CHO Hikes 6% to New High in 1 Month, Growing Profit from Catering and Truck Maintenance

As of 14.30 pm local time in Thailand. The share price of CHO Thavee Public Company Limited (CHO) is at THB1.05, increased THB0.05 or 5%. During the session, the share price was highest at THB1.06 and lowest at 1.01 with a trading value of THB8,084 million. CHO’s share price hit a new high in 1 month after the share price reached THB1.06 on 1 May 2019.

Globlex Securities states CHO reported a net profit of THB 40.21 million in 1Q19, increased by 18.21%YoY. The EBITDA was THB 83.07 million, increased by 40% YOY. The increases were from the special design product group for an assembly of domestic catering truck and bus, and an increased revenue proportion of truck maintenance. The gross profit margin increased to 15.25% from 11.71% and a net profit margin was 4.92%, increased from  3.9% of the first quarter in 2018

At the end of March 2019, CHO has a backlog worth THB 2,974 million after delivery of NGV buses to the Bangkok Mass Transit Authority (BMTA) and receiving a continuous income for 10 year of buses maintenance, Moreover, CHO has operated maintenance and fixing center of the truck which has already opened at Chonburi for a first place and plan to operate more than 2 or 3 places this year. The potential customers of the special design product group for an assembly of domestic catering truck and bus are both airline and overseas customers.

The project of installing e-tickets in 2,600 public buses which have been done for 800 buses. Currently, it was canceled and the management team sees the less effect on setting the impairment due to there are many people interested in purchasing the e-ticket equipment and the company has a plan to implement the e-ticket in another project.

Globlex Securities expects a net profit of CHO in 2019 to grow from THB 45.47 million in 2018 which had turnarounded from a deficit of THB 20 million in 2017. Although this height of D/E ratio is at 3.32 due to the effect of delay in delivery of 489 NGV buses. However, currently, all of 489 NGV buses had been delivered and the debt had been paid by cash.   

CHO issues the CHO-W2 with a 1 year and 6 months maturity date and allocated 2:1 to the rightful shareholders which XR date is on 20 June 2019 with 1:1 right and the price is 0.86 per right. The shareholder can use their right to buy CHO-W2 at the end of this year for expanding shareholder base to decrease in D/E ratio.

As a result, Globlex Securities provides an optimistic point of view on CHO and recommends “Buy” for speculation.