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

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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

<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

<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

<p>Site visit at The ESSE at Singha Complex and The ESSE Sukhumvit 36 came out with a positive tone. We maintain BUY rating on S with a 2019 target price of Bt4.2 derived from a sum-of-the-parts (SOTP) methodology and implying 17.5xPE’19E</p><p><strong>Key takeaway</strong><strong>:</strong></p><ul>
<li>2H19 performance of residential business (70% of total sales) will be much better than 1H19. 70% of The ESSE ‘s total units with Bt3.5bn potential sales will be recognized by this year.</li>
<li>Hospitality business (30% of total sales) is under pressure by the close of Maya Bay in Phi Phi for the next five years. However, we do not include this project in our valuation.</li>
</ul>

Site visit at The ESSE at Singha Complex and The ESSE Sukhumvit 36 came out with a positive tone. We maintain BUY rating on S with a 2019 target price of Bt4.2 derived from a sum-of-the-parts (SOTP) methodology and implying 17.5xPE’19EKey takeaway:
2H19 performance of residential business (70% of total sales) will be much better than 1H19. 70% of The ESSE ‘s total units with Bt3.5bn potential sales will be recognized by this year.
Hospitality business (30% of total sales) is under pressure by the close of Maya Bay in Phi Phi for the next five years. However, we do not include this project in our valuation.


S: Better Outlook on Its 2H19 Performance

Thailand

Asset World Corp Public Company Limited focuses on real estate development and investment services. The Company offers property management. Asset World Corp serves customers in Thailand.

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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

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

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

S: Better Outlook on Its 2H19 Performance

Site visit at The ESSE at Singha Complex and The ESSE Sukhumvit 36 came out with a positive tone. We maintain BUY rating on S with a 2019 target...

Pi Securities PCL, Thailand

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