KCE Electronics Public Company Limited (SET: KCE) reported its 2021 earnings late yesterday that was lower than what the market had expected, resulting in more than a 10% decline of its securities traded in the Stock Exchange of Thailand, despite the reported net profit for 2021 was up more than 110%.
The share price of KCE as of 16:01 local time in Thailand is trading at THB65.50 per share, decreased THB7.75 or 10.58%.
After the analyst conference on February 9, 2022, analysts have a negative outlook on KCE. Kasikorn Securities (KS) stated that KCE has been experiencing technical issues with the new machine that was installed since Nov 2021. The management said that the machine is unable to operate and the company is trying to fix the issues. This issue delays the start-up on future capacity at Ayutthaya and Rojana as well, because the team is focusing on Lat Krabang plant. This should delay revenue growth by 1-2 quarters, while GPM will likely continue to be subdued from lower utilization and higher scrap rate, even with ASP hike by 3% at year-end 2021.
KS added that it foresees a downside risk to our 2022-23 earnings forecasts, and to consensus as well.
Maybank Securities (Thailand) said that the earnings were lower than the market expectation due to the rising material cost that could be partially offset by increasing selling price, but not at the whole amount. Meanwhile, the technical issues with the machine are not complete and could be done by late 1Q22 at the earliest.
The capacity expansion for KCE is slower than scheduled by approximately one quarter, resulting in missing the due date for its scheduled delivery plan.
MST added that the market could rerate KCE’s estimate by 10-15%, recommending investors to slow down their investment in KCE and wait and see.
