SUSCO, a strong buy in my view.

SUSCO a new idea with a stronger buy opinion.

SUSCO (3.06) has seen its share price correct by more than 15% over the past two weeks following a nice 10x Q. increase in YoY earnings growth.  In the third quarter of 2016, this company had sales volume of 153.545 million litres, an increase of 36.988 million litres, or 31.73%, from the same period in 2015.  For the nine month period ended September 30, 2016, the company had a sales volume of 495.888 million litres, an increase of 105.859 million litres, or 27.14%  as compared to the same period in 2015.   The 2Q. did not look so good but only due to special factors of dividends from a subsidary,  if the dividend received from a subsidiary as mentioned, was excluded, SUSCO would have had an increasing in the net profit of Baht 56.59 million, or 151.31% from the same period of 2015.  Net profit margin doubled as compared to the past couple of years.  Wow.  Book value is stated at 3 Baht and I can see a total of 0.12 Baht dividend over the next 12 months or for a yield of close to 4% on the current stock price of 3.08.  This company pays dividends twice a year.

From Thai Biz news:  "SUSCO is budgeting Bt165mn to open more stations next year. It expects 4Q16 performance to be good on seasonality. It expects 2016 revenue to reach Bt20bn thanks to its wider customer base. (Thun Hoon, 25/10/16).  "SUSCO expects 4Q16 earnings to be outstanding because of holidays. It expects 2016 revenue growth to reach 15%. It plans to increase its customer base by active strategy. It targets 250 service stations within 2017. It plans to upgrade its service stations into one-stop service stations". ( Thun Hoon, 12/10/16)

SUSCO to me has to be a key valuation play trading at 1x PBV and PE 10 for 2016,  as compared to its closed comparable PTG trading at 11x PBV and a P/E  of 40!   Apart from valuations SUSCO also has good earnings growth as 4Q will likely see another more than ten fold earnings growth on a YoY basis with 30-40% QoQ earnings growth.  2017 should see yet further earnings growth of 15% supported by both oil and non oil business. The company sells a broad range of fuels, including jet fuel.  It does not make sense to me that PTG should be valued at 4 times higher then SUSCO?  Look at it this way:  PTG should deliever about a 0.24 Baht dividend per share next year vs. 0.12 Baht for SUSCO, so that's 2 times' more... but PTG stock price at 28.75, is 9.3 times higher!

Some of you will remember right around 3 years ago I pounded the table here on PTG (28.75)  at less 1/6 the price its now, only to be discouraged by some skeptical comments here and elsewhere on how they can't beat PTT. Well they did.  Here is the link to that original member article  https://thaistocks.com/content/another-high-growth-stock-tame-valuation-defensive-sector

SUSCO is no PTG in scope & size (PTG revenues are about twice SUSCO's) and quality, but surely deserves a higher p/e valuation than 1/4 of PTG -and 4.65 (9.3 divided by 2) times higher as I estimate above (on a dividend yield basis comparison)  also SUSCO trades right around its stated book value of 3 Baht per share, vs. PTG book value per share is shown at 2.55,  so trading at 11.7 times its stated book value!    My stronger buy view rating at today's closing price of 3.06 for SUSCO is my reflected and only reasonable conclusion.  As always comments welcome.

Beset Regards,