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

Asset World Corporation / Equity Bottom-Up

<p><strong>We are positive toward AWC’s earnings recovery outlook given the company’s ability to adopted cost control program effectively and benefit from earnings buffer from commercial business during the pandemic. The company’s EBITDA margin recovered to positive territory at 7.4% in 3Q20 from its trough level at -31% in the previous quarter. However, we anticipate it may take 5-6 quarters for the group to reach back its pre-COVID19 EBITDA level after the company reopened all their hospitality and retail assets in 4Q20. Faster-than-expected vaccine delivery will also create upside to AWC’s earnings in 2021-22E.</strong></p>
<div>• Anticipate gradual recovery in hospitality business</div>
<div>• AWC report net loss of Bt620m in 3Q20. A moderate recovery from all time low level in 2Q20 which driven mainly by hospitality revenue (+239%QoQ) to Bt461m and retail revenue (+21%QoQ) to Bt820m. </div>
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<p><strong>We reduce target price to Bt4.50 (Previous TP: Bt4.70) after earnings downward revision in 2020-21E. Our target price derived from DCF methodology while implies 105xPE’22E.</strong></p>

We are positive toward AWC’s earnings recovery outlook given the company’s ability to adopted cost control program effectively and benefit from earnings buffer from commercial business during the pandemic. The company’s EBITDA margin recovered to positive territory at 7.4% in 3Q20 from its trough level at -31% in the previous quarter. However, we anticipate it may take 5-6 quarters for the group to reach back its pre-COVID19 EBITDA level after the company reopened all their hospitality and retail assets in 4Q20. Faster-than-expected vaccine delivery will also create upside to AWC’s earnings in 2021-22E.
• Anticipate gradual recovery in hospitality business
• AWC report net loss of Bt620m in 3Q20. A moderate recovery from all time low level in 2Q20 which driven mainly by hospitality revenue (+239%QoQ) to Bt461m and retail revenue (+21%QoQ) to Bt820m. 

 

We reduce target price to Bt4.50 (Previous TP: Bt4.70) after earnings downward revision in 2020-21E. Our target price derived from DCF methodology while implies 105xPE’22E.

AWC: Group EBITDA Already Turned Positive in 3Q20

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/scg-packaging-public-company-limited" target="_blank" data-smartkarma-citation="entities:28684:1" rel="noopener">SCG Packaging (SCGP TB)</a> raise around US$1.2bn in its Thailand IPO. It is a part of the <a href="https://www.smartkarma.com/entities/siam-cement-pcl-the" target="_blank" data-smartkarma-citation="entities:2589:1" rel="noopener">Siam Cement (SCC TB)</a> group.</p></div><div><p>SCGP is a packaging solutions provider in ASEAN offering fiber-based packaging, performance and polymer packaging, food service products, design, printing and other solutions. SCGP is the largest packaging paper and corrugated containers producer in ASEAN, as per Frost &amp; Sullivan. </p></div><div>I have covered various aspects of the deal in my earlier notes:</div><div><ul>
<li><a href="https://www.smartkarma.com/insights/scg-packaging-pre-ipo-shift-to-packaging-has-been-aiding-margins-but-acquisition-drove-up-leverage" target="_blank" rel="noopener">SCG Packaging Pre-IPO - Shift to packaging has been aiding margins but acquisitions have driven up leverage</a></li>
<li><a href="https://www.smartkarma.com/insights/scg-packaging-ipo-unexciting" target="_blank" rel="noopener">SCG Packaging IPO - Unexciting</a></li>
</ul></div><p>In this note, I'll talk about the deal updates and provide implied valuations at different share price levels.</p>

SCG Packaging (SCGP TB) raise around US$1.2bn in its Thailand IPO. It is a part of the Siam Cement (SCC TB) group.SCGP is a packaging solutions provider in ASEAN offering fiber-based packaging, performance and polymer packaging, food service products, design, printing and other solutions. SCGP is the largest packaging paper and corrugated containers producer in ASEAN, as per Frost &amp; Sullivan. I have covered various aspects of the deal in my earlier notes:
SCG Packaging Pre-IPO - Shift to packaging has been aiding margins but acquisitions have driven up leverage
SCG Packaging IPO - Unexciting
In this note, I'll talk about the deal updates and provide implied valuations at different share price levels.

SCG Packaging IPO Trading - Placed with Domestics

<p><strong>We upgrade rating for AWC to BUY from HOLD with expectation for gradual recovery in earnings from 4Q20 onwards after reported net loss in 2Q20. We still prefer AWC ahead of other tourism play stocks due to its superior position based on; (1) the outstanding quality of its assets; (2) remarkable earnings growth profile over the next five years and (3) well-diversified sources of revenue.</strong></p>
<p><strong>The Story:</strong></p>
<div>• Domestic tourist number recovery shown sign of industry upturn</div>
<div>• Commercial office revenue remain resilient</div>
<div>• Expect 2H20 earnings to recover HOH on the back of rising occupancy rate for most of the retail assets and non-Bangkok hotels and revenue recognition from utilizing hotel assets for AWC infinite lifestyle and state quarantine programmes.</div>
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<p><strong>We reduce target price to Bt4.70 (Previous TP: Bt4.90) after earnings downward revision in 2020-21E. Our target price derived from DCF methodology while implies 64xPE’22E, a 150% premium to domestic peers.</strong></p>

We upgrade rating for AWC to BUY from HOLD with expectation for gradual recovery in earnings from 4Q20 onwards after reported net loss in 2Q20. We still prefer AWC ahead of other tourism play stocks due to its superior position based on; (1) the outstanding quality of its assets; (2) remarkable earnings growth profile over the next five years and (3) well-diversified sources of revenue.
The Story:
• Domestic tourist number recovery shown sign of industry upturn
• Commercial office revenue remain resilient
• Expect 2H20 earnings to recover HOH on the back of rising occupancy rate for most of the retail assets and non-Bangkok hotels and revenue recognition from utilizing hotel assets for AWC infinite lifestyle and state quarantine programmes.

We reduce target price to Bt4.70 (Previous TP: Bt4.90) after earnings downward revision in 2020-21E. Our target price derived from DCF methodology while implies 64xPE’22E, a 150% premium to domestic peers.

AWC: Positive Sign for Domestic Tourism Industry

Sri Trang Gloves (Thailand) / Equity Capital Markets

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<p><a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (STGT TB)</a> raised around US$480m (THB15bn) in its Thailand IPO. The company is globally the third largest glove manufacturer, by capacity. </p>
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<p>I covered the basic aspects of the deal in <a href="https://www.smartkarma.com/insights/sri-trang-gloves-ipo-one-to-keep-an-eye-for-ve-effect-of-covid-19" target="_blank" rel="noopener">Sri Trang Gloves IPO - One to Keep an Eye for +ve Effect of COVID-19</a>.</p>
<p>In this insight, I'll talk about the deal dynamics.</p>
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Sri Trang Gloves (STGT TB) raised around US$480m (THB15bn) in its Thailand IPO. The company is globally the third largest glove manufacturer, by capacity. 


I covered the basic aspects of the deal in Sri Trang Gloves IPO - One to Keep an Eye for +ve Effect of COVID-19.
In this insight, I'll talk about the deal dynamics.


Sri Trang Gloves IPO Trading - Riding on COVID-19 Second Wave

<p><strong>We initiate coverage of AWC with a HOLD rating, based on a target price of Bt4.90, which is derived from a DCF methodology (WACC of 6.0%, terminal growth of 3%). Our target price implies 0.3xPEG’21E, a 50% premium to the Thailand Consumer Discretionary sector.</strong></p>
<p><strong>The Story:</strong></p>
<div>• Accelerating growth in the next five years</div>
<div>• Top luxury-mid scale hotel operator in the country</div>
<div>• High-end property rental income provides earnings buffer</div>
<div>• Upside from asset price revaluation</div>
<div>• Performance will bottom out in 2Q20</div>
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<p><strong>Risks: Highly competitive industry, economic slowdown, reliance on third-party sales agents</strong></p>

We initiate coverage of AWC with a HOLD rating, based on a target price of Bt4.90, which is derived from a DCF methodology (WACC of 6.0%, terminal growth of 3%). Our target price implies 0.3xPEG’21E, a 50% premium to the Thailand Consumer Discretionary sector.
The Story:
• Accelerating growth in the next five years
• Top luxury-mid scale hotel operator in the country
• High-end property rental income provides earnings buffer
• Upside from asset price revaluation
• Performance will bottom out in 2Q20

 

Risks: Highly competitive industry, economic slowdown, reliance on third-party sales agents

AWC: Fastest-Growing Hotel Chain in Thailand

Thailand

Asset World Corporation invests in, develops, and manages real estate properties in Thailand, focusing on hospitality, lifestyle destinations, and commercial workspaces. The company operates through two segments: Hotel and Related Services, and Rental and Rendering of Commercial Building Services. It develops and owns hotels, community shopping malls, and mixed-use properties. Headquartered in Bangkok, Thailand, the company was founded in 2009.

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Asset World Corporation (AWC TB)

AWC: Group EBITDA Already Turned Positive in 3Q20

•AWC report net loss of Bt620m in 3Q20. A moderate recovery from all time low level in 2Q20 which driven mainly by hospitality revenue (+239%QoQ)...

Pi Securities PCL, Thailand

SCG Packaging IPO Trading - Placed with Domestics

SCG Packaging (SCGP TB) raised around US$1.2bn in its Thailand IPO. Given its lack of growth in the past, we remain less than excited, to put it...

Sumeet Singh

AWC: Positive Sign for Domestic Tourism Industry

We upgrade rating for AWC to BUY from HOLD with expectation for gradual recovery in earnings from 4Q20 onwards after reported net loss in 2Q20. We...

Pi Securities PCL, Thailand

Sri Trang Gloves IPO Trading - Riding on COVID-19 Second Wave

Sri Trang Gloves (STGT TB) raised around US$480m (THB15bn) in its Thailand IPO. The company is globally the third largest glove manufacturer, by...

Sumeet Singh

AWC: Fastest-Growing Hotel Chain in Thailand

We initiate coverage of AWC with a HOLD rating, based on a target price of Bt4.90, which is derived from a DCF methodology (WACC of 6.0%, terminal...

Pi Securities PCL, Thailand

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