KCE and HANA Share Prices Rally on a Weaker Baht

Shares of KCE and HANA rallied Wednesday as the Thai baht weakened and raw materials prices continued to fall in lockstep with oil prices.

The share price of KCE Electronics Public Company Limited (SET: KCE) rose THB2.00/share or 3.27% to THB64.00/share, with a trading value of THB518 million.

The share price of Hana Microelectronics Public Company Limited (SET: HANA) rose THB1.50/share or 3.26% to THB47.50/share, with a trading value of THB223 million.

KTBST Securities maintains a BUY rating on KCE and a target price of THB80.00 on an expectation that core profit would grow +18% YoY but to decline -15% QoQ to THB596 million. A reduction in QoQ may be due primarily to supply chain disruption as several European automakers which are KCE’s major customer group have had to shut their plants in the wake of the Russia-Ukraine war. However, gross profit margin would improve slightly to 25.5% on the back of selling price increases and a greater efficiency in the production process. Meanwhile, net profit for 2022/23 is projected at THB3.0 billion (+23% YoY) and THB3.3 billion (+14%), respectively. Revenue in USD terms is predicted to increase +22.7%/+15.4% to USD575 million/USD664 million in light of the growing demand for PCBs. Gross profit margin would increase to 27.5% on economies of scale and selling price increases.

KTBST, also, reiterates a BUY rating on HANA with a target price of THB70.00 as it predict 1Q22 core profit to grow +4% YoY, +16% QoQ to THB430 million in expectation of stronger revenue and weaker baht YoY, and a low base in 4Q21, a period the SiC business suffered a  huge loss. Gross profit margin would improve QoQ although USD revenue appears to have decreased slightly after the Russia-Ukraine war and China’s re-lockdown have resulted in  supply chain disruption.