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.

Thematic (Sector/Industry)

<ul><li>We maintain a neutral view on the possibility of increasing the retail diesel price ceiling within the range of Bt1-2/liter to Bt31-32/liter due to the negative financial position of the Oil Fuel Fund, which stands at nearly -Bt100bn, and the need for excise tax collection by the Ministry of Finance to meet the target.</li><li>While an upward adjustment to the retail diesel price ceiling could yield short-term benefits for oil retailers in the form of one-time stock gains, challenges persist for marketing margins, including i) the incremental costs associated with the Euro 5 standard for refined oil products; and ii) the management efficiency of the Oil Fuel Fund.</li><li>Therefore, we maintain our conservative view on marketing margins in 2024E. For the downstream sector, we prefer refinery operators to oil retailers, with TOP as the top pick (Outperform; FV: Bt62.4). </li></ul>

We maintain a neutral view on the possibility of increasing the retail diesel price ceiling within the range of Bt1-2/liter to Bt31-32/liter due to the negative financial position of the Oil Fuel Fund, which stands at nearly -Bt100bn, and the need for excise tax collection by the Ministry of Finance to meet the target.While an upward adjustment to the retail diesel price ceiling could yield short-term benefits for oil retailers in the form of one-time stock gains, challenges persist for marketing margins, including i) the incremental costs associated with the Euro 5 standard for refined oil products; and ii) the management efficiency of the Oil Fuel Fund.Therefore, we maintain our conservative view on marketing margins in 2024E. For the downstream sector, we prefer refinery operators to oil retailers, with TOP as the top pick (Outperform; FV: Bt62.4). 

Energy (Oil Retailers) - Scenarios for a Diesel Price Lift

<ul><li>The MPC's softer outlook for 2024E GDP growth, now projected within the range of 2.5-3.0%, will provide more leeway for the committee to maintain the policy interest rate above inflation, thereby ensuring a positive real interest rate.</li><li>Considering i) the current real interest rate at 3.6% (Thai policy rate at 2.5%, CPI at -1.1% YoY), the highest in 32 months and higher than the US real interest rate at 2.1% (US policy rate at 5.5% and CPI at +3.4% YoY); ii) the uncertain outlook for the Digital Wallet scheme, which may prevent Thai GDP growth in 2024E from reaching its full potential level; and iii) the divided vote (five to two) in the most recent meeting, there is a possibility that the MPC may reduce the policy interest rate in the future to stimulate the economy and bring economic growth back to its potential level.</li><li>This scenario would be positive for high dividend plays (BCP, PTT, TOP, WHAUP, SABINA and ADVANC) and the finance sector (SAWAD, MTC and TIDLOR) (Figure 9).</li></ul>

The MPC's softer outlook for 2024E GDP growth, now projected within the range of 2.5-3.0%, will provide more leeway for the committee to maintain the policy interest rate above inflation, thereby ensuring a positive real interest rate.Considering i) the current real interest rate at 3.6% (Thai policy rate at 2.5%, CPI at -1.1% YoY), the highest in 32 months and higher than the US real interest rate at 2.1% (US policy rate at 5.5% and CPI at +3.4% YoY); ii) the uncertain outlook for the Digital Wallet scheme, which may prevent Thai GDP growth in 2024E from reaching its full potential level; and iii) the divided vote (five to two) in the most recent meeting, there is a possibility that the MPC may reduce the policy interest rate in the future to stimulate the economy and bring economic growth back to its potential level.This scenario would be positive for high dividend plays (BCP, PTT, TOP, WHAUP, SABINA and ADVANC) and the finance sector (SAWAD, MTC and TIDLOR) (Figure 9).

Economic Update: MPC Holds Policy Interest Rate at 2.5%

<ul><li>The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which is not a surprise to the market.</li><li>The financial position of the Oil Fund is at a manageable level.</li><li>The marketing margin being left untouched eases concern and is likely to create positive sentiment for oil retailers, especially PTG, whose exposure to diesel volume sold through oil service stations is higher than peers at 77% (vs. 45-57% for peers). </li></ul>

The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which is not a surprise to the market.The financial position of the Oil Fund is at a manageable level.The marketing margin being left untouched eases concern and is likely to create positive sentiment for oil retailers, especially PTG, whose exposure to diesel volume sold through oil service stations is higher than peers at 77% (vs. 45-57% for peers). 

Industry Update – Energy (Oil Retailers)

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>We reiterate the BUY call with a TP of Bt42.0. We like BCP for its well-diversified business portfolio including E&amp;P, refinery, marketing, power, etc. supporting relatively stable earnings.</li>
<li>3Q22 earnings improved YoY, while softened QoQ The company reported a 3Q22 net profit of Bt2.5bn (+36% YoY, -53% QoQ), looming in line with our expectations. The YoY earnings growth </li>
<li>The refinery segment operating GRM dropped to US$11.2/bbl., leveling off QoQ from an exceptionally high level,due to a decline in the crack spread of all refined products as the demand </li>
</ul>


We reiterate the BUY call with a TP of Bt42.0. We like BCP for its well-diversified business portfolio including E&amp;P, refinery, marketing, power, etc. supporting relatively stable earnings.
3Q22 earnings improved YoY, while softened QoQ The company reported a 3Q22 net profit of Bt2.5bn (+36% YoY, -53% QoQ), looming in line with our expectations. The YoY earnings growth 
The refinery segment operating GRM dropped to US$11.2/bbl., leveling off QoQ from an exceptionally high level,due to a decline in the crack spread of all refined products as the demand 


<ul>
<li>We reiterate the BUY call with a TP of Bt42.0. We like BCP for its well diversified business portfolio including E&amp;P, refinery, marketing, power etc. supporting relatively stable earnings.</li>
<li>Exceptional GRM spike drove 2Q22 profit Excluding the stock gain of Bt3.9bn and other onetime items the recurring EBITDA stood at Bt8.7bn (+190% YoY, +14% QoQ).</li>
<li>The refinery margin (GRM) spiked to US$24.42/bbl.,compared to US$6.8/bbl.in 1Q22 and US$4.2/bbl. in 2Q21, on the back of rise in all product spreads due to supply tightness from Ukraine-Russia conflict.</li>
</ul>


We reiterate the BUY call with a TP of Bt42.0. We like BCP for its well diversified business portfolio including E&amp;P, refinery, marketing, power etc. supporting relatively stable earnings.
Exceptional GRM spike drove 2Q22 profit Excluding the stock gain of Bt3.9bn and other onetime items the recurring EBITDA stood at Bt8.7bn (+190% YoY, +14% QoQ).
The refinery margin (GRM) spiked to US$24.42/bbl.,compared to US$6.8/bbl.in 1Q22 and US$4.2/bbl. in 2Q21, on the back of rise in all product spreads due to supply tightness from Ukraine-Russia conflict.


BCP : Attractive Dividend Yield and Cheap Valuation

Thailand

Bangchak Corporation Public Company Limited operates as an energy company. The Company offers petroleum exploration and production, biomass, crude oil, and solar energy. Bangchak markets its products in Thailand.

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Bangchak Corporation (BCP TB)

Energy (Oil Retailers) - Scenarios for a Diesel Price Lift

We maintain a neutral view on the possibility of increasing the retail diesel price ceiling within the range of Bt1-2/liter to Bt31-32/liter due to...

Krungthai XSpring

Economic Update: MPC Holds Policy Interest Rate at 2.5%

This scenario would be positive for high dividend plays (BCP, PTT, TOP, WHAUP, SABINA and ADVANC) and the finance sector (SAWAD, MTC and TIDLOR)

Krungthai XSpring

Industry Update – Energy (Oil Retailers)

The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which...

Krungthai XSpring

BCP : Bring 4Q22 Outlook

We reiterate the BUY call with a TP of Bt42.0. We like BCP for its well-diversified business portfolio including E&P, refinery, marketing, power,...

Pi Securities PCL, Thailand

BCP : Attractive Dividend Yield and Cheap Valuation

We reiterate the BUY call with a TP of Bt42.0. We like BCP for its well diversified business portfolio including E&P, refinery, marketing, power...

Pi Securities PCL, Thailand

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