The share price of Sabuy Technology Public Company Limited (SET: SABUY) has been performing poorly for the most part of this year up to this point after reaching a record high of THB38.00 per share in January 2022.
Despite MSCI Global Index announcement of inclusion of SABUY in the Small Cap Index last week, the share price does not seem to respond in the positive direction as it should have been. The price fell more than 11% in a month and 26.5% in three months.
The company reported net profit for 1Q22 (ending 31 Mar 2022) of THB107.3 million, an increase of THB73.6 million or 218.5% from the same period last year and an increase of THB30.5 million or 39.7% from the previous quarter. This increase in the net profit was in accordance with enhanced efficiency in cost management for administrative expenses and recognition of net profit of food court system management, vending machine business, drop-off services and TBSP Plc.
Sales and services revenue for the period was THB735.0 million, representing an increase of THB370.9 million or 101.9% from the same period last year and an increase of THB20.9 million or 2.9% from the previous quarter.
Bualuang Securities (BLS) stated that SABUY is the firm’s favourite stock, and this could be getting a swan at a duck’s price, judging from the current valuation of SABUY that is underappreciated by investors and the market at large. BLS also sees impressive growth potential of the company.
BLS said that THB787 million of net profit that the firm projected for this year can be achieved, despite 1Q22 net profit accounted for only 14% of the full year projection. It expected sequentially higher QoQ profits each quarter, 2Q-4Q22, as new businesses ramp up and build critical mass. 2Q22 net profit is expected at THB160-180 million (up 240-280% YoY and 50-70% QoQ) and THB200-250 million in 3Q22 (up 260-350% YoY and 10-60% QoQ).
Stating that the outflow will eventually subside, BLS said that SABUY will make a quick turnaround once the bearish sentiments abate, driven by its continually strong earnings growth projected in 2Q22.
The growth will start from its branch expansion from 5,984 at YE21 to 12,100 branches at the end of the first quarter and will increase to 15,000 branches at the end of June. The second growth driver would be its lending business(+THB5-10 million QoQ) after the acquisition of many firms holding the necessary licenses.
Moreover, the recovery of its existing businesses (payment kiosks, vending machines and food courts) will support its 2Q22 earnings (+25- 35 million QoQ), due to Covid-19 relaxations. Last but not least, it will recognize profit sharing from M&A and CDM business (+3-5 million QoQ).
In addition, BLS stated that SABUY’s valuation will dive from trailing PER of 112x to 2022 PER of 54x and fully diluted 2023 PER of 44x with PEG of below 1x. Thus, the firm gave a BUY recommendation with a target price as high as THB50 per share.