Krungsri Securities Public Company Limited stated that ICHI reported second quarter 2569 core profit of 309 million baht, up 8% year on year and 8% quarter on quarter, excluding a special gain from land sales of 120 million baht in the second quarter of 2568. Total revenue was 2.1 billion baht, down 5% year on year but up 11% quarter on quarter. Domestic revenue, which accounted for 97% of total revenue, still grew 7% year on year despite the impact of longer than normal machine maintenance causing some product shortages, and alkaline water production overlapping with other product lines. Alkaline water is expected to grow 100% year on year and 6% quarter on quarter, accounting for 13 to 14% of revenue. Meanwhile, overseas revenue fell 81% year on year, mainly from lower Cambodia sales and lower OEM sales due to the fake coconut water problem in China. Gross margin was 23.5%, compared with 24.0% in the second quarter of 2568 and 24.1% in the first quarter of 2569, better than expected even though packaging costs rose. SG&A expenses to sales increased to 9.8% from 7.2% and 7.6% respectively, due to community and social investment promotion measures of 36 million baht, compared with 8 million baht in the first quarter of 2569, and the company received tax benefits of 72 million baht. The second half of 2569 trend is expected to improve in both revenue and easing costs. First half profit accounted for 47% of the full year 2569 normalized profit estimate of 1.26 billion baht, up 5% year on year. Second half profit is expected to increase both year on year and from the first half, supported by the El Nino period expected from October to March 2570, new alkaline water flavors launching in September, production returning to normal, full shelves, and easing costs. If oil does not exceed 90 to 95 dollars, it is still manageable. The company estimates 2570 profit to increase 17% from 8% revenue growth and lower costs. Medium to long term picture still has supporting factors, including high margin alkaline water still growing strongly and set to become the second best selling product after green tea. Production capacity increases from a partner factory completed in November 2569, supporting growth for at least three years. Depreciation will start to decline by 150 million baht in 2571 and by 50 million baht per year in 2572 to 2574, not yet included in estimates. Tax benefits double from higher community and social investment promotion measures, from investment of 300 million baht to 421 million baht, making tax saving increase from 600 million baht to 842 million baht, with the increase not yet included in estimates, and this applies from the fourth quarter of 2568 to the fourth quarter of 2571. Krungsri Securities selects ICHI as a top pick in the beverage sector, recommends Buy, and adjusts the target price to 2570 at 18.1 baht based on a PER of 16 times. It views ICHI as benefiting the most from El Nino period revenue and easing costs after the war, and expects a high dividend yield of 6.4%.
Ichitan Group Public Company LimitedDomestic revenue grew 7% YoY and alkaline water expected to grow 100% YoY, supporting second half growth.
