THAILAND EQUITY RESEARCH

Page | 1 | PHILLIP SECURITIES (THAILAND)

Closing Price(Bt) 4.34Target Price(Bt) 3.30 (-20.23%)

COMPANY DATA

O/S Shares (mn) : 6,528 Market Cap. (Btmn) :Market Cap. (USDmn) :52-WK Hi/Lo (Bt) : 4.54/3.463M Average Daily T/O (mn) : 2.13Par Value (Bt) : 0.10

MAJOR SHAREHOLDERS (%)

1. Roongroj Sansarthra 24.52.Maruth Sansarthra 7.43. Monrak Sansarthra 7.4

PRICE PERFORMANCE (%)

1MTH 3MTH 1YRABS 2% 0% 16%REL TO SET INDEX 0% -11% 27%

PRICE VS SET INDEX

Source: Bloomberg, PSR

KEY FINANCIALS

FYE Dec FY14 FY15 FY16E FY17ESales(Btmn) 7,177 7,172 7,478 7,926Net Profit(Btmn) 1,227 1,372 1,413 1,496EPS (Bt) 0.30 0.21 0.22 0.23P/E (X) 14.4 20.6 20.1 18.9BVPS (Bt) 0.69 0.48 0.52 0.58P/B (X) 6.3 9.1 8.4 7.5DPS (Bt) 0.30 0.19 0.16 0.17Dividend Yield (%) 6.9 4.3 3.7 4.0ROE (%) 44.82 47.03 44.10 42.31Debt/Equity (X) 1.67 1.66 1.24 1.45

Source: Company, PSR Est.**Multiples and yields are based on latest closing price

VALUATION METHOD

P/E'16 (15x)

Danai Tunyaphisitchai, CFACapital Market Investment Analyst # 2375Tel: 66 2 635 1700 # 481

28,331 806

04 March 2016

Sell (Maintain)

27 April 2016

0

2

4

6

Apr-13 Apr-14 Apr-15 Apr-16

DCC TB EQUITY SETI (rebased)

Dynasty Ceramic Demanding valuation amid less attractive dividend yield THAILAND | SET | CONMAT | COMPANY RESULTS BLOOMBERG DCC TB l REUTERS DCC.BK 1QFY16 net profit up 14% y-y but dividend payout cuts in order to fund expansion project DCC reported a 14% y-y growth in 1QFY16 net profit to Bt439mn with sales rising 3%. Domestic sales increased slightly as DCC’s major group of customers has suffered weaker purchasing power due to falling agricultural prices, but regional sales climbed after DCC shifted focus to export to mitigate impact from domestic slowdown. Gross margin ticked up to 41% from 40% a year ago and SG&A expense declined. Its profitability-driven strategy appears to be a key mechanism toward strong earnings growth. As for dividend policy, DCC announced dividend of only Bt0.05 for 1QFY16 performance (ex-dividend trade on May 4) after it cut dividend payout policy to 75% from 100%, saying the company has intended to reserve cash to fund its expansion. The company aims to increase capacity by 1mn sq.m. or 18% from 5.7mn sq.m. a month currently with an estimated investment of Bt500mn. The dividend payout cut was completely unexpected as the company’s financial positive remains healthy and its liabilities are relatively low at Bt280mn as compared to equities of Bt3.5bn, meaning low debt to equity at 0.44x that gives DCC enough room to tap into financial institutions. We think the company’s dividend payout cut rather than borrowing from financial institutions could signal a sense of cautious approach.

FY16 net profit seen up 3% Thailand’s drought condition will likely take a toll on DCC’s target customers, implying weaker spending power, but the company’s focus on regional markets would help mitigate the impact. We expect total sales volume to grow 5% but average selling price is likely to soften on gloomy domestic market, and thus revenue is forecast to grow 4%. A decrease in natural gas price, thanks to falling oil price, is likely to push gross margin slightly wider to 43% from 42% but penetration into regional market could drive operating expense higher, particularly marketing and logistic expenses. As such, net profit would grow 3% in 2016. A key risk to our forecast is export market with revenue accounting for less than 10% of the total. Expensive valuation DCC comes at an expensive valuation with the stock trading at 20x P/E vs its historical average of 14x-15x. Furthermore, the cut of dividend payout ratio to reserve cash for expansion makes the stock less attractive, in terms of dividend yield that decreased to 3% from previously 5%. We have a ‘SELL’ rating on DCC with a target price of Bt3.30.

Ref. No.: CO2016_0347

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Income StatementBtmn 1Q16 4Q15 1Q15 q-q+/- y-y+/-Sales and services 2,086 1,762 2,024 18% 3%Costs of sales 1,215 1,024 1,202 19% 1%Gross profit 871 738 822 18% 6%Sel ling expenses 165 147 186 12% -11%Administrative expenses 155 151 155 2% 0%Operating profit 551 440 481 25% 15%Other income 3 2 6 31% -50%Gain/loss from affil iates 0 0 0 n.m. n.m.Other expense 0 0 0 n.m. n.m.EBIT 554 442 486 25% 14%Interest expense 5 7 8 -22% -36%EBT 548 435 478 26% 15%Taxation 109 88 92 24% 18%EAT 439 347 385 27% 14%Minority 0 0 2 -168% -111%Net profit before extra 439 347 384 27% 14%Extraordinary items 0 0 0 n.m. n.m.Net profit 439 347 384 27% 14%EPS (Bt) 0.07 0.05 0.09 40% -22%

Key Financial Ratio% 1Q16 4Q15 1Q15 q-q+/- y-y+/-Cost of sales/sales 58.26% 58.09% 59.37% 0% -2%SG&A exp/sales 15.33% 16.96% 16.88% -10% -9%Gross margin 41.74% 41.91% 40.63% 0% 3%Operating profi t margin 26.41% 24.94% 23.75% 6% 11%Net profit margin 21.06% 19.67% 18.97% 7% 11%

Balance Sheet Btmn 1Q16 4Q15 1Q15 q-q+/- y-y+/-Assets 5,140 5,134 5,097 0% 1%Liabi li ties 1,580 2,014 2,403 -22% -34%Paid-up (mn shrs) - Par Bt0.1 6,528 6,528 4,080 0% 60%Equities 3,560 3,121 2,695 14% 32%BVPS (Bt) 0.55 0.48 0.66 14% -17%Debt/equity (x) 0.4 0.6 0.9 -31% -50%

Dynasty Ceramic COMPANY RESULTS

THAILAND EQUITY RESEARCH

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Corporate Governance -2015

ADVANC BAFS BCP BIGC BTS CK CPN DRT DTAC DTCEASTW EGCO GRAMMY HANA HMPRO INTUCH IRPC IVL KBANK KCEKKP KTB LHBANK LPN MCOT MINT MONO NKI PHOL PPSPS PSL PTT PTTEP PTTGC QTC RATCH ROBINS SAMART SAMTELSAT SC SCB SCC SE-ED SIM SNC SPALI THCOM TISCOTKT TMB TOP VGI WACOAL

AAV ACAP AGE AHC AKP AMATA ANAN AOT APCS ARIPASIMAR ASK ASP BANPU BAY BBL BDMS BECL BKI BLABMCL BOL BROOK BWG CENTEL CFRESH CHO CIMBT CM CNTCOL CPF CPI CSL DCC DELTA DEMCO ECF EE ERWGBX GC GFPT GLOBAL GUNKUL HEMRAJ HOTPOT HYDRO ICC ICHIINET IRC KSL KTC LANNA LH LOXLEY LRH MACO MBKMC MEGA MFEC NBC NCH NINE NSI NTV OCC OGCOISHI OTO PAP PDI PE PG PJW PM PPP PRPRANDA PREB PT PTG Q-CON QH RS S & J SABINA SAMCOSCG SEAFCO SFP SIAM SINGER SIS SITHAI SMK SMPC SMTSNP SPI SSF SSI SSSC SST STA STEC SVI SWCSYMC SYNTEC TASCO TBSP TCAP TF TGCI THAI THANA THANITHIP THRE THREL TICON TIP TIPCO TK TKS TMI TMILLTMT TNDT TNITY TNL TOG TPC TPCORP TRC TRU TRUETSC TSTE TSTH TTA TTCL TTW TU TVD TVO TWFPTWS UAC UT UV VNT WAVE WINNER YUASA ZMICO

2S AEC AEONTS AF AH AIRA AIT AJ AKR AMANAHAMARIN AP APCO AQUA AS ASIA AUCT AYUD BA BEAUTYBEC BFIT BH BIG BJC BJCHI BKD BTNC CBG CGDCHG CHOW CI CITY CKP CNS CPALL CPL CSC CSPCSS CTW DNA EARTH EASON ECL EFORL ESSO FE FIREFOCUS FORTH FPI FSMART FSS FVC GCAP GENCO GL GLANDGLOW GOLD GYT HTC HTECH IEC IFEC IFS IHL IRCPITD JSP JTS JUBILE KASET KBS KCAR KGI KKC KTISKWC KYE L&E LALIN LHK LIT LIVE LST M MAJORMAKRO MATCH MATI MBKET M-CHAI MFC MILL MJD MK MODERNMOONG MPG MSC MTI MTLS NC NOK NUSA NWR NYTOCEAN PACE PATO PB PCA PCSGH PDG PF PICO PLPLANB PLAT PPM PRG PRIN PSTC PTL PYLON QLT RCIRCL RICHY RML RPC S SALEE SAPPE SAWAD SCCC SCNSCP SEAOIL SIRI SKR SMG SOLAR SORKON SPA SPC SPCGSPPT SPVI SRICHA SSC STANLY STPI SUC SUSCO SUTHA SYNEXTAE TAKUNI TCC TCCC TCJ TEAM TFD TFI TIC TIWTLUXE TMC TMD TOPP TPCH TPIPL TRT TSE TSR UMIUP UPF UPOIC UREKA UWC VIBHA VIH VPO WHA WINXO

Score Range

< 50%

50-59%

60-69%

70-79%

80-89%

90-100%

The disclosure of the survey result of the Thai Institute of Directors Association (IOD) regarding corporate governance is made pursuant to the Office of the Securities and Exchange Commission. The survey of the IOD is based on the information of a company l isted on the Stock Exchange of Thailand and the Market for Alternative disclosure to the public and able to be accessed by a general public investor. The results, therefore, i s from the perspective of a third party. It is not an evaluation of operation and is not based on inside information.

The survey result is as of the date appearing in the Corporate Governance Report of Thai Listed Companies. As a result, the survey result may be changed after that data. Phil lip Securities (Thai land) of securities company does not confirm nor certi fy the accuracy of such survey result.

No logo given

Number of Logo

Results Presentation

THAILAND EQUITY RESEARCH

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Anti-corruption indicators

Level 5 (Extended)BCP CPN GYT PE PM PPP PT PTT PTTGC SAT sccTHANI TOP

Level 4 (Certified) DCC DTC DRT EASTW ECL EGCO ERW FSS GCAP HANA HTCINTUCH IRPC IVL KBANK KCE KGI KKP KTB LANNA LHBANK MTINKI PSL PTG PTTEP SABINA SCB SNC SNP SSF SSSC TCAP

THCOM TISCO TMB TMD TNITY TOG

Level 3 (Established)

Level 3A: Declaration to join CAC, etcABC ACAP ADVANC AGE AH AMANAH ANAN AP APCS APURE ASASIA ASIAN ASIMAR BIGC BROOK BTS BWG CEN CENTEL CFRESH CHARANCHO CHOTI CM CNT COL CPF CPI CPL DELTA DEMCO DIMETDNA DTAC EA ECF EE EVER FPI GBX GC GFPT GLOWHMPRO HOTPOT ICC ICHI IFEC INOX INSURE IRC JAS JTS JUBILEKC KTC KYE LHK LPN LRH MAKRO MC MCOT MFC MFECMINT MJD MONO MOONG NBC MSC NDR NINE NMG NSI NTVOGC PACE PCSGH PDI PG PHOL PLAT PPS PR PRANDA PREBPS QLT RATCH RML ROBINS ROJNA RWI SAMCO SCCC SCG SEAOILSE-ED SENA SINGER SITHAI SMK SMPC SPALI SPC SPCG SPI SRICHASSI STANLY SUPER SVI SYMC SYNEX SYNTEC TASCO TCMC TFI THAITHRE THREL TICON TKT TLUXE TMILL TMT TNL TPCORP TSTE TSTH

TTCL TU TVI UOBKH UREKA VGI VNT WACOAL WHA ZMICO

Level 3B: Organization's statement but no declaration to join CAC, etcAAV AHC AIT AKR ARROW ASK BA BDMS BEC BJCHI BUICGH CHG CHOW CIG CITY CK CKP COLOR CWT EARTH EASONEPG F&D FANCY FIRE FMT FORTH GENCO GL GOLD GPSC GRAMMYHYDRO IRCP IT JCT KCM KWC LH LIT LOXLEY MACO MANRINMATI MODERN MSC NOBLE NOK NPK NUSA OISHI OTO PAF PAPPATO PF PJW PLANB PLE POLAR PRG PTL Q-CON QTC RCIS11 SALEE SAM SAMART SAMTEL SAPPE SC SCP SFP SIM SLPSMT SPA SPORT SSC SST STEC STPI SUC SUTHA SVI TTBSP TAE TCC TFD TGCI TGPRO THANA THIP TIW TK TMWTNDT TOPP TPC TPCH TPIPL TSR TT TYCN UAC UBIS UECUMI UP UPF UT UV VPO WAVE WINNER YUASA

Level 2 (Declared)2S ABICO AF AKP AMARIN AMATA AOT APCO AYUD BEAUTY BFITBH BKD BLAND BTNC CCP CI CSR CSS EFORL EPCO FEFNS FVC GEL GLOBAL HEMRAJ IEC IFS INET JUTHA KASET KCARKKC KSL L&E LALIN LTX M MALEE MBK MBKET MEGA MKMPG MTLS NCH NCL NPP OCC OCEAN PB PCA PRINC QHROCK RPC S & J SGP SIAM SIS SKR SMG SMIT SORKON SUSCOTAKUNI TEAM TF TIC TIP TIPCO TMC TMI TPP TRT TRUTRUE TSC TSI TTW TVD TVO UKEM UNIQ UWC VNG WIIKWIN XO

Level 1 (Committed)ACD AEONTS AFC AIRA AJ ALUCON AMC AQUA ARIP AUCT BAT-3KBIG BJC BOL BRR BSBM CBG CCET CCN CGD CMR CPHCSC CSP CTW DCON DRACO DSGT DTCI E EMC ESSO FOCUSFSMART GIFT GLAND GRAND GUNKUL HFT HTECH ILINK ITD JSP IHLKDH KTIS KTP LEE LST MAJOR MAX M-CHAI MDX MIDA MATCHML MPIC NC NEP NNCL OHTL PICO PK PL PPM NWRPRAKIT PRECHA PRIN PSTC RAM RICH RS SANKO SAUCE SAWAD PYLONSAWANG SCN SEAFCO SHANG SIRI SMART SMM SOLAR SPACK SPG SFSPPT SPVI STAR SVH SVOA SWC TAPAC TC TCCC TCJ STATCOAT TKS TNH TNPC TPA TPAC TPOLY TRC TRUBB TSE TTATTI TTL TTTM TWP TWZ U UMS UPA UPOIC UVAN UTPVARO VI VIBHA VIH VTE WG

Data not available/No policyA ACC AJD AQ BCH BGT BROCK BSM BTC CHUO CRANECPR EIC FER JMART JMT KAMART KBS KIAT LDC MCS METCOMBAX NEW NEWS NYT PAE PDG PERM PMTA RCL RICHY ROHPOST S SIMAT TCB TR TSF TVT

THAILAND EQUITY RESEARCH

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Anti-corruption indicators

Level 5 : Extended

Anti-corruption policies extend to business partners, dealers, and distributors.

Level 4 : Certified

Anti-corruption policies can be engaged by audit committee and auditors approved by the SEC.

Anti-corruption policies are certified by CAC and independent assurance providers.

Level 3 : Established

Anti-corruption corruption policies cover anti-bribery, and communications and educating all employees anti-corruption policies.

Level 3A Public out statement to join CAC, etc.

Level 3B Declare statement and organization’s anti-corruption policies but no intention to join CAC, etc.

Level 2 : Declared

Declare statement to participate CAC against corruption.

Level 1 : Committed

Organization and Board of Directors’ statements against corruption and not getting involve in any malpractices.

AssessmentAnti-corruption progress indicator for listed companies is a part of SEC’s commitment to create sustainability in anti-corruption and to become a role model to any

related business. The progress indicators comprise of five levels: 1) Committed, 2) Declared, 3) Established, 4) Certified, and 5) Extended. These indicators will

encourage listed firms to formulate anti-corruption policies to opt out of corruption, and investors can determine their investment based on anti-corruption indicator

or avoid investment in listed firms that could get involve in corruption.

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Industry Group Name Sector Name Sector IndexAgro & Food Industry[AGRO] Agribusiness AGRI

Food & Beverage FOODConsumer Products[CONSUMP] Fashion FASHION

Home & Office Products HOMEPersonal Products & Pharmaceuticals PERSON

Financials [FINCIAL] Banking BANKFinance & Securities FINInsurance INSUR

Industrials [INDUS] Automotive AUTOIndustrial Materials & Machinery IMMPackaging PKGPaper & Printing Materials PAPERPetrochemicals & Chemicals PETROSteel STEEL

Property & Construction[PROPCON] Construction Materials CONMATConstruction Services CONS Property Development PROPProperty Fund & REITs PF&REIT

Resources [RESOURC] Energy & Util ities ENERGMining MINE

Services [SERVICE] Commerce COMMMedia & Publishing MEDIAHealth Care Services HELTHTourism & Leisure TOURISMProfessional Services PROFTransportation & Logistics TRANS

Technology [TECH] Electronic Components ETRONInformation & Communication Technology ICT

PSR Rating SystemCapital Gain Recommendation> 15% BUY> 5% - 15% ACCUMULATE / TRADING BUY> 0% - 5% NEUTRAL0 <= SELL

RemarksWe do not base our recommendations entirely on the above quantitative return bands. We consider qual itative factors like (but not limited to) a stock's risk reward profi le, market sentiment, recent rate of share price appreciation, presence or absence of stock price catalysts, and speculative undertones surrounding the stock, before making our final recommendation

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