Title BSC_Company analysis report CSM ICB 3357 27 05 2014
Report Type Phân tích công ty
Source BSC
Industry Consumer Goods
Bussiness CSM
Detail Date : 27/05/2014
Total pages : 7
Language : English
File Type : .PDF
FileSize : 595 Kb
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Short Content
CSM is the leading manufacturer in Vietnam tire sector. CSM accounts for 33% of the total domestic marketshare và 12% of the export marketshare, which are the highest among Vietnam tire companies. In particular, CSM is superior in tire segments for auto (25% market share) and motorcycles (35% market share). In tire segment for truck, CSM accounts for 8% market, which is lower than DRC.
o    Continuos decline in natural rubber prices brings cost advantages for tire businesses: raw rubber materials accounted for 85% of the CSM’s material structure. Quarter 1/2014, natural rubber prices continued to decline by 10.83% compared to the end of 2013.
o    Motivation for medium- and long-term growth from new radial tire factory and export markets: the radial tire factory (with a total capacity of 1 million tires, expects to export 60% of the production) is expected to be the main growth driver of the company in the context of domestic demand stability. However, we believe that the radial factory will not contribute much to the revenue and profit of the company in 2014.
o    Divestment in non-core business: in 2013, the company divested in Phuoc Hoa Rubber Company. In 2014, the company will probably divest in Carbon Philip Company (8%), transfer two projects, namely No. 9 Nguyen Khoai and 504 Nguyen Tat Thanh; and stop a number of projects in Ho Chi Minh City.
The company’s performance in Q1/2014showed a positive result with the profit after tax of VND 79 billion, which increased by 14.42% q-o-q, mainly due to the sharp fall in raw rubber prices and in administration costs (VND 10 billion).
We expect the revenue and profit after tax of CSM in 2014 will respectively be VND 3,252 billion, up 3.77% and VND 336 billion, down 6.63% (EPS of 4,996 dong) compared with 2013. The company will continue to benefit from the low rubber price. However, net profit margins may decrease (from 11.49% in 2013 to 10.34% in 2014) due to increases in depreciation and interest expenses.
Investment recommendation: CSM has pretty good basic indicators, high dividend (expected 23% in 2013); If the consumption of radial tire products goes well, the company will grow well in the long term. We recommend buying CSM share with the 12 months target price of 43,500 dong, up 13.28% over the current price.