Equity Analysis /

I&I Group PCL: The whole is greater than the sum of its parts, or synergy makes money

  • YoY and QoQ earnings growth seen for the next six quarters

  • Different parts help the whole

  • Earnings revision with scope for upside

Napon Jaisan
Napon Jaisan

Equity Research Analyst

Bualuang Securities
25 August 2022

We hosted a virtual roadshow for domestic investors last Thursday. Following the meeting, IIG’s stock price has risen almost 20% so far. The investors we talked to expressed optimism over IIG’s growth prospects and the Lansing deal. We believe that it makes sense to price IIG at its future 2023 level to reflect the full-year impact of the acquisition of Lansing. So have rolled over our investment horizon to YE23 with a new target price of Bt58.

YoY and QoQ earnings growth seen for the next six quarters

In 2Q22, IIG posted a record revenue of Bt233m, up 40% YoY and 6% QoQ, However, its GM was only 24.3%, the lowest GM in three years. IIG has started working on a big project (a new CRM program). The initial stage of the project involved high-cost and low-revenue but in 2H22, staff will master the learning curve and the project will generate higher revenue. Moreover, other projects with fat-margin billings will be actualized in 2H22. Thus, we believe IIG’s GM bottomed out in 2Q22.