009F 2010F
Sales (Btmn) 2,390 2,591 2,510 2,475 2,549
EBITDA (Btmn) 551 676 522 534 554
Normalised earnings (Btmn) 327 393 302 282 298
Earnings (Btmn) 314 393 285 282 298
EPS (Bt) 0.31 0.39 0.29 0.28 0.3
PER (x) 6.6 5.2 7.2 7.3 6.9
EV/EBITDA (x) 3.9 3.1 4.4 4.4 4
CF/share (Bt) 0.4 0.5 0.4 0.4 0.5
BVPS (Bt) 1.4 1.6 1.5 1.5 1.6
P/BV (x) 1.5 1.3 1.4 1.4 1.3
DPS (Bt) 0.24 0.3 0.25 0.23 0.24
Dividend yield (%) 11.70% 14.60% 12.10% 11.00% 11.60%
Net debt/equity (x) 0.1 0 0.2 0.2 0.1
ROA (%) 17.40% 20.80% 14.50% 13.90% 14.70%
ROE (%) 23.50% 26.60% 18.80% 18.80% 19.20%
Source : Company reports and KELIVE Research estimates.
By Kim Eng Securities (Thailand) Company Limited on May 18, 2009
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