Kaohoon Online has selected two stocks with a potential of high growth for investors to consider on October 2, 2019.
KTBST – TU
KTB Securities (Thailand) (KTBST) has reiterated the “BUY” rating on Thai Union Group Public Company Limited (TU) with an unchanged target price of Bt21.00, implying 2019 core PER of 19.5x (5-yr average PER). Tuna price dropped -33% YoY, -19% MoM to USD1,100/ton in September, which resulted in 9M19 tuna price declining -17% YoY to USD1,296/ton, due to rising supply.
KTBST still maintains 2019E core profit forecast of Bt5.3bn, which represents a growth of +38% YoY, but there is scope to raise our forecast to reflect a significant decrease in tuna price after the 9M19 tuna price (USD1,296/ton) was well below our full-year estimate of USD1,450/ton. Adding to positive factors, TU’s 3Q19E earnings are expected to grow further given its low-cost tuna inventory and dining-out season in Europe.
TU’s share price has recovered last week in expectation of benefit from India’s corporate tax cut and an easing of some lawsuits. The stock’s valuation remains attractive, trading at a deep discount of 15x, or -1 SD.
KTBST thus views the current share price as an opportunity to increase positions in expectation of a robust 2019E earnings growth of +38% YoY.
KTBST – PTG
KTB Securities (Thailand) (KTBST) has reiterated the “BUY” rating on PTG Energy Public Company Limited (PTG) with an unchanged target price of Bt27.75, which implies 2020 PER of 25.0x, or +0.5 SD above 5-yr average PER. This translates to PEG of just 0.4x, as KTBST estimates PTG’s net profit to grow at CAGR of 62% in 2019-20E.
KTBST forecasts 3Q19E net profit of Bt282mn, a significant growth from Bt1mn recorded in 3Q18 but a drop of -31% QoQ due to seasonality. The rapid growth YoY would contribute to 1) higher sales volume, 2) stable marketing margin, and 3) lower depreciation charges.
Additionally, production from PTG’s palm complex has been on track with capacity utilization at 85-90% currently. KTBST thus maintains 2019E/20E net profit forecast of Bt1.57bn/Bt1.85bn, representing a growth of +151%/18% YoY.
PTG’s share price has fallen 12% over a month due to oil price volatility. KTBST sees the share price rebound in the near term given 1) an attractive valuation considering the current market cap/gas station at Bt15, which is a similar level to a construction cost/gas station at Bt15-20mn, and 2) a potential increase in B100 price as EGAT set to buy the remaining 134k-ton crude palm oil in the system within October, which may boost crude palm oil price by Bt1.0-1.5/kg.