Stocks in Focus on December 16, 2019: OSP and QH

Stocks in Focus on December 16, 2019: OSP (KTB Securities (Thailand) TP at ฿50.00/share) and QH (Asia Wealth Securities TP at ฿3.30/share).

Kaohoon Online has selected stocks with a potential of high growth for investors to consider on December 16, 2019.

 

KTB Securities (Thailand) (KTBST) has given a “BUY” recommendation on Osotspa Public Company Limited (OSP) with a target price at ฿50.00/share.

KTBST is slightly positive about OSP’s 2020E earnings outlook in terms of cost-saving following a visit of OSP’s new glass bottle SGA2 plant on Friday, Dec. 13th. SGA2 is a modern technology plant, which 1) requires just 100 workers vs. SGA1 of 160 workers, 2) offers several cullet options, 3) yields a low defect rate, and 4) can produce lighter weight bottle production (10-20% lower cullet compared to conventional bottle).

Thus, KTBST maintains 2019E/20E earnings forecast of Bt3.39bn (+13% YoY)/Bt3.96bn (+16.7% YoY).

OSP’s share price has outperformed the SET Index by 23% in the past 6-month period. KTBST foresees several supportive factors although the stock’s valuation appears demanding, trading at 2019E PEG of 2.14x, which is well above its peer of 1.7x.

KTBST forecasts OSP’s net profit to grow at a CAGR of 13.5% in 2018-20E, while seeing an upside to our 2020E earnings forecasts in light of stronger overseas sales and uses of lighter weight bottle in the remaining products, which should save its cost significantly.

 

Asia Wealth Securities (AWS) has given a “BUY” recommendation on Quality Houses Public Company Limited (QH) with a target price at ฿3.30/share.

AWS expects QH share price to revise down resulting in an annual dividend yield of 8.3%, while expecting QH to benefit from government property stimulus measures due to the reduction of transfer fees and the Baan Dee Me Down project which reduced transfer fee of Bt50,000 per person for the first hundred thousand cases in the period of 11 December 2019 -31 March 2020.

Although it is only a short period of time, QH has a high stock in hand project of Bt47bn of which more than Bt7bn is the project worth less than Bt3mn that will benefit from government stimulus measures, while low rise projects continue to sell well despite the weak economy, as this segment has real demand, QH has the low rise of 65% of all the projects and 80% of the backlog is low rise.

Moreover, QH has relaunched the Q1 Sukhumvit project, with a gross profit margin of 38-40%, which is expected to close sales of 10 units with a minimum price of Bt30mn per unit. In addition, QH has a 60% share of its net profit which is expected to be the highest profit sharing of 4Q19 driven by HMPRO.