MBKET Is Positive on JMART Group after a Strong Performance in 3Q21

Jay Mart Public Company Limited (JMART),JMT Network Services Public Company Limited (JMT) and Singer Public Company Limited (SINGER) reported their 3Q21 earnings last week with strong performance during the quarter as JMART’s nine-month earnings was higher than the full-year profit of 2020, JMT’s quarterly earnings were a record high and JMT’s gross profit margin in the quarter was an all-time high even in low season.

 

In the third quarter of 2021, JMART reported a net profit of 269 million baht in 3Q21, increased 3.30% from a net profit of 261 million baht in 3Q20. Meanwhile, the company recorded an increase of 58.63% for its 9M21 period at 835 million baht. The record of JMART’s 9M21 was higher than the full-year profit of 2020.

Meanwhile, JMT reported a net profit of 351.7 million baht in 3Q21, an increase of 24.2% from the 3rd quarter of 2020, reflecting a net profit margin of 37% and the consolidated financial accounts for the 9 months period of 2021 had a net profit of 923.3 million baht, an increase of 28.8% over the 9 months period of 2020, reflecting a net profit margin of 36%.

For the 3rd quarter of 2021, SINGER had net profit of 165 million baht which increased by 48 million baht or 41.0% from net profit of 117 million baht in 3Q20. For the 9-month period of  2021, the company had net profit of Baht 488 million which increased by 169 million baht or 53.0% from net profit of 319 million baht in the same period of previous year.

 

Maybank Kim Eng Securities (Thailand) (MBKET) has a positive view and gives “BUY” recommendations on the three stocks along with an upgrade on the target prices.

MBKET expected the better-than-expected net profit for JMART was due to the performance of its financial segment that was able to maintain growth rate in the quarter even though the retail sector was impacted by the lockdown. MBKET stated that the recovery in the fourth quarter will hit a record high at 1.2 billion baht, representing an increase by 56%, seeing an opportunity for an entry before the analyst meeting on November 18, 2021, that the market would have a positive reaction on the completion of VGI and U later this year. The synergy will financially support JMART and its business outlook significantly in 2022-2023. MBKET revised up JMART’s target price from Bt46.50 to Bt50.50 per share.

 

MBKET stated that JMT had set a new record faster and stronger than expected by one quarter from higher than target debt collection, confirming the record-breaking earnings prospects in the next five quarters (4Q21-4Q22). The share price rallied 15% MTD, but at a 30x P/E level, which was still below earnings per share growth of 37% YoY next year. In the short term, MBKET saw an upgraded game that continues to move forward, especially after the analyst meeting on November 18, both on the debt purchase and collection that performed better than the market estimates. In addition, MBKET noted that JMT is still its top pick, giving a target price at Bt62.25 per share on 35x P/E, revised up from Bt54.75 per share.

 

Lastly, the report of 165 million baht of net profit from SINGER, representing a decrease by 10% QoQ, but an increase by 41% YoY beat MBKET’s expectations by 10% as gross profit margin rose 200bps QoQ to 50%, which was a record high even in a low season. The growth of the loan portfolio beat MBKET’s forecast by 10%, especially on the C4C segment at 5.6 billion baht, increased 22% QoQ while the yield was stable. Meanwhile, NPL dropped 40bps QoQ to 3.7%.

MBKET expected 4Q21 to continue growing QoQ, supported by 1) more new product in the commercial segment that would lead sales and GPM to maintain over 50% and 2) the acceleration of C4C loans.

MBKET is revising its estimation after the earnings of the nine-month period accounted for 74% of its 2021 target that could beat the expectation by 5-10%. The outlook for 2022 will grow solidly over its strong financial status after the capital increase. MBKET gave a target price for SINGER at Bt49.00 per share.