Head of Research, Krungthai XSpring

Waraporn Wiboonkanarak

Head of Research

A full service Thai brokerage

Krungthai XSpring

Krungthai XSpring is a full service broker. The company provides a wide range of investment services such as Securities Brokerage, Derivative Agent Business, Securities Borrowing and Lending, Securities Trading, Underwriting, Financial Advisory, Wealth Advisory, Private Fund Management and International Markets Securities Trading. 

In terms of credibility, Fitch Ratings has assigned Krunghtai XSpring a long-term rating of AA- and a national short-term rating of F1+ with stable outlook.

Thematic (Sector/Industry)

<ul><li>Weak domestic demand pressured 1H24 auto production downward by 17% YoY to 760k units.</li><li>Accordingly, we have reduced our 2024E auto production forecast to 1.60mn units, down 13% YoY.</li><li>We view that sector share prices have largely priced in this negative factor, while auto production may have bottomed out in 2Q24. </li></ul>

Weak domestic demand pressured 1H24 auto production downward by 17% YoY to 760k units.Accordingly, we have reduced our 2024E auto production forecast to 1.60mn units, down 13% YoY.We view that sector share prices have largely priced in this negative factor, while auto production may have bottomed out in 2Q24. 

Automotive - 2024E Auto Production Forecast Cut to 1.60mn Units

Equity Bottom-Up

<ul><li>We switch to a Neutral rating (from Outperform).</li><li>Our valuation metrics suggest that the steady earnings growth outlook has already been priced in, while there is no catalyst from the tactical view.</li><li>The 12M forward fair value, based on the earnings yield method, has been revised down to Bt23.60 (vs. Bt34.14 previously), in tandem with the downward earnings revisions and a higher required rate of return of 19.5% (vs. 15.0% previously) following our new house view on the macroeconomic variables used for the beta projection.</li></ul>

We switch to a Neutral rating (from Outperform).Our valuation metrics suggest that the steady earnings growth outlook has already been priced in, while there is no catalyst from the tactical view.The 12M forward fair value, based on the earnings yield method, has been revised down to Bt23.60 (vs. Bt34.14 previously), in tandem with the downward earnings revisions and a higher required rate of return of 19.5% (vs. 15.0% previously) following our new house view on the macroeconomic variables used for the beta projection.

Aapico Hitech - A Challenging Year for AH

<ul><li>Based on the current valuation metrics, our recommendation for AH faces potential downgrade risks, aligned with the revision of our earnings projection to account for the more pronounced deterioration in the 1Q24 GPM than initially anticipated.</li><li>AH reported a 1Q24 net profit of Bt319mn (-43% YoY, +132% QoQ), 8% lower than the market’s expectation due to a deeper- than-expected deterioration of the gross profit margin (GPM).</li><li>Excluding the FX impact, the core profit amounted to Bt301mn (-50% YoY and -28% QoQ).</li></ul>

Based on the current valuation metrics, our recommendation for AH faces potential downgrade risks, aligned with the revision of our earnings projection to account for the more pronounced deterioration in the 1Q24 GPM than initially anticipated.AH reported a 1Q24 net profit of Bt319mn (-43% YoY, +132% QoQ), 8% lower than the market’s expectation due to a deeper- than-expected deterioration of the gross profit margin (GPM).Excluding the FX impact, the core profit amounted to Bt301mn (-50% YoY and -28% QoQ).

Aapico Hitech - Sharp Fall in 1Q24 GPM Pressured Earnings

<ul><li>Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.</li><li>This will act as a negative catalyst for the 1Q24E earnings outlooks of auto parts makers.</li><li>The sluggish near-term outlook has caused the auto sector to underperform the market YTD, resulting in limited downside risks in terms of the tactical view.</li></ul>

Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.This will act as a negative catalyst for the 1Q24E earnings outlooks of auto parts makers.The sluggish near-term outlook has caused the auto sector to underperform the market YTD, resulting in limited downside risks in terms of the tactical view.

Automotive - Auto Production Fell 18% YoY in 1Q24

<ul><li>Thai auto production continued to weaken in February 2024, with 2M24 auto output contracting by 15.9% YoY.</li><li>This implies a negative catalyst for the 1Q24E earnings outlooks of auto parts manufacturers.</li><li>We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand. </li></ul>

Thai auto production continued to weaken in February 2024, with 2M24 auto output contracting by 15.9% YoY.This implies a negative catalyst for the 1Q24E earnings outlooks of auto parts manufacturers.We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand. 

Automotive. - Auto Output Remained Weak in February 2024

Thailand

Aapico Hitech Public Company Limited manufactures car assembly jigs and stamping dies used for manufacturing automobiles in assembly plants. The Company also manufactures OEM automotive parts and operates automobile dealership business.

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Aapico Hitech (AH TB)

Automotive - 2024E Auto Production Forecast Cut to 1.60mn Units

Weak domestic demand pressured 1H24 auto production downward by 17% YoY to 760k units. Accordingly, we have reduced our 2024E auto production...

Krungthai XSpring

Aapico Hitech - A Challenging Year for AH

Our valuation metrics suggest that the steady earnings growth outlook has already been priced in, while there is no catalyst from the tactical view.

Krungthai XSpring

Aapico Hitech - Sharp Fall in 1Q24 GPM Pressured Earnings

AH reported a 1Q24 net profit of Bt319mn (-43% YoY, +132% QoQ), 8% lower than the market’s expectation due to a deeper- than-expected deterioration...

Krungthai XSpring

Automotive - Auto Production Fell 18% YoY in 1Q24

Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.

Krungthai XSpring

Automotive. - Auto Output Remained Weak in February 2024

We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand.

Krungthai XSpring

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