Stock Analysis: BBIK Shows Strong Growth Potential
Maybank Securities has maintained a Buy recommendation on BBIK, citing expectations for core profit to experience significant growth in Q4/2023 (+107% YoY, +4% QoQ) and in 2024 (+38% YoY). The research department’s target remains steady at 123 baht as the company secures various project bids, signaling a return to profitability following a period of uncertainty. With an estimated 38% YoY growth in core earnings per share for 2024, attributed to increased worker productivity, lower tax rates, and winning more project bids, BBIK is positioned for success. Additionally, the stock is currently trading at a PEG of 0.9x, the lowest among technology service providers.
Projected Backlog and Revenue Growth
The backlog for BBIK is anticipated to increase in Q4/2023 and Q1/2024. Despite experiencing a temporary decrease in the third quarter of 2023 due to political uncertainty, the company has regained momentum with the successful bidding of projects. As a result, the backlog is expected to show positive growth in the coming quarters as new contracts are secured.
Factors Driving 2024 Earnings Growth
BBIK’s core earnings per share for 2024 are projected to grow by 38%, supported by four key factors: profit growth from domestic and overseas projects, increased profit share from associates, and tax-related benefits. Particularly, the company anticipates significant contributions from digital transformation projects in Thailand, which are expected to drive profit growth in the range of 15-20%.
Lowest PEG Ratio Among Technology Companies
With a P/E ratio of 37 times in 2023 and a projected core earnings per share growth of 39% CAGR for 2023-25, BBIK boasts a PEG ratio of 0.9 times, the lowest among technology providers in Thailand. Despite potential revenue recognition volatility, the company’s performance indicators remain strong, with a target price of 123 baht and a 2024 P/E of 34 times based on DCF.
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#Currently on stocks – Maybank Securities looks at stocks, maintaining a Buy recommendation on BBIK as core profit is expected to grow strongly in Q4/2023 (+107% YoY, +4% QoQ) and 2024 ( +38% YoY). The research department’s target remains unchanged at 123 baht as BBIK returns to winning various project bids in October 2023. The backlog is expected to increase in Q4/23 and Q1/24, with core earnings per share are estimated in 2024. Grown 38% YoY due to winning more project bids. Higher worker productivity and lower tax rates BBIK stock trades at a PEG of 0.9x, the lowest among technology services companies.
Backlog is likely to increase in Q4/2023 and Q1/24. BBIK ended 3Q23 with a backlog of 692 million baht (+61% YoY, -12% QoQ), with the QoQ decrease resulting from the delay in submitting project proposals due to political uncertainty during May-August ( Process for finding a new Prime Minister after the election) BBIK returned to win the project bid again in October. Some projects should start signing contracts in the 4th quarter of 2023, while other projects We have to wait until clients finalize their annual budgets in early ’24. As a result, we expect the backlog to increase QoQ in Q4/23 and Q1/24.
4 important factors supporting core EPS growth of 38% in 2024 The research department predicts 2024 earnings per share growth of 38% based on 4 important factors: 1) profit growth of 15% from projects in Thailand. and increase work efficiency at Vulcan 2) Profit grew 6% from overseas projects 3) Profit share from associates grew 11% and 4) Profit increased 6% from lower tax rates and share ratio Innoviz estimates that projects in Thailand contribute 15 % to profit growth, which will be driven by the growth of the digital transformation industry. in Thailand at a level of 15-20% (BBIK executives estimates)
Lowest PEG ratio (0.9 times) among technology companies. With a P/E in 2023 of 37 times and core earnings per share growth in 2023-25 at 39% CAGR, BBIK has a PEG ratio of 0.9 times, the lowest among technology providers in Thailand, with 4 technology stocks In Thailand, the average PEG ratio is 2.3 times and the target price based on DCF is 123 baht (WACC 9.4%, Terminal Growth 3.4), representing a 2024 P/E of 34 times. There is a risk that quarterly revenue recognition will be more volatile. This is because some customers have started breaking their projects into smaller steps.
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