Stocks in Focus on May 11, 2020: DRT and RS

Stocks in Focus on May 11, 2020: DRT (Maybank Kim Eng TP at ฿6.20/share) and RS (KTB Securities TP at ฿13.50/share).

Kaohoon Online has selected stocks with a potential of high growth for investors to consider on May 11, 2020.

 

Maybank Kim Eng has given a “BUY on Weakness” recommendation on Diamond Building Products Public Company Limited (DRT) with a target price at ฿6.20/share.

Maybank stated that DRT posted a strong 1Q20 normalised profit of THB168m (+73% QoQ, +2% YoY), beating the forecast at THB140m, despite being hit by several negative factors. Moreover, DRT announced stock repurchase of 94m shares or 9.92% of the registered capital at the price of THB5.50 during 7-26 May. This may help support the stock price. Given a good dividend yield of 7.2%, Maybank recommends BUY on weakness after the share price has rebounded by 25.5% from the bottom with a TP of THB6.20 based on the average forward PE for the past 10 years at 12.8x.

 

KTB Securities (Thailand) (KTBST) has given a “BUY” recommendation on RS Public Company Limited (RS) with a target price at ฿13.50/share.

KTBST upgraded RS’ target price from ฿13.00/share to ฿13.50/share, while maintaining the “BUY” rating as 1) KTBST changed valuation to PER from DCF method — targeted PER is 25.2x, which is -1.5 SD below its 5-yr average; and 2) KTBST upgraded 2020-21E net profit forecast to reflect the stronger earnings outlook. RS reported 1Q20 earnings results that significantly exceeded Bloomberg consensus and KTBST’s forecast by 40% due to stronger-than-expected blended gross profit margin. KTBST, thus, raised our 2020-21E net profit forecast by 5-14% with 2020E net profit to grow +43% to Bt519mn.

RS’s share price outperformed the SET Index by 11% in three months. KTBST saw the share price moving further higher as 1) RS’s 1Q20 earnings came in stronger than expected, and 2) its 2020E net profit expected to hit a fresh record high (+43% YoY).