𝛼SKILM: Productivity Efforts Are Finally Reflected in the Price
We change our recommendation on ILM to HOLD from BUY, as ILM has seen strong share price performance and converged towards our target price. We maintain our target price of Bt16.70, implying a downside of 3% from the current price. We derive our target price from a DCF-based valuation using a WACC of 7.9% and a terminal growth rate of 2%.
Investment thesis:
- Customized furniture brand Younique captures modern customer demand
- Improved cost control should support further margin expansion
- Overseas expansion provide future growth opportunities
Interim: Revenue continued to recover and was only down by 3.5% in 1Q21 YoY. The results confirm our expectations of a fast recovery. Continued expansion efforts and the fast-growing brand Younique drive a positive outlook.
Risks: Slowdown in Thai consumer spending, increased competition puts pressure on margins, worsening inventory management, disruptions in the supply chain.
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