COM7 Public Company Limited (COM7)’s 1Q21 earnings are expected to grow 68% YoY to 483 million baht which would mainly be driven by a demand for Apple products and computer equipment continues to rise, and transitioning from 4G to 5G would boost demand for mobile phones over the next 2 years, reflecting COM7’s forward 2-year earnings growth CAGR of 23%.
Tisco Securities (TS) revised up a recommendation on COM7 to “BUY” and also upgraded a target price to ฿66.25/share from ฿51.50/share as COM7’s earnings would grow 23% annually vs. its peers at 9% annually, bringing a market share to 20-30% in line with the company’s target.
Besides the aforementioned factors, TS saw the delay in iPhone 12 release in 4Q20, Work/Learn from Home caused by Covid-19 new wave, and government’s Shop Dee Mee Kuen scheme (Shop and Payback) would enhance COM7’s earnings in 1Q21 to reach 483 million baht.
Key highlights for COM7’s growth in 2021 are 1) Apple has the largest market share among smartphone vendors, 2) global shortage of computer chips and Cryptocurrency is on the rise which would lead to an increase in product prices, and 3) a rising demand in 5G-related products and gadgets for the next 2 years.
With the CAGR of 23% in 2021-2023, COM7’s net profit would be 2,091 million baht (+41% YoY) in 2021, 2,616 million baht (+25% YoY) in 2022 and 3,159 million baht (+16% YoY) in 2023.
Meanwhile, KGI Securities (KGI) expected COM7 to continue to mark all-time highs in 2021-2022 with an outstanding 2-year average earnings growth rate of 26% vs. its peers at 18% propelled by 1) solid IT device demand amid digital disruption, 2) dynamic strategies in both stores platform and product offering, and 3) low base from temporary store closures in 2Q20.
Due to the positive catalyst both short-term and long-term, KGI re-rated PER on COM7 from 34.2x (+1.5 S.D its historical average) to 36.0x (+1.0 S.D. its peers’ historical average) and rolled the target price over to end-2022 at ฿72.00/share and maintaining a rating of Outperform on the counter.