SINGER Jumps 8.5%, Analyst Expects 125% Gain in 1H20 to Beat 2019’s Full-Year Profit

The share price of Singer Thailand Public Company Limited (SINGER) jumped ฿1.20/share or 8.57% to ฿15.20/share with a trading value of 394 million baht as of 11:37 local time in Thailand (GMT+7). Maybank Kim Eng revised up its target price on SINGER to THB17.70/share.

 

Maybank Kim Eng sees positive developments for both businesses. i) Sales-Leasing business saw +59% YoY sales revenue. Apart from a high season, there are more sales opportunities as people stay home. Air-conditioning products have doubled YoY, boosting GPM from 44% to 47% due to better product mix, and ii) C4C business.

Loan portfolio grows as planned +THB400m/ quarter, interest income increased +7% QoQ. While the NPL declines from 8.1% to 7%, decreasing for the third consecutive quarter. Both the HP-C4C business and debt collection are still performing well QoQ. The provisions level is stable QoQ, 1H20 net profit soared +125% YoY to THB207m, beating the full year earnings of THB166m in 2019.

 

Profit momentum should continue in 3Q-4Q20, even the low season, at THB100m/quarter or up 100% YoY, beating our forecast from, i) the hire purchase business revenue. Sellers increased from 1.4k to 2k nationwide by the end of the year and Commercial products to support the community economy recovered faster than in the city.

While the C4C business will grow in parallel. ii) In terms of cost reduction, it dropped YoY, in accordance with the provisions, in line with NPL that fell faster than expected of 10-14% to only 7% at the end of this year.

Maybank raises its revenue assumptions by +16% from the better than expected hire-purchase business to THB3.419b (+45% YoY) and net profit up +25% to THB405m (+144% YoY) and causes NPM to move from 7% to 12%, setting a new record for the decade.

 

In addition, Maybank stated that although the share price rose +70% after reporting 1Q20 earnings, the current price trades at only 13.4x P/E FY20. There is still a discount from the sector’s leaders MTC-SAWAD that trade on 20-22x P / E FY20 while net profits are rising to a new record. Thus, Maybank raises its TP for 2020 to THB17.70/share based on Fwd P / E’FY20 = 17.5x, equivalent to PEG 0.28x on the average of the next 3 years. However, economic slowdown, hire purchase receivables and government policy are the downside risks for SINGER.