CMNT> Company Update: TSR - Asia Wealth Securities Thiensurat PCL (TSR) Key takeaways from analyst meeting on 15 August, 2014 - TSRs 2Q14 net profit margin improved to 10.7%, up from 8.5% in 2Q13 and higher than its average of 5.8% over the last three years. - TSRs new sales distribution channels are expected to boost sales with proportionately less SG&A. Improved business operations all round - Sales grew despite the difficult period in 1H14:TSRs 2Q14 sales increased by 12.7%QoQ and 5.0%YoY to Bt255.6mn, thanks to the newly launched water purifier Super AlkaLi model in 1Q14. The new product was well accepted by customers as it produces mild base water for good health. Moreover, the rise in sales was attributable to a higher penetration rate driven by an improvement in the companys selling channels such as call center and telesales. Overall, the increase in sales was considered as very satisfactory amid the domestic political turmoil in 1H14. - Improved net profit margin: TSR booked a net profit at Bt30.6mn in 2Q14 with a net profit margin of 10.7%, up from 8.5% in 2Q13, while it booked 1H14 net profit at Bt48mn with a net profit margin of 8.8%, up from 6.4% in 1H13. The improvement in the net profit margin was a result of good controls for both manufacturing and financial costs. The companys gross profit margin stayed at a high 81.6% rate in 1H14 as compared to 79.5% in 1H13. Bright outlook: expansion on its way - New distribution channels: TSR usually sells its products through a door-knock approach as the company is confident that it is the best way to persuade customers to buy its products. The company plans to boost its sales by adding new distribution channels, which includes 1) adding new branches, 2) promoting products through companys website and social media, 3) partnering with property developers to offer TSRs products as freebies to residential buyers, and 4) expanding through the modern trade channel. We perceive that the varied sales distribution channels shou ld boost the companys sales by 15% over the next three years. We also expect that sales increases from these new distribution channels will incur proportionately less increases in SG&A expenses as the company will rely more on technology than human resources. - Upgrade on facility: TSR plans to expand its capacity from 15,000 units per month (at the first two factories) to over 30,000 units per months by early next year. So far, the company has been on its schedule to complete the first phase of its third factories in Pathumthani, which is expected to be completed prior to 2Q15. - On the process of brand building: TSR is currently in the stage of building its brand awareness while the company sold its products mainly through a door-knock approach which limited the sales growth. By the door-knock approach, the company had been able to sell over 100,000 water purifier in the last three years. Therefore, we expect the bright outlook for TSR. Thailand Research Department Mr. Warut Siwasariyanon Tel: 02 680 5041 Mr. Traikun Kitimahakun Tel: 02 680 5043 By Asia Wealth Securities Company Limited on Aug 19, 2014 This report has been prepared by Asia Wealth Securities Company Limited (AWS). The information herein has been obtained from sources believed to be reliable and accurate, but AWS makes no representation as to the accuracy and completeness of such information. AWS does not accept any liability for any loss or damage of any kind arising out of the use of such information or opinions in this report. Before making your own independent decision to invest or enter into transaction, investors should study this report carefully and should review information relating. All rights are reserved. This report may not be reproduced, distributed or published by any person in any manner for any purpose without permission of AWS. Investment in securities has risks. Investors are advised to consider carefully before making investment decisions.
Posted on: Tue, 19 Aug 2014 04:58:51 +0000
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