The street-beating 2Q20 result and expectations of a stronger HoH operational performance in 2H20 should boost the share price going forward. IVL’s current valuation is undemanding—a PBV of only 0.9x for YE21 (1.3SD below IVL’s long-term mean of 1.9x). Our BUY call stands.
IVL reported a 2Q20 net profit of Bt154m, down by 93% YoY and 73% QoQ. Stripping out a Bt277m FX gain, a Bt3,291m loss on inventories, and an Bt18m impairment (required under the new TFRS9 accounting standard), core earnings would be Bt2,579m, down 48% YoY but up 42% QoQ. The result was much better than our estimate (a Bt636m net loss) and the street (a Bt314m net loss), due to lower SG&A and interest expenses and a bigger tax credit than assumed.