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Dynasty Ceramic
Tisco Securities has maintained its "buy" rating on Dynasty Ceramic, with a 12-month target price of Bt18 per share.
Several factors have negatively affected demand for ceramic tiles and put downward pressure on Dynasty Ceramic's margins this year. However, the brokerage expects 2007 to be a more favourable year due to an anticipated upturn in domestic consumption, reduced cost pressures and the positive impact of the baht's appreciation on its raw material costs.According to the company, demand in October remained weak and the broker believes this resulted from widespread flooding. This is quite disappointing, as the fourth quarter is normally a favourable one for sales of ceramic tiles. Nonetheless, gross margin should still show a slight rise due to lower energy costs. The broker now expects a net profit for the fourth quarter. However, it has cut its net profit forecast for 2006 by 5 per cent at Bt578 million to reflect lower sales, but left its 2007-2008 earnings projections unchanged at Bt730 million and Bt821 million, respectively. The outlook for Dynasty's earnings next year remains favourable for several reasons: the likelihood of a rebound in demand as consumer confidence recovers.
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