Ticon back on the strong buy list.
At 15.20 now, I am turning bullish again on Ticon and rate it a strong buy today!
The Thai biz. news paper today "Stock Wave" has a very upbeat Thai language report on Ticon and I don't see the various "reduce" and "take profits" today broker reports as anything to worry much about, other then short term sentiment. Where is their substance? Its the same old story of various broker analysts' not believing what Ticon can deliever, just as last year, and the year before.
For example, many show a fall-off in earnings growth for year 2007, while they don't explain why this is so at all. Unless they think TFUND 4 is improbable? As these said about TFUND 1 and 2. TFUND2 tranche was just listed in April '06. Then, they show the dividend will only increase a few lousy setang this year, when EPS should increase some 0.30 to 0.40, as compared to last year. I expect at least a 25% net profit per share increase this year.
Also I think one can expect some 0.70 or more interim dividends to be announced in August and payable shortly thereafter, as the interim dividend. (This is my own estimate, I have no company guidance on this).
"TFUND 3" will be launched early, already by December or January 2007. They are starting to file the paper work already -and while interest rates might notch up a touch, so will their factory rentals. I don't see this as a major issue, at this point.
Their logistics business is coming on stream nicely with Warehouses to start be rented there before the end of this year. Ticon has an excellent land location near the new Airport on this. Logistics is the next big growth business in Thailand, I belive.
My own EPS forecast for this year is 1.65 and rising to 1.85 for 2007. Dividend payout has averaged 85-90% over the past 3 years, so we might expect a 1.30 to 1.4 total dividend for the coming year? This so would come to a 9% yield at the price of 15.2, or among the highest of any SET company! Yet look at their strong growth rate! The long term growth rate of expected yearly dividend increases is impressive and set to continue, in my view, as I don't buy the argument (or high risks) that there wont be any more TFUND additions.
Ticon's excellent annual report is very helpful & comprehensive and they state there again that "growth is exceeding supply". Try to take a look at Ticon's annual report.
One possible concern is Ticon's ability to keep up the listing every year, of another tranche of property Fund. The concern are interest rates. Surely if long term % rates move much higher, the fund will have to pay more to induce buyers. But the point is their factory rents are also increasing and so hardly static. So they have a buffer on this.
Strong buy view re-instated with Ticon amply trading around 15.2 just now.
Best Regards,
Paul A. Renaud.
