In this briefing:
- China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
- QH: 2018 Earnings Grew 10% In-Line with Our Forecast
1. China Risun (中国旭阳) IPO Quick Note: Past the Peak of Coking Cycle
China Risun, a leading coking coal refining player in China, is seeking up to USD 243 million via a listing in Hong Kong. In this insight, we will discuss the following topics:
- Company’s business and the value chain of coking coal
- Industry backdrop of the coking coal processing industry in China
- Shareholders and investors
- Thoughts on valuation
2. QH: 2018 Earnings Grew 10% In-Line with Our Forecast
QH has 4Q18 net profit of Bt786m (-13%YoY, -40%QoQ). The 2018 result was in-line with our expectation.
- 4Q18 earnings from property development segment drop 36%YoY caused by one time charge of Bt150m from litigation and lead to higher SG&A-to-sales to 25.4% from 18.1% in 4Q17. Meanwhile, total sales grew 20%YoY.
- 4Q18 equity income grew 12%YoY at Bt493m driven by HMPRO contribution which derived from its branches expansion and HMPRO S.
- 2018 core earnings grew 83%YoY to Bt2.0bn backed by gross margin improvement and better SG&A controls. Meanwhile, sales drop 6% YoY due to lower new project launches.
- We maintain positive outlook in 19-20E driven by Q Sukhumvit transfer and foresee little impact from LTV implementation. QH’s portfolio are based on luxury segment and 50% of net profit come from equity income which mainly driven by HMPRO.
- Announced an interim dividend payment of Bt0.14 (XD on 24 Apr), which is equivalent to 4.3% upcoming dividend yield.
We maintain our BUY rating with a target price of Bt3.9 based on 10xPE’19E.
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