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Thai Plaspac​: Good 1Q21 core profit as expected, but extra expenses hit bottom-line

  • Core profit in line; bottom-line miss
  • TPAC reported a 1Q21 net loss of Bt20m
  • TPAC’s 2Q21 core earnings look set to expand further YoY

Expectations of YoY core earnings growth for 2Q21 and 2021, driven by structurally expanding demand for consumer-linked packaging and acquisitions, should catalyze the share price going forward. Moreover, we expect TPAC to deliver superior EBITDA and earnings growth, as well as margin expansion, through 2023. But the market hasn’t yet anticipated or priced that in, we believe.

The stock currently trades at low valuation metrics compared with its peers—a 2021 PER of 16.0x (a 37% discount to the peer mean of 25.6x) and a YE21 PBV of 2.1x (47% below the average peer PBV of 4.0x). TPAC currently trades on the MAI (not the SET), which entails some discount to being SET-listed, but its strong earnings growth profile and scope for upside should eventually narrow the discount gap. Any share price dip resulting from its disappointing 1Q21 bottom-line would open an opportunity to BUY!

Core profit in line; bottom-line miss

TPAC reported a 1Q21 net loss of Bt20m, a reversal from the net profits posted for 1Q20 and 4Q20. Stripping out Bt133m in non-recurring tax expenses (tied to amended tax rules related to goodwill in India) and a Bt2m gain on FX, core earnings would be Bt112m, up by 32% YoY and 77% QoQ. While the core profit was in line with our estimate, we had expected the bottom-line to be written in black ink, not red.


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