Italian-Thai Thai Development Plc (ITD)

Company Update
Monday, January 26, 2015
I V Global Securities Public Company Limited
Italian-Thai Thai Development Plc (ITD)
Rating : BUY
Fair price: Bt10.20
Close price: Bt8.85
Coming to the fore
Company Information
Ticker:
Sector:
Shares outstanding (m):
Market capitalization (Btm):
Trading vol/day (‘000 shares):
Free float (%):
Beta:
ITD TB
Construction
5,279.84
46,726.59
112,162.69
66.17
2.48
Major Shareholders
Premchai Karnsasuta
Nijjaporn Joranajit
Thai NVDR Co.
18.44%
8.43%
3.53%
Consensus Bloomberg
2014F EPS (Bt):
Target price (Bt):
0.16
7.80
Price Performance
52 Wk high/low:
Absolute (%)
Relative (%)
1M
22.9
18.1
8.90 /3.40
3M
73.5
68.8
250
1Y
140.6
117.0
YTD
38.3
31.6
 Glut of new work on the way for ITD. ITD looks more likely to
secure several new contracts this year after a few sluggish years on
project delays and internal financial constraints. We see ITD regaining
opportunities to work on new contracts this year, particularly the SinoThai double-track rail projects, the revived Myanmar Dawei project,
mass transit projects and possibly the pending flood protection project.
 Starting with the comeback project, Dawei. ITD said recently that
the company has been allowed to develop the Dawei Special Economic
Zone Phase 1 under a JV partnership with Rojana Industrial Estate Plc
(ROJANA, N/R). The first phase of the project includes a 75-year
concession for a land plot of 35 sq km (from the original 205 sq km) to
develop as roads, ports, housing and a mini-industrial zone. The projects
will be supported by the Myanmar and Thai governments, which should
soon sign an MOU (memorandum of understanding) providing support
through investment incentives in the Dawei Special Economic Zone.
 Recap – the Dawei project. The new contract would help remove the
risk of ITD setting aside an impairment loss (of US$190m) which ITD
claimed to have already invested in the original project under the
previous concession before it surrendered this back in 2013 due to the
Thai government’s intervention. Japanese investors, some of the major
financial sponsors of the project, decided to invest in another industrial
zone, Thilawa. The Thilawa Special Economic Zone, located on the
outskirts of Yangon, is the first Special Economic Zone (SEZ) to be built
in Myanmar, and should be commercially operational this year.
 A new Green Line contract. ITD expects to sign the civil work
contract for the Green Line route (Mor Chit to Saphan Mai) worth Bt15bn
in 2Q15. Construction of this project is scheduled to start in 2H15,
boosting backlog by 15% from the Bt100bn of existing construction
work, excluding Bt149.6bn of concession contracts to operate an
expressway in Bangladesh and a railway in Mozambique.
200
150
100
 Balance sheet less worrisome. Post the recent capital increase of
Bt2.12bn (private placement of 419.37m shares at a price of Bt5.05
each), ITD’s net DE ratio has fallen to about 1.96x.
50
0
ITD
SET
 Maintain BUY with a new TP of Bt10.2. The upside risk to our
earnings forecasts will depend on ITD’s ability to secure more mass
transit contracts and double-track rail and medium-speed train projects.
We maintain our BUY rating on ITD with a price target of Bt10.2 (up
from Bt8.7), or at 3.5x 2015F book.
Investment summary
CGR 2014:
FY Dec 31
Sales (Btm)
2011
42,269
2012
44,467
2013
41,453
2014F
43,525
2015F
46,790
2016F
49,129
Analyst
Net profits (Btm)
(1,698)
134
907
776
921
1,049
[email protected]
EPS (Bt)
(0.41)
P/E (x)
EV/EBITDA (x)
DPS (Bt)
Yield (%)
BVPS (Bt)
P/BV (x)
ROE (%)
ROA (%)
Net D/E ratio (%)
n.m.
23.7
0.00
0.0
1.92
4.6
(18.1)
(3.3)
265.5
Rattana Leenutaphong
Tel: 662-658-5787
Change (%)
Change (%)
Change (%)
22.8
5.2
-6.8
5.0
7.5
n.m.
107.9
575.7
-14.4
18.6
n.m.
107.9
483.0
-21.2
18.6
0.03
276.4
13.9
0.00
0.0
2.05
4.3
1.6
0.2
310.3
0.19
47.4
15.0
0.00
0.0
2.38
3.7
9.0
1.5
225.7
0.15
60.2
15.6
0.00
0.0
2.75
3.2
6.0
1.2
162.4
0.17
50.7
14.9
0.00
0.0
2.93
3.0
6.1
1.3
151.0
5.0
13.9
0.20
13.9
44.6
14.4
0.00
0.0
3.13
2.8
6.6
1.4
138.1
Source: Company and IVG estimates
The opinions and information contained herein are based upon sources believed to be reliable but their accuracy, completeness or correctness are not
guaranteed. This information is not to be construed as an offer, invitation or solicitation to buy or sell the securities covered herein by this report. I V
Global Securities Plc (“IVG”) accepts no liability whatsoever for any direct or consequential loss arising from any use of this document or its content.
Company Update
Monday, January 26, 2015
I V Global Securities Public Company Limited
Results review
(Btm)
Construction revenue
Gross profit
SG&A
EBIT
Doubtful debt expense
Other income
Equity profit
Interest expense
Non-recurring items
Net profit
Net profit exc. Non-recurring
EPS (Bt)
4Q14F
10,588
1,407
559
848
(20)
(70)
(3)
(446)
(141)
280
421
0.05
4Q13
11,208
1,179
440
740
(18)
232
(1)
(579)
(20)
452
472
0.09
% YoY
(5.5)
19.3
27.1
n.m.
n.m.
(130.2)
155.0
(23.0)
620.6
(38.1)
(10.7)
(43.0)
3Q14
12,048
840
505
335
(3)
330
2
(621)
66
291
225
0.06
%QoQ
(12.1)
67.4
10.6
153.1
585.8
(121.3)
(260.3)
(28.1)
(315.3)
(3.7)
87.3
(11.4)
2014F
43,525
4,048
2,205
1,843
(45)
675
25
(2,283)
55
776
721
0.15
2013
41,453
4,056
2,047
2,009
131
827
22
(2,204)
75
907
832
0.19
% YoY
5.0
(0.2)
7.7
(8.3)
(134.3)
(18.3)
11.9
3.6
(27.1)
(14.4)
(13.3)
(21.2)
Source: Company and IVG estimates
Financial ratios
(%)
Construction rev growth YoY
Construction rev growth QoQ
Gross margin
SG&A as % of revenues
EBIT margin
Net margin
Net D/E ratio
1Q13
-6.7
-19.0
9.6
5.6
4.6
1.9
265.8
2Q13
-8.3
-4.0
9.9
5.6
5.5
0.2
261.5
3Q13
-4.6
4.6
9.0
4.8
5.8
1.4
217.1
4Q13
-7.4
13.8
10.6
3.7
7.5
4.1
225.7
1Q14
-2.6
-9.4
9.3
5.4
5.0
1.0
242.0
2Q14
10.8
5.8
8.0
5.2
4.3
-0.2
249.2
3Q14
18.8
12.2
7.0
4.1
3.7
1.9
233.4
4Q14F
-5.5
-12.1
13.3
5.5
9.0
4.0
162.4
1Q13
10,095
967
571
396
(4)
338
9
(565)
147
342
2Q13
9,688
954
548
406
11
123
(5)
(533)
67
90
3Q13
10,138
913
496
416
142
129
20
(527)
(119)
24
4Q13
11,533
1,222
431
791
(18)
237
(1)
(579)
(20)
452
1Q14
10,152
942
563
379
(45)
132
21
(570)
57
156
2Q14
10,737
859
578
281
23
284
5
(646)
74
50
3Q14
12,048
840
505
335
(3)
330
2
(621)
66
291
4Q14F
10,588
1,407
559
848
(20)
(70)
(3)
(446)
(141)
280
Source: Company and IVG estimates
Track record
(Btm)
Construction revenue
Gross profit
SG&A
EBIT
Doubtful debt expense
Other income
Equity profit
Interest expense
Non-recurring items
Net profit
Source: Company and IVG estimates
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Company Update
Monday, January 26, 2015
I V Global Securities Public Company Limited
I V Global Investment Research – Recommendation Definitions
Sector Recommendations
Stock Recommendations
OVERWEIGHT: The industry, as defined by the analyst's
coverage universe, is expected to outperform the relevant
primary market index by at least 10% over the next 12
months.
BUY: Expecting positive total returns of 15% or more over the
next 12 months.
NEUTRAL: The industry, as defined by the analyst's
coverage universe, is expected to perform in line with the
relevant primary market index over the next 12 months.
HOLD: Expecting total returns of not more than -10% to +10%
over the next 3 months.
UNDERWEIGHT: The industry, as defined by the
analyst's coverage universe, is expected to underperform
the relevant primary market index by 10% over the next
12 months.
SELL: Expecting negative total returns of 15% or more over the
next 12 months
Disclaimers
The disclosure of the survey result of the Thai Institute of Directors Association (“IOD”) regarding corporate government is
made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the
information of a company listed on the Stock Exchange of Thailand and the Market for Alternative Investment disclosed to the
public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is
not an evaluation of operation and is not based on inside information.
The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the
survey may be changed after that date. I V Global Securities Plc. (IVG) does not confirm nor certify the accuracy of such survey
result.
The opinions and information contained herein are based upon sources believed to be reliable but their accuracy, completeness
or correctness are not guaranteed. This information is not to be construed as an offer, invitation or solicitation to buy or sell
the securities covered herein by this report. I V Global Securities Plc. (“IVG”) accepts no liability whatsoever for any direct or
consequential loss arising from any use of this document or its content.
18th Floor, Mercury Tower, 540 Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330
Telephone: +66 (0) 2658-5800 Fax: +66 (0) 2658-5779
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