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

<ul>
<li>Maintain BUY rating with a TP of B23.00 based on 16xPE’22E, which is close to +1SD of its five-years average trading.Our rating is premised on positive pet food growth outlook</li>
<li>We expect 1Q22E earnings to come in at Bt250m (+16%YoY,-6%QoQ), soften QoQ on the back of weak margin outlook from surging raw material costs. </li>
<li>We foresee earnings visibility to pick up in 2Q22 onwards, driven by stronger pet food revenue thanks to new capacity and margin improvement given easing cost pressures.</li>
</ul>


Maintain BUY rating with a TP of B23.00 based on 16xPE’22E, which is close to +1SD of its five-years average trading.Our rating is premised on positive pet food growth outlook
We expect 1Q22E earnings to come in at Bt250m (+16%YoY,-6%QoQ), soften QoQ on the back of weak margin outlook from surging raw material costs. 
We foresee earnings visibility to pick up in 2Q22 onwards, driven by stronger pet food revenue thanks to new capacity and margin improvement given easing cost pressures.


ASIAN: Expect 1Q22 Earnings to Modestly Drop QoQ

<ul>
<li>Maintain BUY rating and roll forward valuations to FY22E, with a new target price of Bt23 (up 5% from previous TP),based on 10.3xPE’22, which is close to its 10-years historical</li>
<li>Our ratings reflect positive view on pet food, frozen VAP, and aqua feed demand recovery post lockdown, and solid margin from baht weakening.</li>
<li>The spin-off of AAI via IPO issuance will unlock its value and growth potential and we leave it as an upside to our TP.</li>
</ul>


Maintain BUY rating and roll forward valuations to FY22E, with a new target price of Bt23 (up 5% from previous TP),based on 10.3xPE’22, which is close to its 10-years historical
Our ratings reflect positive view on pet food, frozen VAP, and aqua feed demand recovery post lockdown, and solid margin from baht weakening.
The spin-off of AAI via IPO issuance will unlock its value and growth potential and we leave it as an upside to our TP.


ASIAN: Unlock Value and Potential Growth of AAI Via IPO

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Distributor and exporter of processed frozen seafood <a href="https://www.smartkarma.com/entities/asian-sea-corp-pcl" target="_blank" data-smartkarma-citation="entities:19827:1" rel="noopener">Asian Sea Corp (ASIAN TB)</a> (ASC) has <a href="https://www.set.or.th/set/pdfnews.do?newsId=16341685899620&amp;sequence=0" target="_blank" rel="noopener">announced</a> it intends to spin-off and separately list Asian Alliance International (AAI), a manufacturer of tuna products and pet food.
AAI is currently a wholly-owned subsidiary of ASC. The goal is to issue new shares accounting for 20% of AAI on a fully diluted basis, and for ASC to place out shares totaling 10% on a fully-diluted basis. ASC's effective interest would therefore decline to 70% with 30% in public hands. Pre-emptive rights for existing ASC shareholders will also be afforded, up to 20% of the IPO.
In the 1H21, AAI accounted for 53%, 61%, &amp; 55% of ASC's revenue, net profit &amp; net assets, and has effectively been the group's growth driver in recent years.
At Bt16.30/share ASC's share price is 25% adrift of its all-time high in early August, but still 880% up from its Covid low in March last year.
With an expected implementation of the spin-off in the 4Q22, has the market over-corrected recently?
More below the fold.

Distributor and exporter of processed frozen seafood Asian Sea Corp (ASIAN TB) (ASC) has announced it intends to spin-off and separately list Asian Alliance International (AAI), a manufacturer of tuna products and pet food.
AAI is currently a wholly-owned subsidiary of ASC. The goal is to issue new shares accounting for 20% of AAI on a fully diluted basis, and for ASC to place out shares totaling 10% on a fully-diluted basis. ASC's effective interest would therefore decline to 70% with 30% in public hands. Pre-emptive rights for existing ASC shareholders will also be afforded, up to 20% of the IPO.
In the 1H21, AAI accounted for 53%, 61%, &amp; 55% of ASC's revenue, net profit &amp; net assets, and has effectively been the group's growth driver in recent years.
At Bt16.30/share ASC's share price is 25% adrift of its all-time high in early August, but still 880% up from its Covid low in March last year.
With an expected implementation of the spin-off in the 4Q22, has the market over-corrected recently?
More below the fold.

Towards A New Holdco As Asian Sea (ASIAN TB) Spins Off Pet Food Sub

Equity Analyst - Asia Consumer Sector, Investory

Devi Subhakesan

Equity Analyst - Asia Consumer Sector

ASIA CONSUMER: INSIGHTS AND INVESTMENT IDEAS

Investory

Investory is a Singapore-based boutique independent equity research firm founded in January 2017 with a primary focus on consumption themes across Asia-Pacific.

We aim to generate investible ideas based on consumption trends and outlook. We screen our ideas on several parameters - product potential, long-term growth and management commitment being the most critical.  We follow a fundamental analysis approach in our stock selection process and are not restricted by market cap.

We aspire to grow into a leading source of unbiased research, free of conflict of interest, for investors yearning for independent and disciplined analysis. 

We also undertake bespoke research mandates to support our Institutional clients’ investment needs.

Our team comprises of professionals with extensive experience in the Asian equity markets, in areas ranging from research, servicing institutional clients and investment management.

<a href="https://www.smartkarma.com/entities/asian-sea-corp-pcl" target="_blank" data-smartkarma-citation="entities:19827:1" rel="noopener">Asian Sea (ASIAN TB)</a> announced its plans to list the pet food business currently held in the 100% subsidiary Asian Alliance International (AAI), subject to regulatory approvals.  Asian Sea will hold a majority stake (not less than 70%) in the spun-off subsidiary post listing. This could potentially help unlock value for Asian Sea assuming the high growth pet food subsidiary could attract greater investor interest and superior valuation, post listing. Currently <a href="https://www.smartkarma.com/entities/asian-sea-corp-pcl" target="_blank" data-smartkarma-citation="entities:19827:1" rel="noopener">Asian Sea (ASIAN TB)</a>  trades at low double digit P/E in line with other Thailand based sea food processing companies.In this insight, we discuss likely value upside to <a href="https://www.smartkarma.com/entities/asian-sea-corp-pcl" target="_blank" data-smartkarma-citation="entities:19827:1" rel="noopener">Asian Sea (ASIAN TB)</a>  based on Asian Alliance's possible valuations upon listing (based on its reported financials).

Asian Sea (ASIAN TB) announced its plans to list the pet food business currently held in the 100% subsidiary Asian Alliance International (AAI), subject to regulatory approvals.  Asian Sea will hold a majority stake (not less than 70%) in the spun-off subsidiary post listing. This could potentially help unlock value for Asian Sea assuming the high growth pet food subsidiary could attract greater investor interest and superior valuation, post listing. Currently Asian Sea (ASIAN TB)  trades at low double digit P/E in line with other Thailand based sea food processing companies.In this insight, we discuss likely value upside to Asian Sea (ASIAN TB)  based on Asian Alliance's possible valuations upon listing (based on its reported financials).

Asian Sea Corp (ASIAN TB): Spin-Off Listing of Pet Food Likely Intended to Unlock Value.

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

<a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a>, the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. <div class="content-highlight">The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. </div>

Cp Pokphand (43 HK) (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from CP FOODS (CPF TB), the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. 

C.P. Pokphand’s Privatisation Bid from CPF

Thailand

Asian Sea Corporation Public Company Limited manufactures, distributes, and exports processed frozen seafood and pet food, serving customers globally. The company offers a range of products including frozen shrimp, fish, and various wet and dry pet food products. It also provides cold storage services. Headquartered in Samut Sakhon, Thailand, the company was founded in 1964.

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Asian Sea (ASIAN TB)

ASIAN: Expect 1Q22 Earnings to Modestly Drop QoQ

Maintain BUY rating with a TP of B23.00 based on 16xPE’22E, which is close to +1SD of its five-years average trading. Our rating is premised on...

Pi Securities PCL, Thailand

ASIAN: Unlock Value and Potential Growth of AAI Via IPO

Maintain BUY rating and roll forward valuations to FY22E, with a new target price of Bt23 (up 5% from previous TP), based on 10.3xPE’22, which is...

Pi Securities PCL, Thailand

Towards A New Holdco As Asian Sea (ASIAN TB) Spins Off Pet Food Sub

Assuming a typical holding company discount of ~25%, I see little upside here. With a long-dated spin-off, I would expect shares to drift in the...

David Blennerhassett

Asian Sea Corp (ASIAN TB): Spin-Off Listing of Pet Food Likely Intended to Unlock Value.

Discuss valuations and potential upside from proposed spin-off listing of Asian Sea's Pet food subsidiary. Likely catalyst for stock's valuation...

Devi Subhakesan

C.P. Pokphand’s Privatisation Bid from CPF

CPP announced a privatisation offer from CPF at HK$1.15 cash for each scheme share. Overall, we think the offer price is attractive and that the...

Arun George

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