วันพุธที่ 27 พฤษภาคม พ.ศ. 2552

Kim Eng Stock Market Update Recommends Buy SIS

SIS Distribution (Thailand) (SIS) - BUY

Price (Bt) 4.12
Target (Bt) 5.00
Set Index 533.92

1Q09 earnings recover qoq and stable yoy

1Q09 earnings recover to Bt51mn (+27% qoq)
SiS Distribution (Thailand) (SIS) announced an impressive, recovering

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earnings of Bt51mn (EPS Bt0.25), up 27% qoq and only slightly down yoy and slightly higher than our forecast, although hurt by the negative environment. This rather impressive result was due to 1Q09 sales performing rather well at Bt3,144mn, up 6% qoq and 8% yoy. SIS sales could have slowed under the current economic slump, but instead was driven by government and private sales projects of around Bt200mn this quarter. In addition, some market segments (PDA/phones and computer notebooks) saw stronger sales for the period. The 1Q09 gross margin was down to 5% from 7% in the previous quarter and the previous year with more project deliveries at lower margins than in the consumer sales segment. S.G.& A. expenses were down to only Bt108mn (-30% qoq, -26% yoy) even with higher sales as better cost controls and a provisioning reversal of Bt8mn came into play. Interest was Bt7mn, down 30% qoq and stable yoy from lower interest rates.

Stable sales this year, although effected by a weak economy
The 2009 prospects are uncertain due to a weak economy. As SIS is a leader in the IT market with
a strong presence in the computer notebook segment, accounting for 30% of SIS sales and PDA / phones with
10% of sales The HTC brand will launch new models in the second quarter and has targeted growth by 30% and
will increase market share to 38% from 30% in PDA phones. In addition, SIS is focusing on private and
government IT projects. Overall, we conservatively forecast flat SIS sales for 2009. However, the net
profit is likely to fall 27% to Bt150mn (EPS Bt0.73) from higher competition pressuring margins.

Trading on a low PER, 2009 earnings likely higher than forecast
The 1Q09 earnings accounted for 34% of our full year forecast and SIS earnings in the second half
are usually higher than in the first half. Thus, 2009 earnings are likely to be higher than our forecast.
The current SIS price of Bt4.12 is trading on a rather cheap 2009 PER of just 5.6x with an EV/EBITDA of
3.8x along with our conservative forecast down 27% yoy. We estimate the fair value at Bt5/share based on a
2009 market PER of 7x. We maintain our BUY rating. However, investors should note that SIS shares are quite
illiquid.

Earnings summary
Year End Dec 31 2006 2007 2008 2009F 2010F
Sales (Btmn) 9,237 10,417 11,999 12,000 13,200
EBITDA (Btmn) 213 261 352 267 290
Normalised earnings (Btmn) 93 130 207 150 165
Earnings (Btmn) 93 130 207 150 165
EPS (Bt) 0.46 0.64 1.02 0.73 0.81
PER (x) 8.9 6.4 4 5.6 5.1
EV/EBITDA (x) 7.9 4.9 3.5 3.8 3.6
BVPS (Bt) 2.8 3.3 4.1 4.4 5
P/BV (x) 1.5 1.2 1 0.9 0.8
DPS (Bt) 0.14 0.25 0.35 0.26 0.28
Dividend yield (%) 3.40% 6.10% 8.50% 6.20% 6.80%
Net debt/equity (x) 1 0.7 0.5 0.2 0.2
Total liabilities/equity (x) 2.7 1.7 1.6 1.1 1
ROA (%) 4.20% 6.70% 10.50% 7.50% 8.40%
ROE (%) 17.60% 21.00% 27.60% 17.30% 17.10%
Source : Company reports and KELIVE Research estimates.

By Kim Eng Securities (Thailand) Company Limited on May 18, 2009

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