Indorama Polymer (IRP:TB): Dec 15/08
Strong Buy, ฿3.20. Improved market position will provide strong earnings growth by 2010.
Banpu (BANPU:TB): Dec 4/08 Strong Buy, ฿180. In the right markets, would be > ฿340 in normal markets.
Nine Dragons (2689:HK): Dec 1/08, Buy, HK$1.57. We expect a horrible year to June/09, but longer term, this will be seen as a very attractive entry price.
PTT (PTT:TB): Oct 24/08, Buy, ฿163. Offers diversified exposure to Thai energy sector – will be volatile, but safe long term.
Glow Electricity (GLOW:TB): Nov 24/08, Buy ฿18.20. Steady earnings and growth forecast –price target of ฿26.00
Central Pattana (CPN:TB): Jun 2/08, Sell, ฿25.25. Good assets, but price reflects market’s admiration for owners – over-valued on every valuation metric.
Thai Oil Plc (TOP:TB): Hold, Dec 11/08, ฿23.00. Under-valued, but collapse in chemicals market and continued inventory write-downs will cause losses in near term.
PTT Expl’n (PTTEP:TB): Nov 5/08 Buy ฿75.50. Buy on dip. Exploration write-downs and falling oil prices will continue to rock share price in near term.
| Indorama Polymers: (IRP:TB) Great execution of its growth strategy. Timing is unfortunate, but value creation not in question |
Current: ฿3.20 Dec 15, 2008 Target: ฿8.00 STRONG BUY |
Becoming the leading Global PET company
Through expansion and opportunistic acquisitions from weaker competitors, IRP will become the 2nd largest producer by 2010 and the only producer with operations balanced with market demand in North America, Europe and Asia.
Share price has fallen 70% since August
At 63% debt to total capital, IRP’s leverage is much higher than is typical for Thai industrials, and the Thai market is skittish when it comes to capital. That and poor H208 results have put significant pressure on the stock providing an attractive entry price.
|
|
2007 |
2008E |
2009E |
2010E |
|
Rev growth |
115.3% |
66.8% |
25.1% |
27.1% |
|
EBITDA Margin |
9.8% |
6.3% |
5.0% |
3.9% |
|
EPS |
0.78 |
0.82 |
0.20 |
0.76 |
|
P/E |
4.0x |
3.8x |
15.4x |
4.1x |
|
EV/EBITDA |
6.4x |
6.0x |
6.2x |
5.9x |
Balance sheet is the major risk If the recession is longer or deeper than forecast, then IRP could require up to ฿1.5bn in additional capital. IRP’s majority shareholder, has deep pockets and access to capital. We expect gearing to peak at 70% in Q409.
June 15 2009: ECP recommends investors take profits on Thailand energy-related and chemicals companies including PTTCH, IRPC and PTT.
