In-Depth Financial Analysis of Bluebik Group and Other Key Players

Broker Name: Maybank Securities (Thailand) PCL

Date of Report: November 12, 2024

Bluebik Group (BBIK TB): Strong Growth and Strategic Recommendations

Bluebik Group (BBIK TB) has demonstrated a commendable performance in the third quarter of 2024, reporting a record-high quarterly core profit that surpassed forecasts. The company’s core net profit for 3Q24 reached THB88 million, reflecting a 16% year-over-year (YoY) growth and a 95% quarter-over-quarter (QoQ) increase. This performance was driven by higher-than-expected gross margins and lower-than-expected selling, general, and administrative (SG&A) expenses. Notably, BBIK did not expand its workforce during this period, leading to a stronger-than-anticipated net margin of 23.5%.

Future Outlook and Revised Targets

The momentum is expected to continue into 4Q24, with a forecasted core profit of THB91 million, marking a 14% YoY and 3% QoQ growth. This optimism is backed by robust demand for tech services, particularly from the banking, insurance, and retail sectors. BBIK’s backlog at the end of 3Q24 stood at THB871 million, with THB355 million scheduled for recognition as revenue in 4Q24, thereby securing 82% of the projected revenue for the quarter.

Following the impressive 3Q24 results, the core profit forecast for FY24-26 has been revised upwards by 3%. The revised target price (TP) is now THB50.1, reflecting an 18% upside from the current price of THB42.75. The projected core profit growth for FY25E is 30% YoY, driven by virtual banking projects, cloud migration, and increasing AI adoption. BBIK anticipates that AI-related projects will account for more than 50% of its revenue within the next 3-5 years, up from approximately 20% in 3Q24.

Financial Metrics and Key Drivers

BBIK posted a revenue CAGR of 73% from FY17-22, with management aiming for similar growth rates in the coming years. The company’s net profit margin remained steady at 22-23% from FY20-22. Despite a drop in ROE from 50% in FY20 to around 21% in FY22, BBIK maintains a strong net cash position, with minimal interest-bearing debt.

Upside potential for BBIK includes stronger-than-expected revenue growth outside Thailand and more joint ventures and M&A deals. However, challenges such as a recession, lower budgets for digital transformation projects, and a shortage of skilled labor could pose risks.

Other Listed Companies Analysis

Accenture (ACN US)

Accenture, traded under the ticker ACN in the US, is not rated in this report. The company’s current price stands at USD357.3. While specific financial metrics and forecasts for Accenture are not provided, it serves as a benchmark for comparison with BBIK, particularly in terms of P/E ratios, where Accenture’s P/E is 27x.

I&I Group (IIG TB)

I&I Group, with a market cap of USD19 million, is not rated in this report. The company’s current stock price is listed at THB5.85. The projected P/E for 2024 is 25.4x, with an expected 2-year CAGR of 129.4%. The significant growth potential reflects the company’s strategic positioning in the market.

Beryl 8 Plus (BE8 TB)

Beryl 8 Plus, rated as a Buy, has a market cap of USD127 million. The stock is currently priced at THB16.50, with a price target of THB20.50. The projected P/E ratios for 2024 and 2025 are 27.8x and 16.9x, respectively. The company shows a 2-year CAGR of 45.7%, driven by its strong market presence and growth strategies.

Ditto Thailand (DITTO TB)

Ditto Thailand, with a market cap of USD370 million, is not rated in this report. The current price is THB18.90, with a target price of THB23.00. The P/E ratios for 2024 and 2025 are projected at 27.2x and 22.8x, respectively, indicating steady growth and profitability in the coming years.

Humanica (HUMAN TB)

Humanica, rated as a Buy, has a market cap of USD268 million. Its stock is priced at THB10.60, with a target price of THB12.70. The P/E ratios for 2024 and 2025 are 27.9x and 24.6x, respectively. The company’s 2-year CAGR stands at 12.4%, supported by its robust business model and market strategies.

Netbay (NETBAY TB)

Netbay, rated as a Buy, has a market cap of USD94 million. The current price is THB16.20, with a target price of THB20.50. The projected P/E ratios for 2024 and 2025 are 15.6x and 18.1x, respectively. Despite a negative growth outlook with a -3.6% 2-year CAGR, the company remains a solid player in its sector.

Conclusion

Bluebik Group stands out with its robust growth and strategic initiatives, positioning itself for significant future gains. Other companies analyzed in this report also showcase strong market positions and growth potentials, making them noteworthy contenders in the tech and consulting sectors. Investors are advised to consider these insights and recommendations to make informed investment decisions.