Our TRADING BUY stands, led by robust 2022 core profit growth (driven by fatter GM for sugar and electricity units) amid the sustained high global sugar price in 2H22 through 1H23.
Net and core earnings beat our estimates
KSL posted a net profit for 2Q22 (Feb 1-Apr 30, 2022) of Bt415m, up 305% YoY and 25% QoQ. Stripping out three extra items in 2Q22—1) Bt10m FX gain, 2) Bt12m loss from derivative hedging and 3) Bt58m gain from the dilution of KSL’s stake-holding in BBGI from 40% to 28% caused by BBGI’s IPO—core profit was Bt360m, up 118% YoY and 3% QoQ. Net and core profits beat our estimates by 66% and 44%, respectively, thanks to the above one-time gain, higher sales, equity income from BBGI and lower SG&A and tax expenses than modeled. Sales beat our model by 14%. But GM of 16% was lower than our 18.5% estimate and 18.6% in 2Q21, 18.9% in 1Q22 due to higher cane costs. SG&A and tax expenses were 11% and 42% lower than estimates. Equity income beat model by 26% led by higher BBGI profit.