Analyst Forecasts RT’s Outlook to Remain Favorable in 2H21, Giving a TP at ฿3.0

KTBST Securities (KTBST) forecast that Right Tunnelling Public Company Limited (RT) will return to profit in 2Q21. The outlook for the second half of the year remains favorable, and there is a possibility of obtaining more new projects than expected.

 

As a result, KTBST held its normalized profit forecast for 2021 at 250 million baht (+6% YoY), despite the fact that growth in 2021 is likely to slow YoY due to a decline in GPM compared to 2Q20 at 25%.

 

Overall, it is estimated that operating results will improve from the previous quarter. Since the cost overrun projects were delivered in April. And the import of machinery has only been a temporary factor. It also maintained an optimistic outlook for the second half of the year, citing a 4 billion baht backlog as a key driver.

 

KTBST estimated that the new contract signing in 2021 will be worth more than 2.2 billion baht, based on the latest RT information reported in the SET, the company has acquired a new job worth about 600 million baht. Meanwhile, the auction for the Den Chai – Chiang Rai – Chiang Khong double-track railway project is scheduled to begin on May 18. The project includes a tunnel project worth more than 15 billion baht. The company has a very high chance of obtaining work through subcontracting.

 

As a result, KTBST kept its BUY recommendation, with a target price of 3.00 baht based on a 13x P/E in 2021. Key highlights to be monitored are 1) A large backlog of approximately 4 billion baht, which should ensure income at least through 1Q22, and the trend for new projects remains strong; and 2) RT’s share price is currently trading at 2021 P/E of 11x, which is lower than its peers at an average of 16x.