Share price will outperform the sector and the market due to a positive surprise on quick SSS turnaround with profits upside. GLOBAL has shown valuations re-rating to 1SD above its long-term mean or PER of 38x during earnings bullish cycle (now at a 2021 PER of 36.1x and 31.6x for 2022). We have upgraded YE21 DCF-derived target price to Bt23 (up from Bt21.50 to reflect new model, 6.4% WACC and 2.0% terminal growth). BUY!
Earnings upgrade with strong conviction in 2021 growth
YTD SSS in 2021 has given a strong positive signal, turnaround from YoY contraction for five straight quarters (4Q19-4Q20) to a high single-digit growth, coupled with fatter GM comparable to last record high at 23.8% in 2Q20. We have revised up core earnings forecast by 3% in 2021 to reflect 5.0% SSSG (up from our earlier negative 2.0% assumption). GLOBAL will resume 13% sales growth in 2021 following a 6% slippage in 2020 (SSS falling 9% in 2020). Core margin is conservatively forecasted to expand from 8.0% in 2020 to 8.7% in 2021 (below its peak at 8.9% in 2016). GLOBAL will deliver impressive core profit growth of 23% in 2021 after YoY flattish in 2019-2020.