CGS International (Thailand) (CGSI) downgraded Cal-Comp Electronics (Thailand) Public Company Limited (SET: CCET) to Hold from Add, reducing its target price to THB8.30 from THB10.20 after third-quarter earnings fell short of expectations. The revised target offers just 0.6% upside from the closing price of THB8.25 share price on November 13.
The brokerage lowered its core earnings-per-share forecasts for 2026–2028 by 15–20%, reflecting reduced operating margin assumptions. It expects CCET’s product mix to remain a constraint on profitability over the coming quarters, even as revenue continues to grow.
Demand also remains a concern. CGSI anticipates subdued spending on computer peripherals and consumer electronics over the next six to 12 months, as AI-related demand tightens memory availability and increases component costs. The brokerage warned that higher retail prices could encourage price-sensitive buyers to postpone replacement purchases.
The earnings disappointment came despite quarterly revenue of THB48.0 billion, exceeding CGSI’s estimate by 11%. Sales increased 33% from a year earlier and 38% from the preceding quarter, but core net profit reached only THB754 million—33% below both CGSI’s forecast and Bloomberg estimates. Profit rose 42% year-on-year but was broadly unchanged quarter-on-quarter.
CGSI attributed the weaker profitability partly to an adverse product mix. Gross margin narrowed to 4.7%, compared with 5.3% in the previous quarter and 5.1% a year earlier. Selling, general and administrative expenses reached THB1.06 billion, overshooting the brokerage’s forecast by 18%, while operating margin was 2.4% against an expected 3.2%. A higher tax rate also weighed on earnings.
Separately, CCET recorded THB182 million in other expenses that CGSI believes were associated with Chinese factory closures. Removing that charge would have lifted core profit to approximately THB936 million, still around 14% below its estimate.
CCET has announced plans to liquidate three indirectly wholly owned Chinese subsidiaries to simplify operations and lower costs, with completion expected in the fourth quarter of 2030. CGSI’s revised earnings forecasts do not include further factory-closure charges.
The new target uses 20.8 times projected 2028 earnings, with the valuation rolled forward to end-2027, replacing the previous basis of 24.6 times 2027 earnings.
CGSI identified customer additions and larger savings from automation and production consolidation as potential upside drivers. Further closure costs and a prolonged demand slowdown remain downside risks.
