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.

Equity Bottom-Up

<ul><li>We upgrade our rating to Buy (from Outperform) thanks to the improvement of the tactical view to "limited downside risk" from "neutral" previously while attractive short-term valuation and positive long-term prospects remain unchanged.</li><li>Our new 12M fair value, based on the earnings yield approach given a required rate of return of 14.1%, has been raised to Bt39.76 (vs. Bt39.13 previously) following the earnings upgrade to reflect the recent new investment.</li><li>AH has expanded its OEM business to Malaysia with its recent investment in a 60% share in Advanced Vehicle Engineering Global (Avee), with a total investment value of Bt312mn.</li></ul>

We upgrade our rating to Buy (from Outperform) thanks to the improvement of the tactical view to "limited downside risk" from "neutral" previously while attractive short-term valuation and positive long-term prospects remain unchanged.Our new 12M fair value, based on the earnings yield approach given a required rate of return of 14.1%, has been raised to Bt39.76 (vs. Bt39.13 previously) following the earnings upgrade to reflect the recent new investment.AH has expanded its OEM business to Malaysia with its recent investment in a 60% share in Advanced Vehicle Engineering Global (Avee), with a total investment value of Bt312mn.

<ul><li>We switch our rating to Outperform (from Buy). Our valuation metrics suggest that AH is attractive in terms of the current valuation, while the tactical view is neutral.</li><li>The long-term earnings growth outlook remains positive, but we are less bullish than we were in the previous report.</li><li>We have derived a new 12M fair value of Bt39.13 (vs. Bt26.50 previously), based on the earnings yield approach, with a required rate of return of 14%, projected with a multiple regression model (with an R-squared of 88%) through both macroeconomic variables and specific factors of the firm.</li></ul>

We switch our rating to Outperform (from Buy). Our valuation metrics suggest that AH is attractive in terms of the current valuation, while the tactical view is neutral.The long-term earnings growth outlook remains positive, but we are less bullish than we were in the previous report.We have derived a new 12M fair value of Bt39.13 (vs. Bt26.50 previously), based on the earnings yield approach, with a required rate of return of 14%, projected with a multiple regression model (with an R-squared of 88%) through both macroeconomic variables and specific factors of the firm.

Company Update - AAPICO HITECH (AH TB) - MAY 30, 2023

<ul><li>The SET Index is expected to weaken, with the resistance at 1,570/1,580 points and the support at 1,555/1,543 points.</li><li>Keep a close watch on Thai exports in March, with the report to possibly be postponed to early next week.</li><li>Investment strategy: We recommend export-related stocks, i.e., AH, SAT and SABINA, which are expected to benefit from the positive momentum generated by the Thai export report for March.</li></ul>

The SET Index is expected to weaken, with the resistance at 1,570/1,580 points and the support at 1,555/1,543 points.Keep a close watch on Thai exports in March, with the report to possibly be postponed to early next week.Investment strategy: We recommend export-related stocks, i.e., AH, SAT and SABINA, which are expected to benefit from the positive momentum generated by the Thai export report for March.

AH’s earnings picked up solidly in 1H21 thanks to the auto market recovery. While the domestic momentum remains intact, the overseas performance looks more challenging. But with the stronger-than- expected GPM in 1H21, our 2021E earnings estimate is revised up by 13%. We retain our Buy rating, with the new 2021E target price of Bt31 (from Bt27.90 previously), pegged with a PER of 11x (LT average +0.25 S.D.)

AH’s earnings picked up solidly in 1H21 thanks to the auto market recovery. While the domestic momentum remains intact, the overseas performance looks more challenging. But with the stronger-than- expected GPM in 1H21, our 2021E earnings estimate is revised up by 13%. We retain our Buy rating, with the new 2021E target price of Bt31 (from Bt27.90 previously), pegged with a PER of 11x (LT average +0.25 S.D.)

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

We met up with two small companies today, namely Aapico and TMILL, and neither of them is doing well. Perhaps, this is just a reflection of how poor the economy is right now. In any case, this is a quick run-down:<ul>
<li>
Earnings were down 45.8% for Aapico and 8% for TMILL in Q1'19. Aapico blamed the end of their BOI tax privileges, while TMILL blamed high wheat prices.</li>
<li>
Fighting against gravity. Isuzu's sales in Thailand is barely growing at 1.4%. In Malaysia, Honda sales actually sunk 8.2%. These are the two important platforms (potential customer base) for Aapico in their two largest markets.</li>
<li>
Some impact from trade wars. While not yet a major issue, TMILL sees trade wars affecting exchange rates and impacting their input costs. For Aapico, tariffs are a big deal, but they sidestep this as their main production bases are not in China.</li>
</ul>

We met up with two small companies today, namely Aapico and TMILL, and neither of them is doing well. Perhaps, this is just a reflection of how poor the economy is right now. In any case, this is a quick run-down:

Earnings were down 45.8% for Aapico and 8% for TMILL in Q1'19. Aapico blamed the end of their BOI tax privileges, while TMILL blamed high wheat prices.

Fighting against gravity. Isuzu's sales in Thailand is barely growing at 1.4%. In Malaysia, Honda sales actually sunk 8.2%. These are the two important platforms (potential customer base) for Aapico in their two largest markets.

Some impact from trade wars. While not yet a major issue, TMILL sees trade wars affecting exchange rates and impacting their input costs. For Aapico, tariffs are a big deal, but they sidestep this as their main production bases are not in China.


Thailand

AAPICO Hitech Public Company Limited is a global automotive parts manufacturer and supplier, producing metal forming, plastic, casting, forging, and machining parts for OEMs. The company also operates car dealerships and is involved in Internet of Things (IoT) connectivity and mobility solutions. Headquartered in Ayutthaya, Thailand, it was founded in 1996.

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AAPICO Hitech (AH TB)

Partnership with Proton Malaysia

We upgrade our rating to Buy (from Outperform) thanks to the improvement of the tactical view to "limited downside risk" from "neutral" previously...

Krungthai XSpring

Company Update - AAPICO HITECH (AH TB) - MAY 30, 2023

We switch our rating to Outperform (from Buy). Our valuation metrics suggest that AH is attractive in terms of the current valuation, while the...

Krungthai XSpring

Today's Dominant Ideas

The SET Index is expected to weaken, with the resistance at 1,570/1,580 points and the support at 1,555/1,543 points. Keep a close watch on Thai...

Krungthai XSpring

Company Update: Aapico Hitech Plc. (AH)

2Q21 earnings bounced solidly, while the domestic momentum remains intact, the overseas performance looks more challenging

Krungthai XSpring

Aapico and TMILL: Sign of the Times

We met up with two small companies today, namely Aapico and TMILL, and neither of them is doing well. Perhaps, this is just a reflection of how...

Athaporn Arayasantiparb, CFA

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