Equity Analysis /

Osotspa PCL: Resilient earnings with compelling valuations

  • Intra-founding family share shift, no impact on management team

  • Pricing Myanmar’s deterioration in to our model

  • Healthy balance sheet to sustain high payout rate

Bualuang Securities
5 April 2021

A higher stake taken by the majority shareholder improves OSP’s long-term investment outlook. Valuations are good entry at a 2021 PER of 27.3x and 2022 PER of 24.5x, big discount to 30.5x of its mean. Our BUY rating stands at a YE21 DCF-derived target price of Bt40 (7.3% WACC), removed 10% discount to DCF value via priced in downside risk of Myanmar business in our model (resilient core earnings growth forecast of 7% in 2021 and 11% in 2022).

Intra-founding family share shift, no impact on management team  

Mr.Petch Osathanugrah (a member of the founding family) divested all his shares in OSP, 12.69% (selling at a price of Bt33/share, 2.9% discount to 1-day close price of Bt34) to Mr.Niti Osathanugrah (leading majority shareholder of founding family) raising his stake from 16.65% to 23.08%. With this intra-family shareholding switch, we see no impact on the company which has for three years been run by a professional management team with the corporate mission to use ‘power to enhance life through a culture of high performance, innovation and sustainability’.