Earnings Report /
Thailand

TOA Paint Thailand PCL: 2Q20 result beat our estimates: stronger 3Q20 outlook

  • Ahead of our estimate and the consensus forecast

  • TOA reported core profit of Bt524m in 2Q20

  • The result was 5% ahead of the consensus forecast

Bualuang Securities
14 August 2020

A positive surprise in 2Q20 core profit with promising earnings outlook in 3Q20 will trigger share price rebound. Furthermore, TOA will gain a windfall from raw material costs downtrend during global economic recession. Valuations deserve to trade at its long-term mean (since IPO) at 37.3x versus a recent 2021 PER of 32.8x due to core earnings sustainability in 2020 good growth in 2021. Our BUY rating stands, at a YE21 DCF derived-target price of Bt46 based on 6.8% WACC.

Ahead of our estimate and the consensus forecast

TOA reported core profit of Bt524m in 2Q20, up 6% YoY and 3% QoQ.  Core profit was 12% above our estimate due to 7% sales beating our forecast and lower-than-expected effective tax rate (actual 18.9% versus 21.0% of our forecast). The result was 5% ahead of the consensus forecast. Including Bt70m gains of fair value of financial assets (investments) and Bt2m FX loss, net profit was Bt583m, jumping 24% YoY and 41% QoQ.  TOA announced interim DPS Bt0.27 for 1H20 operations, implying to 0.7% simple yield: XD on August 28 and payment on September 11.