STI: Acquisition Benefits Are Not Fully Priced In, Strong BUY
We have a BUY recommendation on STI based on our target of Bt10.10, implying an upside of 31% from the current share price. With the consolidation of AEC, we change our valuation method from sum-of the-parts to a DCF-based valuation and use a WACC of 6.8% and a terminal growth rate of 3%. We apply a 15% small-cap discount.
Investment thesis:
- Recent acquisition gives access to government infrastructure projects
- Major shareholder as a key strategic partner for deal flow
- Backlog ensures strong near-term growth and revenue stability
Interim: Large-scale projects and the successful integration of AEC have driven strong 2Q20 results. We still believe that the market does not consider the benefits of the acquisition to the full extent, providing high upside potential.
Risks: Reliance on limited industries, delay in project completion, shortage of experienced personnel, and adverse regulatory changes.
- Unlock all research summaries
- Follow top, independent analysts
- Receive personalised alerts and emails
- Access Briefings, Analytics, and Events
Upgrade anytime to our paid plans for full-length research, real-time analyst discussions, and more.
Join a thriving community of 45,000+ investors, including the top global asset managers managing over $13trn in assets.
- STI: Attractive Dividend Play with Further Upside02 Jun 2021
- STI: Acquisition Pays off Immediately, Still Further Upside10 Mar 2021
- STI: Acquisition Synergies Should Lead to Further Upside01 Dec 2020
- STI: Acquisition Benefits Are Not Fully Priced In, Strong BUY01 Sep 2020
- STI: Solid Groundwork Laid for an Attractive Investment06 Aug 2020
- IPO Radar: Enter the Stonehenge!...A Rare Architectural Consulting Firm01 Aug 2018