RS Jumps 4%, Analyst Expects “Chase Asia” to Push Long-Term Growth, Recomm. “BUY” at ฿27

The share price of RS Public Company Limited (RS) rose ฿0.90/share or 4.35% to ฿21.60/share with a trading value of 187 million baht.

 

KTBST Securities maintains a “BUY” rating on RS and target price of Bt27.00, which is pegged to 2021E PER of 33.0x (-0.5 SD below its 3-yr average), having a positive view toward Chase Asia Co. deal. 

 

The RS’s board on January 18 approved the subsidiary RSX to spend Bt920mn for 2.74mn shares, or 35% of post-capital increase registered capital, in Chase Asia Co. The transactions should complete by end-February.

 

KTBST believes RS will reap synergy benefits from Chase’s customer base and resources, including call center agents. Additionally, RS should be able to introduce new financial products to support its commerce business. 

 

Based on the company’s provided financial information and growth target, KTBST estimates Chase’s profit contribution at Bt52.0mn, which should create upside of 7% to its 2021E net profit forecast. KTBST currently forecasts RS’s 2021E net profit to grow +31% to Bt751mn.

 

RS’s share price outperformed the SET Index by 16% in the one-month timeframe. Key catalyst is1) brighter 4Q20E earnings outlook, 2) an attractive valuation –the stock currently trades at 28.4x 2021E PER, which is -0.75 SD below its 3-yr average, and 3) strong earnings growth outlook at 34% CAGR in 2019-22E. Additionally, KTBST sees upside to its 2021E earnings forecast from the recent investment in Chase.