DOHOME Jumps 7%, Analyst Raises TP to ฿30, Forecasting 2Q Earnings to Reach New Record

The share price of Dohome Public Company Limited (DOHOME) rose ฿1.75/share or 6.60% to ฿28.25/share as of 16:07 local time in Thailand, with a trading value of 629 million baht.

Capital Nomura Securities (CNS) reiterates its “BUY” rating on DOHOME but increases the target price to 30 baht from 28 baht. CNS forecasts DOHOME’s earnings growth to reach a new record of 5855 million baht (+300% YoY, +8% QoQ) in 2Q21. Thus, it will expand greater than peers due to 1) robust demand in the provincial market, 2) higher steel prices, and 3) good profitability improvement, which will result in much higher gross margins (+710bps YoY, +30bps QoQ).

However, earnings in the second half of this year are expected to decline HoH based on seasonal factors and less advantage from steel price increases. Owing to the fact that SSSG and 2H margins exceeded expectations, CNS upgraded its net profit forecast for 2021-2023 to grow by 6-9%. Earnings for the full year are predicted to be 1.86 million baht, up 156% YoY, before declining to +2% in 2022 due to the high base.