The share price of Jay Mart Public Company Limited (JMART) rose ฿1.75/share or 4.29% to ฿42.50/share as of 15:17 local time in Thailand, with a trading value of 1,004 million baht.
Maybank Kim Eng Securities (Thailand) (MBKET) on its Oct 21 research sees most affiliated businesses of JMART can still survive well from i) JMT’s earnings are still growing in both QoQ and YoY from recovering debtors at the end of the quarter. Higher fully amortized helped boost margin. ii) SINGER enjoyed profit growth of +28%YoY, in line with C4C loan portfolio growth target. iii) Mobile sales slowed QoQ due to store closures in malls, while focusing on cost control. iv) KBJ’s earnings slowed from temporary higher provision. Loan portfolio size remained stable during reorganization.
However, the outlook for 4Q21 profit will recover significantly to 330-350 million baht (+30 to +40% QoQ) from both the financial business (JMT-KBJ) that asset quality gradually recovered in line with the economy and commercial business (SINGER-Mobile) that returned to normal with stimulus measures from the government.
Alos, JMART has a positive development, which is still in line with the plan. i) The capital increase transaction in JMT-SINGER will determine the rights in Nov and get paid in Dec. ii) Synergy has begun among Group in 4Q21, namely products, electrical appliances/gadgets imported by Fanslink (VGI) to be sold through Mobile-SINGER branches, gradual change of 3,000 Singer franchises nationwide to the drop point of Kerry express. Although in the beginning, there is not much income, we see the Quick win project as a good starting point. This is an upside risk to 2022 earnings of 1.93 billion baht (+55%YoY).
Overall, JMART’s growth outlook will set a record along with affiliates JMT-SINGER, accounting for 80% of the profit base. There are affiliates waiting to unlock value in the next 1-2 years (Insurance, KBJ, J Ventures). MBKET estimates earning per share for 2022-23 at 46% per annum (CAGR), vs the current share price at 27xP/E’2022, reflecting PEG 0.59x. Recommend “BUY”, with a target price for 2022 after restructuring of 46.60 baht based on SOTP method.