CIVIL closed the first day of trading at 4.50 baht, a decrease of 2.17% or 0.10 baht from the IPO price of 4.60 baht, trading value 2,243.70 million baht from the opening price of 5.25 baht, the highest price is 5.25 baht, the lowest price 4.50 baht.
Bualuang Securities (as a Financial Advisor (FA) and Lead Underwriter) stated that the fundamental valuation of Civil Engineering Public Company Limited’s (CIVIL) shares in 2022 at 5.4 baht / share, based on EPS of 2022 at 0.38 baht (Post-Money) and PER at 14.0 times, based on historical average PER (Historical PER) for the past 7 years (2015-2021) at 16.4 times of construction companies listed in the large market. Small, a total of 6 companies that have reported the most profits in the past.
However, the upside will come from bidding on new projects. and manage costs more than expected After the company IPO and listed on the market, it will make it known more widely. Opportunity to receive good feedback from new partners to jointly invest in bidding on future projects especially large infrastructure
and the company has investments ready to add new machines for supporting the bidding of large projects that will gradually come out later than in the past It also helps to manage costs more efficiently than the old machine that may have a higher repair cost.
Therefore, there is an opportunity for investors to value CIVIL more (re-rating valuation), allowing the stock to trade on a higher valuation. Therefore, we have prepared a table of sensitivity (sensitivity analysis) of base value and Target PER in case of discount from 0-25% (Base case, we give discount at 15% first) as shown below. for investors to study as an alternative for investment decision making and get the basic value up to 6.3 baht in the case of setting PER equal to the group average
In this regard, CIVIL has important investment issues as follows: 1) Has 55 years of construction experience, starting from road works and expanding to work on dams and reservoirs, airports, industrial estates, and railways. There is a backlog of approximately 16,873 million baht, with an experienced management team to share their experiences. from generation to generation
2) Outstanding in cost management and apply technology Both in terms of reducing the construction process (Optimized workflow), reducing the cost of construction (Cost Optimization) and having a construction plant close to the major construction sites in 4 provinces, helping to reduce material costs. and transportation time Results reflected through higher-than-average GP and low cost overrun.
3) Huge Opportunities from the Construction Industry Picture to come back to prosper again After the Covid-19 situation severely affect the economy The construction sector is back to work normally. and accelerating the disbursement of the budget for a new round. It is expected that the Ministry of Transport will push the construction of roads-expressways for more than 300 billion baht and the government pushes for the PPP project that holds more than 1 trillion baht in the pipeline between 1-3 years and sees the EEC project. seriously come back again Laying down the country’s economic infrastructure for a new round These are all jobs that CIVIL is good at.
4) Profit has passed the lowest point. And clearly outperform the group’s performance, as evidenced by the 9M19 fiscal year’s financial statement that the core profit grew 267% YoY and the contractor revenue grew more than 30% YoY compared to the group. that dropped an average of 8% YoY, a positive effect from a significant revenue recognition period for major projects
5) Estimating the trend of revenue-profit growth this year plus Scope of upsides We forecast 2022 core profit of Bt269 million, growing 15% YoY from the entry into the revenue recognition period of the high-speed rail project. Saraburi – Kaeng Khoi while the upside will come from the opportunity to bid for new projects that are more than expected (5 billion baht / year), especially the EEC and in the case of better-than-estimated profit margins from serious cost reductions
