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

<p><strong>We expect BTS’s core earnings to gradually recover from late 2QFY22 (July’21-Sep’21) onwards when majority of Bangkok commuters received vaccines after the rollout program that already kicked off on 7th June. We reiterate a BUY rating for BTS with a new the target price of Bt11.20 (Previous TP:Bt11.50), derived from SOTP. Target price cut was due to a reduction in VGI holding stake and earnings downgrade.</strong></p><div>• We expect core earnings in 1QFY22 (April’21-June’21) to drop QoQ as we anticipate performance for BTSGIF and media business under VGI to remain subdue after 3rd wave of Covid-19 emerged. However, YoY recovery is due to low base of media revenue and U City’s share of loss in 1QFY21.</div><div></div><div>• Revise earnings forecast down in FY2022 and FY2023 by 3% and 22%</div><div></div><p><strong>BTS’s long-term earnings growth profile remain intact supported by farebox revenue from secured Yellow-Pink lines (Expect partial COD in March’22), revenue recognition of new Ads assets on expanded mass transit gridlines under VGI, profit sharing from U-tapao int. airport (Expect COD in FY2025), and, upside from Orange line (expect project to be awarded by end of 2021.</strong></p>

We expect BTS’s core earnings to gradually recover from late 2QFY22 (July’21-Sep’21) onwards when majority of Bangkok commuters received vaccines after the rollout program that already kicked off on 7th June. We reiterate a BUY rating for BTS with a new the target price of Bt11.20 (Previous TP:Bt11.50), derived from SOTP. Target price cut was due to a reduction in VGI holding stake and earnings downgrade.• We expect core earnings in 1QFY22 (April’21-June’21) to drop QoQ as we anticipate performance for BTSGIF and media business under VGI to remain subdue after 3rd wave of Covid-19 emerged. However, YoY recovery is due to low base of media revenue and U City’s share of loss in 1QFY21.• Revise earnings forecast down in FY2022 and FY2023 by 3% and 22%BTS’s long-term earnings growth profile remain intact supported by farebox revenue from secured Yellow-Pink lines (Expect partial COD in March’22), revenue recognition of new Ads assets on expanded mass transit gridlines under VGI, profit sharing from U-tapao int. airport (Expect COD in FY2025), and, upside from Orange line (expect project to be awarded by end of 2021.

BTS: Business Outlook Rely Chiefly on Progress of Vaccination

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The SET50 Index is one of the very few indices that is still weighted by full market cap. Stocks need to have a minimum free float of 20% to be eligible for index inclusion but the free float is not used to determine the weight of the stock in the index.</p><p>This had led to stocks with low free floats having an inordinately high weight in the index. The most recent case in point was <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a> - the stock was an inclusion in the SET50 index at the December review. DELTA is now the third largest stock in the index with a 6.07% weighting, even though the SET free float of the stock is only 22.35%. The stock has jumped 1000% over the last year.</p><p>Media reports now indicate that there are changes brewing that could result in the SET revising the calculation methodology to more accurately determine the free float of stocks, and a change to the calculation methodology of the SET50 Index that would see it move from a full market cap weighted index to a free float market cap weighted index.</p><p>In this Insight, we take a look at the stocks that would be affected by the changes and the impact of passive fund trading on the stocks.</p>

The SET50 Index is one of the very few indices that is still weighted by full market cap. Stocks need to have a minimum free float of 20% to be eligible for index inclusion but the free float is not used to determine the weight of the stock in the index.This had led to stocks with low free floats having an inordinately high weight in the index. The most recent case in point was Delta Electronics Thai (DELTA TB) - the stock was an inclusion in the SET50 index at the December review. DELTA is now the third largest stock in the index with a 6.07% weighting, even though the SET free float of the stock is only 22.35%. The stock has jumped 1000% over the last year.Media reports now indicate that there are changes brewing that could result in the SET revising the calculation methodology to more accurately determine the free float of stocks, and a change to the calculation methodology of the SET50 Index that would see it move from a full market cap weighted index to a free float market cap weighted index.In this Insight, we take a look at the stocks that would be affected by the changes and the impact of passive fund trading on the stocks.

SET50 Index: Change to Free Float Weighting In the Works?

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

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<p>Back on the 18 March, <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> (KLN) <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2019/0318/LTN20190318261.pdf" target="_blank" rel="noopener">announced</a> the possible spin-off and separate listing of 63%-held Kerry Express (Thailand) (KET) on the stock exchange of Thailand. KET is principally engaged in the business of express delivery business in Thailand. </p>
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<p>A strategic partnership was established with GI Global Media Public, a subsidiary of <a href="https://www.smartkarma.com/entities/15943" target="_blank" data-smartkarma-citation="entities:15943:1" rel="noopener">BTS Group Holdings (BTS TB)</a>, <a href="http://www3.hkexnews.hk/listedco/listconews/SEHK/2018/0424/LTN20180424095.pdf" target="_blank" rel="noopener">in July 2018</a>. GI Global paid THB5.9bn (HK$1.475bn) for 23% of KIT, implying a then market value of $6.4bn,  or ~HK$4bn for KLN's 63% stake.</p>
<p>Details of KET's December listing have now been issued - all <a href="https://market.sec.or.th/public/ipos/IPOSEQ01.aspx?TransID=305545" target="_blank" rel="noopener">relevant information</a> is in Thai. That stake in KET is now worth ~50% more, if using the mid-point of the IPO range. </p>
<p>More below the fold.</p>
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Back on the 18 March, Kerry Logistics Network (636 HK) (KLN) announced the possible spin-off and separate listing of 63%-held Kerry Express (Thailand) (KET) on the stock exchange of Thailand. KET is principally engaged in the business of express delivery business in Thailand. 


A strategic partnership was established with GI Global Media Public, a subsidiary of BTS Group Holdings (BTS TB), in July 2018. GI Global paid THB5.9bn (HK$1.475bn) for 23% of KIT, implying a then market value of $6.4bn,  or ~HK$4bn for KLN's 63% stake.
Details of KET's December listing have now been issued - all relevant information is in Thai. That stake in KET is now worth ~50% more, if using the mid-point of the IPO range. 
More below the fold.





Kerry Logistics (636 HK): Kerry Express' Spin-Off

APAC IPOs & Placements

Zhen Zhou, Toh

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

<p><a href="https://www.smartkarma.com/entities/bts-group-holdings-pcl" target="_blank" data-smartkarma-citation="entities:15943:1" rel="noopener">BTS Group Holdings (BTS TB)</a> is back on the market to sell 1.3bn shares in <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a> at a fixed price of THB6 per share. </p><p>VGI beat estimates in its latest Q2 results but the massive deal size may impede near-term performance as it accounts for 44 days of three-month ADV.</p><p>We covered BTS' 2019 selldown in:</p><ul><li><a href="https://www.smartkarma.com/insights/vgi-global-media-placement-high-growth-monopoly-with-good-returns-from-past-deals" target="_blank" rel="noopener">VGI Global Media Placement: High Growth Monopoly with Good Returns from Past Deals</a></li></ul>

BTS Group Holdings (BTS TB) is back on the market to sell 1.3bn shares in VGI PCL (VGI TB) at a fixed price of THB6 per share. VGI beat estimates in its latest Q2 results but the massive deal size may impede near-term performance as it accounts for 44 days of three-month ADV.We covered BTS' 2019 selldown in:VGI Global Media Placement: High Growth Monopoly with Good Returns from Past Deals

VGI Global Placement - Biggest Block Ever by BTS

<p><strong>The stock price fell by 16% in the past three months due to political issue, delay in orange line bidding (Upside Bt2.10) and sluggish recovery in media segment at VGI PCL (BUY TP8.30). However, we foresee potential positive catalysts to drive stock price in an upcoming months including; 1.) possibility that the cabinet could approve core network concession extension (Bt0.70 already included in target price), and, 2.) commencement of the last section in Green Ext. zone 2 in Dec20 (recognize revenue under O&amp;M contract).</strong></p>
<div>•Update on core network concession extension</div>
<div>•Mixed-use project create upside for the company in long-term</div>
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<p><strong>We maintain BUY rating with a target price of Bt12.0 (previous TP12.80), which is equivalent to 60xPE’FY21E, 50% discount to Thai transportation sector. A reduction in target price factors in Bt50bn handover of debt from BMA to BTS in order to get core network concession extension in return.</strong></p>

The stock price fell by 16% in the past three months due to political issue, delay in orange line bidding (Upside Bt2.10) and sluggish recovery in media segment at VGI PCL (BUY TP8.30). However, we foresee potential positive catalysts to drive stock price in an upcoming months including; 1.) possibility that the cabinet could approve core network concession extension (Bt0.70 already included in target price), and, 2.) commencement of the last section in Green Ext. zone 2 in Dec20 (recognize revenue under O&amp;M contract).
•Update on core network concession extension
•Mixed-use project create upside for the company in long-term

We maintain BUY rating with a target price of Bt12.0 (previous TP12.80), which is equivalent to 60xPE’FY21E, 50% discount to Thai transportation sector. A reduction in target price factors in Bt50bn handover of debt from BMA to BTS in order to get core network concession extension in return.

Thailand

BTS Group Holdings Public Company Limited is a Thai multi-industry conglomerate with core businesses in mass transit, media, property development, and services. It operates the BTS Skytrain and Bus Rapid Transit systems in Bangkok, offers comprehensive offline-to-online marketing solutions, and invests in various synergistic ventures, including hotels and real estate. The company was founded in Bangkok, Thailand, in 1968.

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BTS Group (BTS TB)

BTS: Business Outlook Rely Chiefly on Progress of Vaccination

We expect BTS’s core earnings to gradually recover from late 2QFY22 (July’21-Sep’21) onwards when majority of Bangkok commuters received vaccines...

Pi Securities PCL, Thailand

SET50 Index: Change to Free Float Weighting In the Works?

There is a strong possibility that the SET revises the calculation methodology to more accurately determine the free float of stocks, and changes...

Brian Freitas

Kerry Logistics (636 HK): Kerry Express' Spin-Off

Expect strong retail and institutional interest in KET, as e-commerce fuels the strong growth in the logistics sector, as this is the final...

David Blennerhassett

VGI Global Placement - Biggest Block Ever by BTS

BTS is back on the market to sell its shares in BTS. This is the biggest block ever since they started selling in 2017. The deal account for 15% of...

Zhen Zhou, Toh

BTS: Potential Positive Catalysts Ahead

We maintain BUY rating with a target price of Bt12.0 (previous TP12.80), which is equivalent to 60xPE’FY21E, 50% discount to Thai transportation...

Pi Securities PCL, Thailand

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