Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

Pi Research

Thai Equity - Bottom-up - Equities

Leading, full-service investment firm in Thailand

Pi Securities PCL, Thailand

Pi Securities is a well known securities company with 40 years experience in the industry, serving more than 60,000 clients. We offer one - stop service providing full range of financial products and services including extensive Brokerage, Proprietary Trading (Equities and Bonds), Advisory Services, Structured Products.

Moreover, our new research team tailored for institutional clients to focus on mid to small cap of Thai equities and trading strategies. Our services offered to our premium clients also include arrangement of company or site visits to with the managements of Thai listed companies.

Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

<p>We are positive to its 2H20 earnings onwards on the backs of growing demand for biodiesel and cost reduction from insulator business.</p><div>• Insulators business is benefiting from cost reduction scheme</div><div>• Its biodiesel business via AIE will turn profit this year</div><div>• Revised up 2020/21/22 net profit forecast by 91%, 59% and 38%, respectively.</div><div>• 2Q20 net profit of Bt155m (+6,700%YoY, -7%QoQ)</div><div>• We like AI due to its long-term outlook given stable earnings from insulator and growing biodiesel business with attractive dividend yield of 6% a year</div><div>
<br>
</div><p>We maintain our BUY rating with a new target price of Bt2.1 (+30% from previous TP). Our target price is derived from SOTP valuation consisting of AI at Bt1.4 (derived from 10.8xPE’1H21E, which is its one-year trading average), and its stake in AIE at Bt0.7, derived from market value as of 19 Aug 20.</p>

We are positive to its 2H20 earnings onwards on the backs of growing demand for biodiesel and cost reduction from insulator business.• Insulators business is benefiting from cost reduction scheme• Its biodiesel business via AIE will turn profit this year• Revised up 2020/21/22 net profit forecast by 91%, 59% and 38%, respectively.• 2Q20 net profit of Bt155m (+6,700%YoY, -7%QoQ)• We like AI due to its long-term outlook given stable earnings from insulator and growing biodiesel business with attractive dividend yield of 6% a year
 
We maintain our BUY rating with a new target price of Bt2.1 (+30% from previous TP). Our target price is derived from SOTP valuation consisting of AI at Bt1.4 (derived from 10.8xPE’1H21E, which is its one-year trading average), and its stake in AIE at Bt0.7, derived from market value as of 19 Aug 20.

<p><strong>We initiate coverage of AI with a BUY rating and a target price of Bt1.94, based on a sum-of-the-parts valuation consisting of AI’s insulator and engineering businesses at Bt1.28 (pegged to the Asia ex-Japan Energy sector mean of 9.5x PE’20E), and its stake in AIE at Bt0.66, derived from market </strong><strong>value as </strong><strong>of July 10, 2019.</strong></p>
<p><strong>The story:</strong></p>
<ul>
<li>Long-term relationships with state enterprises</li>
<li>Growing demand to support three-year growth</li>
<li>Gross margin recovery in 2Q19E</li>
<li>Government policy to support biodiesel demand</li>
<li>Upside from pure glycerin refinery project</li>
</ul>
<p><strong>Risks</strong><strong>:</strong></p>
<ul>
<li>Crude palm oil price volatility</li>
<li>Foreign exchange rate fluctuation</li>
</ul>

We initiate coverage of AI with a BUY rating and a target price of Bt1.94, based on a sum-of-the-parts valuation consisting of AI’s insulator and engineering businesses at Bt1.28 (pegged to the Asia ex-Japan Energy sector mean of 9.5x PE’20E), and its stake in AIE at Bt0.66, derived from market value as of July 10, 2019.
The story:

Long-term relationships with state enterprises
Growing demand to support three-year growth
Gross margin recovery in 2Q19E
Government policy to support biodiesel demand
Upside from pure glycerin refinery project

Risks:

Crude palm oil price volatility
Foreign exchange rate fluctuation


AI: Local Leader in Electrical Insulators

Chief Economist & Political Strategist, CrossASEAN Research

Prasenjit K. Basu

Chief Economist & Political Strategist

REAL-Economics.com

Macroeconomics

<p><strong>-The oil majors' favourite refining hub in ASEAN is Singapore, while the crude-oil/gas comes mainly from Indonesia, Malaysia and Brunei. Infusion of Saudi capital will help to partially redress that, although Saudi Arabia is only the 7th largest oil-refining country, and ARAMCO has moderate amounts of technological expertise (mainly from its ownership of S-Oil in Korea). </strong></p><p><strong>-Malaysia and (especially) Indonesia have been wary of "Arabised" or Wahhabi Islam, and see Saudi offers to widen Arabic</strong>…</p>

-The oil majors' favourite refining hub in ASEAN is Singapore, while the crude-oil/gas comes mainly from Indonesia, Malaysia and Brunei. Infusion of Saudi capital will help to partially redress that, although Saudi Arabia is only the 7th largest oil-refining country, and ARAMCO has moderate amounts of technological expertise (mainly from its ownership of S-Oil in Korea). -Malaysia and (especially) Indonesia have been wary of "Arabised" or Wahhabi Islam, and see Saudi offers to widen Arabic…

King Salman Bearing Gifts: Implications for ASEAN, Oil-Refining and Religion

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Thematic (Sector/Industry)

<p>In this review, we highlight the importance for <strong>investors</strong> to: 1) not 'jump the gun' and sell on companies that are in decline; and 2) think logically about the macro picture, since those may have an impact on whether companies can recover or would lose relevance in the marketplace altogether.</p><p>From our observations, the companies in Thailand that do turn around tend to follow one or more of these four measures, namely: 1) <strong>operations: </strong>a complete transformation rather than minor patch-ups (eg. KARMART, IVL); 2) <strong>competitive strategy: </strong>changing the frame of reference (PIZZA...now part of MINT); 3) <strong>debt restructuring </strong>(BLAND, TPI); and 4) <strong>marketing: </strong>re-branding (eg. DTAC, BTS). Whether you are stuck with certain investments or thinking about investing in potential turnaround plays, observing these four traits or steps could be helpful.</p>

In this review, we highlight the importance for investors to: 1) not 'jump the gun' and sell on companies that are in decline; and 2) think logically about the macro picture, since those may have an impact on whether companies can recover or would lose relevance in the marketplace altogether.From our observations, the companies in Thailand that do turn around tend to follow one or more of these four measures, namely: 1) operations: a complete transformation rather than minor patch-ups (eg. KARMART, IVL); 2) competitive strategy: changing the frame of reference (PIZZA...now part of MINT); 3) debt restructuring (BLAND, TPI); and 4) marketing: re-branding (eg. DTAC, BTS). Whether you are stuck with certain investments or thinking about investing in potential turnaround plays, observing these four traits or steps could be helpful.

Turnarounds: Finding A Phoenix In the Land of the Dead

SGX Market Strategist, Equity & Fixed Income, Singapore Exchange Ltd (SGX)

Geoff Howie

SGX Market Strategist, Equity & Fixed Income

Asia’s leading multi-asset exchange

Singapore Exchange Ltd (SGX)

Singapore Exchange is Asia’s leading and trusted market infrastructure, facilitating the exchange of capital and ideas to create value for people, businesses and economies. As a multi-asset exchange operating equity, fixed income and derivatives markets to the highest regulatory standards, SGX is a vertically integrated business that provides listing, trading, clearing, settlement, depository and data services.

With about 40% of listed companies and over 80% of listed bonds originating outside of Singapore as well as established linkages across the region and in Europe, SGX is Asia’s most international and connected exchange. Offering a full suite of derivatives products across Asian equity indices, commodities and currencies, SGX is the world’s most liquid international market for the benchmark equity indices of China, India, Japan and ASEAN.

As Asia’s pioneering central counterparty, SGX is globally recognised for its risk management and clearing capabilities, and was one of the first globally to adopt the Principles for Financial Market Infrastructure.

Headquartered in AAA-rated Singapore, SGX has over 800 employees including offices in Beijing, Chicago, Hong Kong, London, New York, Mumbai, San Francisco, Shanghai and Tokyo.

<p><strong>SGX lists four Upstream Coal Plays: Geo Energy Resources, Resources Prima Group, BlackGold Natural Resources and Golden Energy &amp; Resources.</strong></p><p><strong>Geo Energy Resources has been the strongest performer among the four upstream plays in the 2016 year to date with a 37.9% gain. On 12 August,  Geo Energy Group reported that for the six months ending 30 June 2016, company revenue was US$33 million compared to US$10 million for the same period a year ago.</strong></p>

SGX lists four Upstream Coal Plays: Geo Energy Resources, Resources Prima Group, BlackGold Natural Resources and Golden Energy &amp; Resources.Geo Energy Resources has been the strongest performer among the four upstream plays in the 2016 year to date with a 37.9% gain. On 12 August,  Geo Energy Group reported that for the six months ending 30 June 2016, company revenue was US$33 million compared to US$10 million for the same period a year ago.

Geo Energy Resources Led Upstream Coal Plays in 2016 YTD

Thailand

Asian Insulators Public Company Limited manufactures electrical porcelain insulators for use in low, medium and high voltage applications such as underground power lines, overhead power lines, and power distribution systems and sub-stations.

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Asian Insulators (AI TB)

AI: Expect Brighter 2H20 Outlook

We are positive to its 2H20 earnings onwards on the backs of growing demand for biodiesel and cost reduction from insulator business.• Insulators...

Pi Securities PCL, Thailand

AI: Local Leader in Electrical Insulators

We initiate coverage of AI with a BUY rating and a target price of Bt1.94, based on a sum-of-the-parts valuation consisting of AI’s insulator and...

Pi Securities PCL, Thailand

King Salman Bearing Gifts: Implications for ASEAN, Oil-Refining and Religion

-The oil majors' favourite refining hub in ASEAN is Singapore, while the crude-oil/gas comes mainly from Indonesia, Malaysia and Brunei. Infusion...

Prasenjit K. Basu

Turnarounds: Finding A Phoenix In the Land of the Dead

In this review, we highlight the importance for investors to: 1) not 'jump the gun' and sell on companies that are in decline; and 2) think...

Athaporn Arayasantiparb, CFA

Geo Energy Resources Led Upstream Coal Plays in 2016 YTD

SGX lists four Upstream Coal Plays: Geo Energy Resources, Resources Prima Group, BlackGold Natural Resources and Golden Energy & Resources.Geo...

Singapore Exchange Ltd (SGX)

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