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.

Equity Bottom-Up

<p><span style="font-size: var(--content-font-size);">We believe the slowdown in the recovery of the refinery and marketing business following the spread of the Delta variant has been largely priced into BCP’s share price. Meanwhile, the company’s diversified earnings along with the solid contribution from power will remain the cushion, particularly amid the peak season for the contribution from Nam San 3A and Nam San 3B in 3Q. We maintain a Buy (with the newly revised TP of Bt28), expecting the resumption of core earnings momentum upon the easing of the COVID-19 impact.</span></p>

We believe the slowdown in the recovery of the refinery and marketing business following the spread of the Delta variant has been largely priced into BCP’s share price. Meanwhile, the company’s diversified earnings along with the solid contribution from power will remain the cushion, particularly amid the peak season for the contribution from Nam San 3A and Nam San 3B in 3Q. We maintain a Buy (with the newly revised TP of Bt28), expecting the resumption of core earnings momentum upon the easing of the COVID-19 impact.

Company Update: Bangchak Corporation Plc. (BCP)

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

Thematic (Sector/Industry)

<h2>Energy Sector: Overweight E&amp;P, Neutral on Refinery and Petrochemical</h2>
<h3>Crude: Solid OPEC+ supply curbs to push crude price up</h3>
<div>• Brent crude oil price spiked to US$75.0/bbl in early July, a two-year high. We see the crude price to maintain at high levels supported by OPEC+ controlled production measures and rising demand from strong global economic recovery after vaccine rollout. We maintain our bullish outlook for 3Q21 and expect the Brent crude rise and maintain at US$80/bbl level. PTTEP is our top pick,</div>
<p></p>
<h3>Refinery: Low pace GRM recovery due to dragged economic growth</h3>
<p>• We expect the gasoline and diesel demand to rise gradually supported by US and EU economic recovery. While jet fuel demand will continue to be under pressure from pandemic-led air travel restrictions. Thus, we expect the GRM to remain flat during 3Q21 and gradually recover by 4Q21. Maintain short-term neutral view on TOP, SPRC, BCP.</p>
<h3>Petrochemicals: Back to pre-Covid oversupply</h3>
<div>• We expect olefin spread to weaken in 2H21 as PE capacity at 7 MTA (6% global capacity) and PP capacity at 6.4 MTA (6% global capacity) will be commercialized in 2H21. we expect polyester and PET demand to fall in 2H21 due to seasonality. Meanwhile, we expect the aromatic spread to remain healthy. PX spread will be supported by new capacity in downstream PTA products from China while BZ demand remains strong from electronics appliance production and downstream (SM) new capacity. Thus, due to the weak 2H21 earnings outlook, we have a neutral view on PTTGC.</div>
<div></div>
<div>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/177/original/ENERGY1.JPG?1626146258" class="editor-image img-responsive" data-smartkarma-image-id="218177"></figure>
</section>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/178/original/ENERGY2.JPG?1626146269" class="editor-image img-responsive" data-smartkarma-image-id="218178"></figure>
</section>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/179/original/ENERGY3.JPG?1626146302" class="editor-image img-responsive" data-smartkarma-image-id="218179"></figure>
<div class="content-caption">Sources: CGS Research, company data. Notes: Valuation summary of stocks under CGS coverage, as of 9 July 2021 ,</div>
</section>
<p></p>
</div>

Energy Sector: Overweight E&amp;P, Neutral on Refinery and Petrochemical
Crude: Solid OPEC+ supply curbs to push crude price up
• Brent crude oil price spiked to US$75.0/bbl in early July, a two-year high. We see the crude price to maintain at high levels supported by OPEC+ controlled production measures and rising demand from strong global economic recovery after vaccine rollout. We maintain our bullish outlook for 3Q21 and expect the Brent crude rise and maintain at US$80/bbl level. PTTEP is our top pick,

Refinery: Low pace GRM recovery due to dragged economic growth
• We expect the gasoline and diesel demand to rise gradually supported by US and EU economic recovery. While jet fuel demand will continue to be under pressure from pandemic-led air travel restrictions. Thus, we expect the GRM to remain flat during 3Q21 and gradually recover by 4Q21. Maintain short-term neutral view on TOP, SPRC, BCP.
Petrochemicals: Back to pre-Covid oversupply
• We expect olefin spread to weaken in 2H21 as PE capacity at 7 MTA (6% global capacity) and PP capacity at 6.4 MTA (6% global capacity) will be commercialized in 2H21. we expect polyester and PET demand to fall in 2H21 due to seasonality. Meanwhile, we expect the aromatic spread to remain healthy. PX spread will be supported by new capacity in downstream PTA products from China while BZ demand remains strong from electronics appliance production and downstream (SM) new capacity. Thus, due to the weak 2H21 earnings outlook, we have a neutral view on PTTGC.










Sources: CGS Research, company data. Notes: Valuation summary of stocks under CGS coverage, as of 9 July 2021 ,




<p><strong>Yesterday analyst meeting came out in a positive outlook for refinery and power plant business in 2Q21-2H21. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method, implying 1.1x PBV’22E. </strong></p><div>• Expect recurring profit to improve both YoY and QoQ in 2Q21, on the back of recovering refinery operations, thanks to revamping GRM and higher refinery utilization rate after TAM in 1Q21. While net profit would soften QoQ due to lower stock gain</div><div></div><div>• Solid power plant business performance in 2Q-3Q21, backed by profit recognition from new 20MW solar projects added in 3Q20 and seasonal higher hydro power plant operation..</div><div></div><div>• Marketing and bio-based business to remain under pressure in 2Q21 due to new wave of COVID-19, while expect to improve in 2H21 as the domestic economy recovers.</div>

Yesterday analyst meeting came out in a positive outlook for refinery and power plant business in 2Q21-2H21. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method, implying 1.1x PBV’22E. • Expect recurring profit to improve both YoY and QoQ in 2Q21, on the back of recovering refinery operations, thanks to revamping GRM and higher refinery utilization rate after TAM in 1Q21. While net profit would soften QoQ due to lower stock gain• Solid power plant business performance in 2Q-3Q21, backed by profit recognition from new 20MW solar projects added in 3Q20 and seasonal higher hydro power plant operation..• Marketing and bio-based business to remain under pressure in 2Q21 due to new wave of COVID-19, while expect to improve in 2H21 as the domestic economy recovers.

BCP: Recovering Refinery and Solid Power Business Performance

<p><strong>Tuesday analyst meeting came out in a positive outlook for refinery and marketing business. We expect a significant upswing in GRM tending up each quarter in 2021 on the back of resumption of gasoline and diesel demand.</strong></p><div>• The TAM in 1Q21 could pressure the earnings performance in 1Q21, However, the recovering GRM, stock gain and stable profit contribution from power and bio based business will support the net profit growth in 1Q21 and ahead.</div><div></div><div>• 1Q21 operating GRM is anticipated to improve to 4.2  US$/BBL level in 1Q21 (+12% QoQ).</div><div></div><div>• Expect BCP to book a higher stock gain of around Bt1.0bn in 1Q21 as Dubai crude price inched up to 62 US$/BBL compared to 50 US$/BBL in beginning of 1Q21.</div><p></p><p>We upgrade our recommendation to BUY (from HOLD), based on a revised-up target price of Bt35.0 factoring in the better refinery performance. Our valuation is derived using sum-of-the-parts (SOTP) methodology, implying 1.0xPBV’21E (15% discount to its Thailand peer).</p>

Tuesday analyst meeting came out in a positive outlook for refinery and marketing business. We expect a significant upswing in GRM tending up each quarter in 2021 on the back of resumption of gasoline and diesel demand.• The TAM in 1Q21 could pressure the earnings performance in 1Q21, However, the recovering GRM, stock gain and stable profit contribution from power and bio based business will support the net profit growth in 1Q21 and ahead.• 1Q21 operating GRM is anticipated to improve to 4.2  US$/BBL level in 1Q21 (+12% QoQ).• Expect BCP to book a higher stock gain of around Bt1.0bn in 1Q21 as Dubai crude price inched up to 62 US$/BBL compared to 50 US$/BBL in beginning of 1Q21.We upgrade our recommendation to BUY (from HOLD), based on a revised-up target price of Bt35.0 factoring in the better refinery performance. Our valuation is derived using sum-of-the-parts (SOTP) methodology, implying 1.0xPBV’21E (15% discount to its Thailand peer).

BCP: Recovering Refinery Performance to Be Key Earnings Driver

<p><strong>Crude: Bright E&amp;P business performance from recovering crude price</strong></p><ul><li>We expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021. <strong> PTTEP is our top pick</strong>, the E&amp;P business will most benefit from recovering crude price.</li></ul><p><strong>Refinery: Improving product demand to drive GRM</strong></p><ul><li>Thai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). <strong>TOP is our top pick </strong>among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).</li></ul><p><strong>Petrochemicals: Benefit from global recovery</strong></p><ul><li>We foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). <strong>PTTGC is our top pick</strong> as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.</li></ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/642/original/SMK1.png?1611645077" class="editor-image img-responsive" data-smartkarma-image-id="184642"></figure><p style="text-align: center;"><strong>Valuation Summary*</strong></p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/643/original/Picture1.jpg?1611645252" class="editor-image img-responsive" data-smartkarma-image-id="184643"></figure></section><p style="text-align: center;"><em>Source: CGS Research, Company data, SET</em></p></section>

Crude: Bright E&amp;P business performance from recovering crude priceWe expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021.  PTTEP is our top pick, the E&amp;P business will most benefit from recovering crude price.Refinery: Improving product demand to drive GRMThai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). TOP is our top pick among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).Petrochemicals: Benefit from global recoveryWe foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). PTTGC is our top pick as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.Valuation Summary*
Source: CGS Research, Company data, SET

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

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.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Bangchak Corporation (BCP TB)

Company Update: Bangchak Corporation Plc. (BCP)

We believe the slowdown in the recovery of the refinery and marketing business following the spread of the Delta variant has been largely priced...

Krungthai XSpring

Energy Sector Outlook 3Q21

We maintain the BUY recommendation based on a target price of Bt146, derived using DCF methodology (WACC 9.4%, TG 2%). Our valuation implies 11x...

Pi Securities PCL, Thailand

BCP: Recovering Refinery and Solid Power Business Performance

Yesterday analyst meeting came out in a positive outlook for refinery and power plant business in 2Q21-2H21. We maintain the BUY recommendation...

Pi Securities PCL, Thailand

BCP: Recovering Refinery Performance to Be Key Earnings Driver

Tuesday analyst meeting came out in a positive outlook for refinery and marketing business. We expect a significant upswing in GRM tending up each...

Pi Securities PCL, Thailand

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

Energy Sector : Overweight- Oil demand recovery to drive 2021 earnings. We expect bright E&P business performance from recovering crude price, and...

Pi Securities PCL, Thailand

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)