Sector Update Ref No. AUTOMOTIVE-1001, January 24, 2011 Automotive | Auto production, exports hit record high We maintain a positive view on the automotive sector on rising production Rating NEUTRAL and exports that will result in strong earnings growth in 2010 after a 23% Previous Rating NEUTRAL drop in 2009. The Thailand Automotive Institute reported car production last Index Closed 400.70 year hit a record high of 64% YoY, and forecasts a continued strong 21% rise Market Cap. (Bt mn) 51,839.87 production this year. % of SET Market Cap. 0.62 2010 auto production hit record high. Sector Benchmark Matrix - SBM The Thailand Automotive Institute reported that 137,403 vehicles were manufactured in December 2010, an increase of 23% YoY, and 71,025 vehicles ROE 280 were exported, up 21% YoY. Institute data also showed 1.64mn vehicles were 240 manufactured in the whole of 2010, a strong increase of 64% YoY, and 896,042 200 160 vehicles were exported, up 67% YoY. Production and exports were the highest 120 levels in 50 years. P/BV 80 P/E 40 0 Thai car production U n it s T h a ila n d C a r P ro d u c t io n 2 0 0 ,0 0 0 1 6 0 ,0 0 0 1 2 0 ,0 0 0 EPS growth Div.Yield 8 0 ,0 0 0 SET Automotive 4 0 ,0 0 0 0 SBM (Sector Benchmark Matrix) is a sector rating based on a Ja n Fe b Mar A pr May Ju n Ju l A u g Sep Oc t Nov Dec standard SET benchmark correlation of 100%. 2008 2009 2010 Source: Toyota & Thailand Automotive Institute Sector P/E Band INDEX 850 800 P/E(x) Production growth to continue in 2011. 750 700 650 20.0 The Federation of Thai industries expects the auto market to surge by 9% to a new 18.0 600 550 16.0 production record of 1.8mn units this year, while the Thailand Automotive Institute 500 14.0 450 400 12.0 upgraded its 2011 auto production target from 1.8mn units to 2mn units, or strong 350 10.0 300 growth of 21% YoY, and expects continuing growth over the next four years. 250 200 150 Growth will be driven by planned capacity increases of new eco-car models for 100 50 export by Suzuki, Honda, Toyota, Mitsubishi, and Nissan, and by Mazda for its B- 0 Dec-03 Dec-04 Dec-05 Dec-06 Dec-07 Dec-08 Dec-09 Dec-10 Dec-11 cars, by a combined 50% to 2.5mn units over the next four years (2011-2014 period), or a growth CAGR of 12%. Thakol Banjongruck firstname.lastname@example.org Registration No. 004927 Tel +66 2659 7000 STANLY remains our top pick. Given the strong vehicle production and strong domestic demand outlook, we estimate robust core earnings growth for our five covered automotive stocks this year of a combined 14% YoY based on our 1.8mn unit auto production assumption for 2011. We have a "Buy" rating on STANLY (fair value Bt241.0) as our top pick due its ability to leverage its No. 1 market share position of 70% to ensure continued growth. We have a “Trading” rating on SAT (fair value Bt30.0) and AH (fair value Bt16.90)ใ This publication constitutes information disclosed to the public and believed to be reliable but its accuracy and completeness are not guaranteed. All opinions, suggestions, or projections are for informational purposes only and shall not be construed as an inducement for the sale or purchase of securities. Amendments to this publication may be made without prior notice. Investors are urged to exercise caution in making a decision to invest in any securities. January 24, 2010 Automotive Sector Thai car sales Thai car exports Units Units Thailand Car Export 120,000 100,000 90,000 80,000 70,000 80,000 60,000 50,000 40,000 40,000 30,000 20,000 10,000 0 0 Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec Jan Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec 2008 2009 2010 2008 2009 2010 Source: Toyota & Thailand Automotive Institute Source: Toyota & Thailand Automotive Institute Breakdown of vehicle production by type New Car Market in Thailand for 2011 and beyond Brand 2011 2012 2013 2014 Isuzu D-Max(RT50) D-Max(RT50)-SUV Export Sales Domestic Sales Production to replace Mu-7 Passe Honda Eco-car(2CV) / Jazz-Hybrid2 City Pick- Civic (2HC) CR-V nger Pick- up & Toyota Prius-hybrid Vios/Yaris2/Eco-car2 Corola Hilux (IMV2) Car, up & PPV, Others Corolla1 Camry 20% PPV, 51% 2% Mitsubishi None Eco-car Triton Other 11% 67% Nissan March(sedan) / New compact sedan Pick- Passe Passe Qsana (to replace Tida Latio) up & nger Mazda Mazda3 / BT50 PPV, nger Car, Car, Ford Ranger (T6) / Focus / Everest 80% Escape1 (Escape discontinued) 32% 43% Chevrolet Aveo(T300) / Colorado (GM1700) Suzuki Eco-car Note : 1 - minor change 2 - not confirmed Source: Toyota & Thailand Automotive Institute Source: SAT & PricewaterhouseCoopers Market share Thai car production & sales Million units AAT, 7% Other, 7% 3.00 CAGR 2010-2014 = 11% 2.50 2.50 2.30 2.20 MITZUBISHI, 12% TOYOTA, 39% 2.00 +21% 2.00 1.42 1.65 1.27 1.50 +65% 1.14 1.01 0.90 1.00 1.00 0.54 NISSAN, 10% 1.17 0.50 0.97 1.06 0.80 0.88 HONDA, 11% ISUZU, 14% 0.55 0.00 2009 2010 2011E 2012E 2013E 2014E Domestic Export Production Source: Toyota & Thailand Automotive Institute Source: SAT & PricewaterhouseCoopers Automotive rating Fair Value Net Profit EPS Growth (%) P/E (x) P/BV (x) 2011 (Bt) 09 10E 11E 09 10E 11E 09 10E 11E 09 10E 11E AH Trading 16.90 -109 364 434 n.m. n.m. 19 n.m. 12.5 10.5 1.0 1.1 1.0 IRC Buy 15.50 261 287 309 (6) 10 8 10.2 9.3 8.6 1.7 1.5 1.3 SAT Trading 30.00 314 796 925 (50) 123 16 27.2 12.2 10.5 3.0 2.5 2.2 STANLY Buy 241.00 957 1,471 1,679 (14) 54 14 15.3 9.9 8.7 2.2 2.0 1.7 TSC Sell 9.30 148 199 220 (23) 35 11 21.3 15.8 14.3 2.1 2.1 1.9 Total/ Average 1,571 3,116 3,567 (23) 98 14 18.5 11.9 10.5 2.0 1.8 1.6 Ayudhya Securities Public Company Limited 550 Bank of Ayudhya Building, Ploenchit Office, 5th floor, Ploenchit Road, Pathumwan, Bangkok 10330, Thailand Tel +66 2659 7000 Fax +66 2646 1103 Ayudhya Securities Public Company Limited Headquarters 550 Bank of Ayudhya Building, Ploenchit Office, 5th Floor Ploenchit Road, Lumpini, Pathumwan, Bangkok 10330 Tel: 0-2659-7000 Fax: 0-2646-1111 Internet Trading: 0-2659-7777 Branches Emporium Chonburi 662 Emporium Tower, Fl. 10, Sukhumvit 24 Road 64/17 Sukhumvit Road, Bang Plasoi, Amphoe Muang, Klongton, Bangkok 10110 Chonburi 20000 Tel: 0-2695-4500 Fax: 0-2695-4599 Tel: 0-3879-0430 Fax: 0-3879-0425 Central Bangna Nakhon Pathom 589/151 Central City Tower 1 Office, Fl. 27 67/1 Ratchadamnoen Road, Phra Pathom Jaedee District, Bangna-Trad Road, Bangna, Bangkok 10260 Amphoe Muang, Nakhon Pathom 73000 Tel: 0-2763-2000 Fax: 0-2399-1448 Tel: 0-3427-5500-7 Fax: 0-3421-8989 Rama II Suphanburi 111/917-919 Rama II Road, Smaedum, 249/171-172 Moo 5 Ta Rahad District, Bangkhuntien, Bangkok 10150 Amphoe Muang, Suphanburi, 72000 Tel: 0-2895-9575 Fax: 0-2895-9557 Tel: 0-3550-1234 Fax: 0-3552-2449 Nakhon Ratchasima 168 Chomphon Road, Tambol Nai Muang, Amphur Muang Nakhon Ratchasima, Nakhon Ratchasima 30000 Tel: 0-4425-1211-4 Fax: 0-4425-1215 Analyst Team Name Sector Coverage E-mail Central line: Kasamapon Hamnilrat Hotel, Steel email@example.com 66.2659.7000 Sittidath Prasertrungruang Electronics, Transportation, Agribusiness firstname.lastname@example.org Fax : 66.2646.1103 Chatree Srismaicharoen Property, Contractor, Construction Materials email@example.com Charnvut Taecha-amorntanakij Energy, Petrochemical firstname.lastname@example.org Thanat Rungsrithananon Banking, Finance & Securities, Commerce email@example.com Thakol Banjongruck Automotive, Healthcare, ICT firstname.lastname@example.org Adisak Phupiphathirungul Strategy email@example.com Wanchai Bunprasert Technical firstname.lastname@example.org Recommendations Buy - Stocks with strong fundamentals and an expected total return of more than 10% over the next year. Hold - Stocks with strong fundamentals and an expected total return of 5-10% over the next year. Sell - Stocks that are overvalued or that have weak fundamentals. Trading - Stocks with weak fundamentals but that have a story for trading. www.ays.co.th Corporate Governance Report of Thai Listed Companies 2009 Thai Institute of Director (IOD) ACL ADVANC ASIMAR BAFS BANPU BAY BCP BECL BKI BLS CPN DRT EGCO ERAWAN GBX GC GSTEEL HEMRAJ ICC IRP IRPC KBANK KEST KK KSL KTB NCH NKI PTT PTTAR PTTCH PTTEP RATCH SAMART SAMTEL SAT SC SCB SCC SCIB SE-ED SIM SIS SNC SSI THCOM THRE TIPCO TISCO TMB TOP TTA ACAP AHC AKR AMATA AOT AP ASK ASP AYUD BBL BEC BGH BH BIGC BMCL BROOK BWG CCET CENTEL CGS CIMBT CK CM CNS CPALL CPF CSC CSL DELTA EASTW ECL EE EIC GENCO GFPT GL GLOW GRAMMY HANA HMPRO IFEC INET KASET KCE KDH KGI KTC KWC L&E LANNA LH LPN LST LVT MACO MAKRO MBK MCOT MFEC MINOR MINT MK MODERN MSC NMG NWR OCC OGC OISHI PF PG PHATRA POST PRANDA PS PSAAP PSL PYLON QH RASA RCI RCL ROBINS ROJNA RS S&J S&P SAMCO SCSMG SHIN SICCO SIMAT SINGER SIRI SITHAI SMK SPALI SPSU SSC SSEC SSF STANLY STEC STEEL STPI SUSCO SVI SWC SYNTEC TASCO TCAP TCP TF TFD THAI TIC TIP TK TNITY TNL TPC TRC TRU TRUE TSTE TSTH TVO TYM UMI UMS UP UPOIC UV VNT WACOAL WAVE YUASA ZMICO AFC AH AIT APRINT APURE ASIA BAT-3K BGT BLAND BLISS BROCK BSBM CCP CHUO CMR CPL CTW DCC DM DSGT DTAC EASON EPCO ESTAR ETG FNS FOCUS GFM GYT IHL ILINK ITD JCT JUTHA KH KWH KYE LEE LRH MAJOR MBAX METRO MILL NEP NIPPON OHTL PICO PL PLE PPM PRG PRIN PRO Q-CON ROCK SCCC SCP SEAFCO SFP SHANG SMIT SPACK SSSC SST SVH TAPAC TCB TCJ THANI TICON TIW TKS TLUXE TMT TNDT TNH TPP TUF TWFP UBIS UEC UNIQ UPF UT UTP WORK Score Range Number of Logos Description 90-100 Excellent 80-89 Very Good 70-79 Good 60-69 Satisfactory 50-59 Pass Below 50 - - Disclaimer The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the policy of the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company listed on the Stock Exchange of Thailand, and the Market of Alternative Investment disclosed to the public and able to be accessed by a general public investor. The result, therefore, is from the perspective of a third party. It is not an evaluation of operation and is not based on inside information. The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that date. Ayudhya Securities Public Company Limited does not confirm nor certify the accuracy of such survey result.
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