Index Rebal/Special Situations, Quiddity Advisors

Janaghan Jeyakumar, CFA

Index Rebal/Special Situations

Quiddity Advisors

Pan-Asia Catalysts/Events

Index Rebalance

<ul>
<li>In this insight, we take a look at the potential ADDs/DELs for the SET50 index rebalance in June 2023.</li>
<li>Based on the latest available data, I expect 3 ADDs/DELs but there are multiple names lurking close to the border.</li>
<li>
<a href="https://www.smartkarma.com/entities/srisawad-corp-pcl" target="_blank" data-smartkarma-citation="entities:9480:1" rel="noopener">Srisawad (SAWAD TB)</a>  and <a href="https://www.smartkarma.com/entities/sansiri-public-co-ltd" target="_blank" data-smartkarma-citation="entities:12201:1" rel="noopener">Sansiri Public (SIRI TB)</a> are leading the SET50 and SET100 Reserve Lists respectively and could become intra-review ADDs if the DTAC-TRUE merger closes in 1H 2023.</li>
</ul>


In this insight, we take a look at the potential ADDs/DELs for the SET50 index rebalance in June 2023.
Based on the latest available data, I expect 3 ADDs/DELs but there are multiple names lurking close to the border.

Srisawad (SAWAD TB)  and Sansiri Public (SIRI TB) are leading the SET50 and SET100 Reserve Lists respectively and could become intra-review ADDs if the DTAC-TRUE merger closes in 1H 2023.


Quiddity Leaderboard for Thailand SET50 Jun 23:Ramkhamhaeng Hospital Is an Interesting Case

Financials & FinTech research, Galliano’s Financials Research

Victor Galliano

Financials & FinTech research

Financials & FinTech, EM & Developed Markets

Galliano’s Financials Research

Galliano's Financials Research provides fundamental research in Emerging Markets financials, including FinTech, as well as financials in select Developed Markets.

The investment style applied is generally value oriented, although Growth At Reasonable Price (GARP) strategies can also be used where appropriate. 

Our investment research approach aim is often contrarian, looking to capitalise on overly sceptical or optimistic consensus views. In terms of valuation techniques, the focus is on PBV ratio to ROE, PE multiples and dividend yield, as well as the application of PEG ratios and, where appropriate, Sum of the Parts (SOTP) valuations.

Equity Bottom-Up

<ul>
<li>We are positive on Bank Ayudhya; it ranks top in terms of pre-provision and second in post-provision profitability, as well as screening well on credit quality metrics and valuations</li>
<li>We also like TMBThanchart, with its further improvement in 3Q22 cost of risk and incrementally better pre-provision returns</li>
<li>Krung Thai remains attractive on valuations and on our returns and credit quality screens, but is, in our view, less compelling than Ayudhya and TMBThanchart</li>
</ul>


We are positive on Bank Ayudhya; it ranks top in terms of pre-provision and second in post-provision profitability, as well as screening well on credit quality metrics and valuations
We also like TMBThanchart, with its further improvement in 3Q22 cost of risk and incrementally better pre-provision returns
Krung Thai remains attractive on valuations and on our returns and credit quality screens, but is, in our view, less compelling than Ayudhya and TMBThanchart


Thai Banks 3Q22 Screener; Bank Ayudhya Stands Out

<ul>
<li>The six Thai banks that we cover all have relatively healthy credit quality, NPL coverage and sound capital adequacy ratios; also, positive cost of risk trends support the earnings outlook</li>
<li>Of these, Krung Thai Bank stands out, with its low cost of risk, healthy post-provision profitability versus peers and its undemanding valuation multiples along with its low PEG ratio</li>
<li>TMBThanchart is one to watch in the deep value category, especially given its attractive cost of risk trends to 2Q22</li>
</ul>


The six Thai banks that we cover all have relatively healthy credit quality, NPL coverage and sound capital adequacy ratios; also, positive cost of risk trends support the earnings outlook
Of these, Krung Thai Bank stands out, with its low cost of risk, healthy post-provision profitability versus peers and its undemanding valuation multiples along with its low PEG ratio
TMBThanchart is one to watch in the deep value category, especially given its attractive cost of risk trends to 2Q22


Thai Banks 2Q22 Screener; Krung Thai Stands Out

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<ul>
<li>
<a href="https://www.smartkarma.com/entities/siam-commercial-bank-scb-x" target="_blank" data-smartkarma-citation="entities:214:1" rel="noopener">SCB X</a> has been a slightly disappointing performer since its restructuring under a new holding company to allow for a reallocation of capital towards growing tech areas.</li>
<li>A key overhang has been its sizable planned investment into leading Thai crypto exchange BitKub but the due diligence for this has been extended signalling a potential cancellation. </li>
<li>The bank's core business is recovering with loan growth recovering and credit costs coming down plus strong growth in digital banking reducing costs. Valuations are attractive on 0.7x FY22E PBV.</li>
</ul>



SCB X has been a slightly disappointing performer since its restructuring under a new holding company to allow for a reallocation of capital towards growing tech areas.
A key overhang has been its sizable planned investment into leading Thai crypto exchange BitKub but the due diligence for this has been extended signalling a potential cancellation. 
The bank's core business is recovering with loan growth recovering and credit costs coming down plus strong growth in digital banking reducing costs. Valuations are attractive on 0.7x FY22E PBV.


SCB X (SCB TB) - The Song Remains the Same

Research and consultancy, Tabbush Report

Daniel Tabbush

Research and consultancy

Tabbush Report

We provide research and consultancy on Asian banks. Our focus is on what we call “Asian bank research, without the noise.” We are interested in the most critical swing-factors for banks, the NPL and credit cycle, and where we believe there is a gap between perception and reality. We often focus on the less studied components of bank financial statements.  Our research is highly thematic, sometimes examining unlisted banks and companies as a window on mainstream banks. 

Being independent allows us to look at smaller banks, often overlooked by others. Analysis of BIS bank guidelines in the context of Asia, is also a focal point, while we also analyze global banks operating in the region. We use what we believe is the most comprehensive, reliable financials database, SNL Financial. S&P Capital IQ augments our database, with corporate data and CEIC, with economics. 

Asian bank research, without the noise.

<ul>
<li>This smaller Thai bank can more easily grow due to relatively small loan base</li>
<li>Strong core fundamentals of rising interest income and falling funding costs</li>
<li>Credit costs remain inflated, falling figures can support strong ROA growth</li>
</ul>


This smaller Thai bank can more easily grow due to relatively small loan base
Strong core fundamentals of rising interest income and falling funding costs
Credit costs remain inflated, falling figures can support strong ROA growth


Thailand

Bank of Ayudhya Public Co., Ltd., also known as Krungsri, is a leading commercial bank in Thailand providing a comprehensive range of universal banking services. It offers personal, corporate, and SME banking services, including auto loans, home loans, transaction accounts, investment banking, and treasury services. The bank is headquartered in Bangkok, Thailand, and was established in 1945.

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Bank of Ayudhya (BAY TB)

Quiddity Leaderboard for Thailand SET50 Jun 23:Ramkhamhaeng Hospital Is an Interesting Case

There could be 15 days of volume to buy in Ramkhamhaeng Hospital (RAM TB) if the name achieves a 15% relative gain vs other names and becomes a...

Janaghan Jeyakumar, CFA

Thai Banks 3Q22 Screener; Bank Ayudhya Stands Out

Of the Thai banks, Bank Ayudhya screens best on a blend of returns, credit quality & valuations; TMB Thanachart returns are improving and Krung...

Victor Galliano

Thai Banks 2Q22 Screener; Krung Thai Stands Out

Thai Banks 2Q22 screener highlights Krung Thai; it trades on undemanding valuations and a low PEG whilst its fundamentals show its has its low cost...

Victor Galliano

SCB X (SCB TB) - The Song Remains the Same

SCB X continues its restructuring under a new holding company to allow for a reallocation of capital towards growth tech areas and we believe this...

Angus Mackintosh

KKP - Small Enough To Grow

KKP remains well smaller than all the largest Thai banks, so can more easily grow. This is coming through in far better loan growth figures, even...

Daniel Tabbush

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