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Premier Marketing

Good sales, yield despite tough economy BUY

Premier Marketing Plc

products last year: Taro Japanese grilled fish flavor in June and Taro crisp fish snack in

November. The Taro crisp fish snack was more popular than expected and production

has not been able to keep up with demand. PM plans to increase capacity for this

production line this year. Last year it also signed on two new trading partners: Osotspa

Taisho Pharmaceutical and Sub-Anant, owner of Preaw Coffee. It expects a steady

stream of new contracts this year. It expects the new product lines to continue to sell

well this year despite the bumps in the road for consumer products.

Snack industry outlook: Based on an average growth rate for the snack industry at

10.6% p.a. in 2010-2012, total market size grew 5.7% in 2013 to Bt27bn. The market is

expected to grow 7% in 2014 to Bt29bn. The fish snack segment took 9% of the total

snack market, with total value of Bt2.3bn in 2013, forecast to rise to Bt2.5bn in 2014,

+10% YoY. Taro is consistently #1 in the fish snack segment with an overwhelming

73.1percent share of the market. This is, however, down from 2012's 75.1% because thirdranked

Bento stole share, lifting its share of the market to 9.5% in 2013 from 7.4% in

2012. It also grabbed share from #2 Fisho, whose slice of the market slid to 8.2% last

year from 9.7% in 2012. In 2014 the players in this segment of the snack industry will

continue to battle over market share, but PM will stay #1, planning that its greater

marketing and new products will bring a 10% rise in sales this year.

2013: Healthy local sales growth but poor exports to Japan. Of the 2013 sales of

Bt3.1bn, 77% was supplied by the local sale of snacks and consumer products, up

6%YoY. PM boosted sales volume by a steady introduction of new products and flavors

- over 30 - throughout the year, overcoming the dip in local consumption and

economy. The remaining sales were largely from export of tuna products, mostly to

Japan (~50% to leading trading firm Nichimo), and these fell 9% YoY, hit by poor global

economies and from yen volatility. We expect exports to get back on track this year.

BUY, target price Bt11, outstanding at yield. The company reduced the number of

shares by 51mn, to 598mn shares from 650mn, effective in March 2014. This action will

raise reported EPS by 7.8%. We forecast EPS at Bt0.8/share in 2014. PM provides a good

annual dividend yield of ~6% p.a., and this year's final interim dividend is Bt0.31/share

(3.6% yield). XD will be announced after the April 24 AGM. We continue to BUY, seeing

the current price as still cheap against solid growth and conservative business

management. Our target price is 11x based on 14x PER in 2014.


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