วันพุธที่ 27 พฤษภาคม พ.ศ. 2552

Kim Eng Stock Recommendations Recommends Buy DCC

Dynasty Ceramics (DCC) - BUY

Price (Bt) 16.00
Target (Bt) 18.00
Set Index 472.72

2Q09 with strong growth and a revised target

2Q09 earnings will be strongly up by 50% yoy to Bt250mn
Dynasty Ceramics (DCC) 2Q09 performance is expected to continue

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strongly up as Apr – May sales
have seen growth of 10%, while the gross margin is up to 42-44% from the near full utilisation. We have
forecast DCC sales to reach Bt1,444mn, up 10% yoy, and a high net profit of Bt250mn (EPS Bt0.61), strongly
up by 50%. These strong sales expectations come from activity in the north and northeast regions, as they
remain the strongest growth markets.

Debt at zero in 2Q09 with a dividend pay out ratio up to 80%
In 2Q09, DCC will payoff all debt of around Bt150mn, as of 1Q09, after lowering debt from Bt816mn
in 4Q08. This results in interest expenses in 2Q09 of nearly zero. DCC has a set dividend pay out ratio up
to 80%. We forecast the DCC dividend for 2Q09 will be around Bt0.50 per share and compared with the 1Q09
dividend of Bt0.55 per share.

Growth against an economic slowdown, higher revision
DCC management has targeted 2009 sales to grow by 10% to Bt5,600mn, as the north and northeast
region have remained the strongest markets for growth. DCC has focused on the low-end market with 90% of
sales in the provinces. Currently, DCC is the leader in low-end tiles. This year, DCC will add 5-10 new
outlets to the current group of 195 stores. Management expects the gross margin will rise to 40% from 38.5%
last year on lower energy costs. We are revising up this year’s earnings projections and now estimate sales
will grow by 10% to Bt5,614mn and the net profit will reach Bt830mn (EPS Bt2.03), up 25%. In addition, DCC
will invest just Bt250mn for new capacity of 6mn sqm to bring the total to 52mn sqm.

Maintain BUY with a target price of Bt18
DCC pays a quarterly dividend at a payout of 75% of net profit. As the current company is debt
free, the dividend payout will increase to 80%. Therefore, we have forecast the DCC dividend will be Bt0.50
per share for 2Q09 earnings. The 2009 full year dividend level should be about Bt1.63 per share or a yield
of 10.2%. We have revised up our fair value to Bt18 from Bt16 based on a 2009 PER of 9x. We are maintaining
our recommendation of BUY.

Earnings summary
Year End Dec 31 2006 2007 2008 2009F 2010F
Sales (Btmn) 4,452 4,458 5,089 5,614 6,175
EBITDA (Btmn) 1,256 1,284 1,314 1,503 1,640
Earnings (Btmn) 567 578 666 830 939
EPS (Bt) 1.39 1.42 1.63 2.03 2.3
PER (x) 11.5 11.3 9.8 7.9 7
EV/EBITDA (x) 6.5 5.9 5.6 4.3 3.7
CF/share (Bt) 1.75 2.59 2.36 3.49 2.82
BVPS (Bt) 4.9 5.4 5.9 6.7 7.4
P/BV (x) 3.2 3 2.7 2.4 2.2
DPS (Bt) 0.97 1 1.25 1.63 1.84
Dividend yield (%) 6.10% 6.30% 7.80% 10.20% 11.50%
Net debt/equity (x) 0.81 0.5 0.32 Cash Cash
ROA (%) 13.30% 13.80% 16.90% 22.50% 25.90%
ROE (%) 29.30% 27.40% 28.80% 32.10% 32.50%
Source : Company reports and KELIVE Research estimates.

By Kim Eng Securities (Thailand) Company Limited on May 27, 2009

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