JMART to Break Its Quarterly Record as Earnings Up over 243%, Analysts Give TP at ฿51

Jay Mart (JMART) to break its quarterly earnings record as it is expected to report a net profit of 360 million baht in 1Q21F, up 243% YoY, mainly from the loyal customers and extraordinary gain from the disposal of 49% share in KBJ Capital Co. Ltd. Analysts have given a target price at ฿51.00/share.

 

KGI Securities (KGI) expected Jay Mart Public Company Limited (JMART)’s 1Q21F earnings to come in at 360 million baht (+33% QoQ, +243% YoY), reflecting from JMART’s main investment holdings in JMT, SINGER, J-Mobile and gain on investment from selling 49% stake in KBJ. Despite a slow start for its core investment holding in JMT and SINGER, KGI expected JMART’s earnings to remain solid. Hence maintaining a rating of Outperform with a 2022 target price of ฿51.00/share (PE  30x).

 

KGI foresaw JMT SINGER to report slower earnings growth QoQ but still healthy growth YoY. For JMT, KGI expected a softer margin QoQ by around 3% due to higher cost of amortization for distressed assets, but YoY still +3% and better cost efficiency. SINGER’s  slower growth QoQ would reflect increased SG&A expenses in advertising for building brand awareness and a reversal in tax expense in 4Q20. Note that combined earnings from JMT and SINGER usually account for around 80% of JMART’s bottom line.

 

While J-Mobile’s operation is expected to recover strongly in this quarter, similar to the recovery trend in 2H20. KGI expected revenue from J-Mobile to be around 2 billion baht (+20% YoY, -10% QoQ (due to seasonality)), with net profit contribution of around 35 million baht in 1Q21F (vs. around 85 million baht in 2020). Meanwhile, selling its 49% equity stake in KBJ to Kookmin Bank in early 2021 will enable the company to book an extra gain on investment of around 120 million baht in 1Q21F.

 

Additionally, KGI expected JMT Network Services Public Company Limited (JMT)’s 1Q21 earnings of 288 million baht (-13% QoQ, +39% YoY), softening slightly due to accelerated booking of amortization cost of  distressed  assets. Meanwhile, its earnings growth profile will be similar to last year with growth backloaded in the second half. Though KGI maintained a rating of Outperform with a 2022 target price of ฿58.00/share (PE 35x), prefering to buy on share price weakness.