The share price of Siam Global House Public Company Limited (GLOBAL) jumped ฿1.40/share or 8% to ฿18.90/share at the closing of the morning session on July 31, 2020, amid the plummet in SET Index by 4 points.
The share continued to rise in the afternoon session, gaining ฿1.90/share or 10.86% to ฿19.40/share.
The sudden surge in GLOBAL might be due to an anticipation of a better outlook in its 2H20 operation on a strong gross profit margin.
KTB Securities (Thailand) (KTBST) reiterated a BUY rating on GLOBAL but raise the target price to Bt19.50 from Bt16.00 and target PER to 37.0x (+1 SD above its 5-yr average) from 35.0x (+0.5 SD). GLOBAL reported 2Q20 earnings results that exceeded Bloomberg consensus forecast by 33%, although net profit fell -2.5% YoY, -17.7% QoQ to Bt507mn due to the COVID-19 lockdown.
KTBST believed GLOBAL’s earnings may have bottomed out in 2Q20 given an easing of the COVID-19 lockdown restrictions, and thus raised 2020E net profit forecast by 18%. KTBST revised up blended gross profit margin assumption to 23% from 20% to reflect its stronger-than-expected blended gross profit margin following a change in product mix strategy. GLOBAL has a plan to open five stores in 2020 (two stores were opened in 1H20), which would boost its net profit significantly in 2H20E.
GLOBAL’s share price outperformed the SET Index by 7% in one month. KTBST expected GLOBAL’s outstanding 2Q20 earnings performance, which may lead to an upgrade in the consensus forecast, and a strong response to house brand products, to lend further support to the share price.