DCC Expects 1Q21 to Hit a New High, Analyst Gives a “BUY” Rating with TP of ฿3.18

It is expected that the net profit of Dynasty Ceramic Public Company Limited (DCC) in 1Q21 will hit a record high as sales volume during the first two months of this year grew 10% year-on-year. Despite higher gas costs, production capacity increase and selling price revised up by 2-4% in mid-Feb will improve gross margin.  

 

Maybank Kim Eng (Maybank) foresaw a revenue of 2,394 million baht in 1Q21 (+27% QoQ, +10% YoY) and gross margin would ramp up to 42.7%, while net profit set to reach a new high of 460 million baht (+25% YoY).

 

DCC has released new products, large sized with beautiful patterns and high margin to substitute imported ones, such as 60×120 cm, 40×80 cm, and 80×80 cm, floor tiles, which received a strong response. DCC targeted sales to expand 5-10% this year, meanwhile Maybank expected 2021 sales to grow slightly 3%. 

 

Despite higher gas costs, the new product release will enable gross margins to maintain around 42%, also driven by lower shipping costs due to the switch to 10 baht. For construction material centers, rental space covered 80,000sq m in 2020 with rental income of about 60 million baht, expecting to increase to 85-100 million baht in 2021. 

 

As a result, 2021 sales projection is 8.754 billion baht, (+3%) and profit of 1.63 billion baht, (+ 3%), setting a new record high. Maybank maintained “BUY for investment” with a target price of ฿3.18/share, on the 10-year average of Dividend Yield – 1SD = 5%.