Founder, Riedel Research

David Riedel

Founder

Independent equity research on GEM Markets

Riedel Research

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Thematic (Sector/Industry)

<ul>
<li>Obama continues the 'pivot to Asia' by attending the ASEAN meeting in Laos.</li>
<li>ASEAN is a critical component of SE Asian stability, partnership with the US and should be a united front in protesting Chinese intrusions into the South China Sea.</li>
<li>A high-profile spat with Philippine president Duterte was an unfortunate distraction and an unhelpful development for the Philippines which benefits from strong U.S. support.</li>
<li>Thailand and Malaysia look like the best opportunities in ASEAN in the medium-term.</li>
<li>BUY…</li>
</ul>


Obama continues the 'pivot to Asia' by attending the ASEAN meeting in Laos.
ASEAN is a critical component of SE Asian stability, partnership with the US and should be a united front in protesting Chinese intrusions into the South China Sea.
A high-profile spat with Philippine president Duterte was an unfortunate distraction and an unhelpful development for the Philippines which benefits from strong U.S. support.
Thailand and Malaysia look like the best opportunities in ASEAN in the medium-term.
BUY…


Takeaways from ASEAN - Investment Opportunities

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>Over a year of declining interest rates has saved SET-listed companies more than Bt14bn per quarter in interest expenses, as the effective interest rate fell from 4.6% in 3Q24 to 4.2% in 3Q25.</li><li>The policy rate cut from 2.50% in 3Q24 to 1.50% in 3Q25 has filtered through to listed companies, lowering their effective interest rate from its peak of 4.6% in 3Q24 to 4.2% in 3Q25.</li><li>The time-interest-earned (TIE) ratio, calculated as EBIT divided by interest expenses, rose from 2.4x in 4Q24 to 3.4x in 3Q25, while financial leverage declined from 1.7x in 4Q24 to 1.4x in 2Q25.</li></ul>

Over a year of declining interest rates has saved SET-listed companies more than Bt14bn per quarter in interest expenses, as the effective interest rate fell from 4.6% in 3Q24 to 4.2% in 3Q25.The policy rate cut from 2.50% in 3Q24 to 1.50% in 3Q25 has filtered through to listed companies, lowering their effective interest rate from its peak of 4.6% in 3Q24 to 4.2% in 3Q25.The time-interest-earned (TIE) ratio, calculated as EBIT divided by interest expenses, rose from 2.4x in 4Q24 to 3.4x in 3Q25, while financial leverage declined from 1.7x in 4Q24 to 1.4x in 2Q25.

Special Report - Lower Rates Lift SET 20063 EPS; Top Picks: GULF, BCPG, EGCO, LH

<ul><li>The 2Q25 core loss came in higher than expected due to higher-than-anticipated cost per available seat kilometer (CASK).</li><li>We downgrade our rating to Underperform (from Neutral) and cut our fair value to Bt0.95 (from Bt1.14), based on a required return of 5.5% (from 13.7%), due to the downward revision of core profit reflecting expenses rising faster than revenue growth, which outweighs the benefit from our house view’s macro factor adjustment of MRP to 5.26% (from 6.83%).</li><li>AAV reported a 2Q25 net profit of Bt214mn. Excluding FX gains of Bt1.3bn, derivatives losses, and other items, this translates into a core loss of Bt792mn, compared with core profit of Bt315mn in 2Q24 and Bt1.29bn in 1Q25, coming in below our expectations owing to higher-than-expected CASK.</li></ul>

The 2Q25 core loss came in higher than expected due to higher-than-anticipated cost per available seat kilometer (CASK).We downgrade our rating to Underperform (from Neutral) and cut our fair value to Bt0.95 (from Bt1.14), based on a required return of 5.5% (from 13.7%), due to the downward revision of core profit reflecting expenses rising faster than revenue growth, which outweighs the benefit from our house view’s macro factor adjustment of MRP to 5.26% (from 6.83%).AAV reported a 2Q25 net profit of Bt214mn. Excluding FX gains of Bt1.3bn, derivatives losses, and other items, this translates into a core loss of Bt792mn, compared with core profit of Bt315mn in 2Q24 and Bt1.29bn in 1Q25, coming in below our expectations owing to higher-than-expected CASK.

ASIA AVIATION Plc. (AAV): Turned to Core Loss in 2Q25 Due to Weak Passenger Volume

<ul><li>We have a negative view on the weak passenger numbers in June, which likely dragged the 2Q25E performance to a YoY contraction of -3%, compared to flat trends in April-May.</li><li>This was likely compounded by a decline in the load factor to 82%, below the pre-COVID level of 83% in 2Q19, resulting in a core loss for 2Q25E, falling short of our previous estimate.</li><li>We downgrade our rating to Neutral (from Outperform) and revise down the fair value to Bt1.14, based on a required return of 13.7%, reflecting lower core profit estimates and updated macro assumptions (Rf = 1.48%, MRP = 6.83%, vs. the previous Bt1.42, 13.1%, Rf = 2.07%, and MRP = 5.58%)</li></ul>

We have a negative view on the weak passenger numbers in June, which likely dragged the 2Q25E performance to a YoY contraction of -3%, compared to flat trends in April-May.This was likely compounded by a decline in the load factor to 82%, below the pre-COVID level of 83% in 2Q19, resulting in a core loss for 2Q25E, falling short of our previous estimate.We downgrade our rating to Neutral (from Outperform) and revise down the fair value to Bt1.14, based on a required return of 13.7%, reflecting lower core profit estimates and updated macro assumptions (Rf = 1.48%, MRP = 6.83%, vs. the previous Bt1.42, 13.1%, Rf = 2.07%, and MRP = 5.58%)

Asia Aviation - Expect a Turnaround to a Core Loss in 2Q25E Due to Weak Passenger Volume

<ul><li>Signs of an impact from sluggish tourism have begun to emerge, pressuring international passenger volumes, which declined 19% YoY in April-May.</li><li>This was accompanied by faster-than-expected drop in the load factor to 83%.</li><li>As a result, we have revised down the core profit forecasts for 2025-26E by 26% and 25%, leading to long-term EPS growth of just a +3% CAGR, albeit still steady than the industry average.</li></ul>

Signs of an impact from sluggish tourism have begun to emerge, pressuring international passenger volumes, which declined 19% YoY in April-May.This was accompanied by faster-than-expected drop in the load factor to 83%.As a result, we have revised down the core profit forecasts for 2025-26E by 26% and 25%, leading to long-term EPS growth of just a +3% CAGR, albeit still steady than the industry average.

Asia Aviation - Lower Load Factor; Fiercer Competition Among Low- Cost Airlines

Thailand

Asia Aviation Public Company Limited is a Thailand-based holding company primarily engaged in investing in low-fare airline businesses, specifically holding 100% of Thai AirAsia Company Limited. The company's operations include scheduled and chartered flight services, along with providing aviation, tourism, and hospitality training through its subsidiary, Asia Aviation Center Co., Ltd. Asia Aviation was incorporated in 2006 and is headquartered in Bangkok, Thailand.

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Asia Aviation (AAV TB)

Takeaways from ASEAN - Investment Opportunities

Obama continues the 'pivot to Asia' by attending the ASEAN meeting in Laos. ASEAN is a critical component of SE Asian stability, partnership with...

David Riedel

Special Report - Lower Rates Lift SET 20063 EPS; Top Picks: GULF, BCPG, EGCO, LH

Over a year of declining interest rates has saved SET-listed companies more than Bt14bn per quarter in interest expenses, as the effective interest...

Krungthai XSpring

ASIA AVIATION Plc. (AAV): Turned to Core Loss in 2Q25 Due to Weak Passenger Volume

The 2Q25 core loss came in higher than expected due to higher-than-anticipated cost per available seat kilometer (CASK).

Krungthai XSpring

Asia Aviation - Expect a Turnaround to a Core Loss in 2Q25E Due to Weak Passenger Volume

We have a negative view on the weak passenger numbers in June, which likely dragged the 2Q25E performance to a YoY contraction of -3%, compared to...

Krungthai XSpring

Asia Aviation - Lower Load Factor; Fiercer Competition Among Low- Cost Airlines

Signs of an impact from sluggish tourism have begun to emerge, pressuring international passenger volumes, which declined 19% YoY in April-May.

Krungthai XSpring

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