KTB Securities (Thailand) (KTBST) has maintained a “BUY” recommendation on RS Public Company Limited (RS) with a target price at ฿25.00/share over a rebound in media revenue and a high season for the business.
KTBST reiterated a BUY rating on RS and a target price of Bt25.00, which is pegged to 2021E PER of 33.0x, or -0.5 SD below its 3-yr average. The 3Q20E net profit is forecasted to grow YoY, QoQ as 1) media revenue rebounded +14% MoM in July, 2) RS is expected to recognize revenue from copyrights in the quarter, 3) in- and outbound revenue increased further in July-August on the back of rising spending power and new products, and 4) blended gross profit margin would widen on higher commerce revenue.
In 4Q20E, KTBST forecasted earnings to grow further QoQ given a high season of the businesses and new products that target the mass market during the festive season. Additionally, RS expected to strike an M&A deal in 4Q20E. KTBST forecasted 2020-21E net profit to grow 67-24% to Bt607mn and Bt751mn.
RS’s share price outperformed the SET Index by 7% in one month. The stock’s valuation, however, remains attractive, trading at 2021E PER of 25.5x, which is just slightly above its commerce peers’ average level of 23.6x. KTBST estimated EPS to grow at 34% CAGR in 2019-22E, while KTBST saw an upside to its forecast if RS strikes an M&A deal in 4Q20.
KTBST believed earnings may have bottomed out in 2019 and thus forecast net profit to hit higher highs in 2020-21E. The security company estimated EPS to grow at 34% CAGR in 2019-22E.