Earnings Report /
Thailand

Osotspa PCL: 3Q21 core profit was in line with our estimate but below street forecast

  • In line with BLS forecast but below the consensus number

  • OSP reported net profit of Bt580m for 3Q21

  • We forecast 4Q21 core profit flattish YoY with growth QoQ

Narumon Ekasamut
Narumon Ekasamut

Equity Research Analyst

Bualuang Securities
11 November 2021

Share price would be under pressure in the shorter-term due to a negative surprise in earnings to the market forecast led to earnings cut flow. Despite that, a price correction, down 7% YTD and inexpensive valuations (a 2022 PER of 24.8x, below 30.5x of its long-term mean), will mitigate a sharp price fall. We suggest ‘Buy on dip’ strategy at good entry price of Bt32 implying a 1.5SD below its PER mean. We have cut at YE22 DCF-derived target price to Bt39 (from Bt40) to reflect earnings forecast cut (7.8% WACC, 2.0% terminal growth).

In line with BLS forecast but below the consensus number

OSP reported net profit of Bt580m for 3Q21, down 37% YoY and 29% QoQ. Excluding Bt47m FX loss from Myanmar Kyat depreciation linked to loan to its JV project (glass manufacturing plant), core profit was Bt627m, down 32% YoY and 26% QoQ, in line with our forecast but 15% short of the street number due to disappointing margins.