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?

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 maintain BUY rating with a target price of Bt141 based on 35xPE’21E, the average of the Thailand energy drink stocks.</strong></p><div>• We expect CBG to report a solid core profit at Bt971m (+21%YoY, +6%QoQ), driven by seasonality and solid sales growth in CLMV.</div><div></div><div>• We still have a positive outlook in 2021 while expect a solid sales growth, which will be driven by overseas sales, new product launch (orange flavor Woody C+ Lock) and liquor’s distribution sales.</div><div></div><div>• In the next three years, we forecast CBG’s sales and earnings to grow at double digit, mainly supported by i) market penetration in Vietnam and China ii) New functional drink products and iii) a solid liquor’s distribution sales.</div><div>
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</div><p><strong>We still like CBG for its 1) Bright outlook in CLMV energy drinks; 2) Potential growth from China market; 3) New S-Curve from new product (WOODY C+ LOCK); and 4) Solid liquor’s distribution sales growth momentum.</strong></p>

We maintain BUY rating with a target price of Bt141 based on 35xPE’21E, the average of the Thailand energy drink stocks.• We expect CBG to report a solid core profit at Bt971m (+21%YoY, +6%QoQ), driven by seasonality and solid sales growth in CLMV.• We still have a positive outlook in 2021 while expect a solid sales growth, which will be driven by overseas sales, new product launch (orange flavor Woody C+ Lock) and liquor’s distribution sales.• In the next three years, we forecast CBG’s sales and earnings to grow at double digit, mainly supported by i) market penetration in Vietnam and China ii) New functional drink products and iii) a solid liquor’s distribution sales.
 
We still like CBG for its 1) Bright outlook in CLMV energy drinks; 2) Potential growth from China market; 3) New S-Curve from new product (WOODY C+ LOCK); and 4) Solid liquor’s distribution sales growth momentum.

CBG: Expect 4Q20 Earnings to Hit a Record High

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> is finally starting to see the light of day across is numerous consumer-related businesses in3Q2020, from its core Thai retail business through BigC to its aluminum can and glass bottling across SE Asia, as well as its consumer supply chain business. </p><p>The company's packaging supply chain business, which includes glass bottling and aluminum cans continues to see improvements since the trough in 2Q2020, with cans driving by new sizes. </p><p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a>'s Big C retail business under modern supply chain continues to suffer from the lack of tourists in Thailand but is seeing some improvements with Mini BigC doing especially well. Rentals have started to pick up, which is positive for profitability going forward. </p><p>The company's consumer supply chain business has seen a decent pick up with 3Q2020 sales growing by +15.1% YoY and +12.6% YoY for 9M2020 driven by non-food, international trading, and logistics.</p><p>Valuations look attractive versus historical levels, especially in view of an impending recovery, with the company trading on 22.7x FY21E PER versus its 3-year average of 28.3x forward PER. </p>

Berli Jucker (BJC TB) is finally starting to see the light of day across is numerous consumer-related businesses in3Q2020, from its core Thai retail business through BigC to its aluminum can and glass bottling across SE Asia, as well as its consumer supply chain business. The company's packaging supply chain business, which includes glass bottling and aluminum cans continues to see improvements since the trough in 2Q2020, with cans driving by new sizes. Berli Jucker (BJC TB)'s Big C retail business under modern supply chain continues to suffer from the lack of tourists in Thailand but is seeing some improvements with Mini BigC doing especially well. Rentals have started to pick up, which is positive for profitability going forward. The company's consumer supply chain business has seen a decent pick up with 3Q2020 sales growing by +15.1% YoY and +12.6% YoY for 9M2020 driven by non-food, international trading, and logistics.Valuations look attractive versus historical levels, especially in view of an impending recovery, with the company trading on 22.7x FY21E PER versus its 3-year average of 28.3x forward PER. 

Berli Jucker (BJC TB) - Consumer Kingpin on the Cusp of Recovery

<p><strong>Yesterday analyst meeting came out with a positive tone. We maintain BUY rating with a target price of Bt141 based on 35xPE’21E, the average of the Thailand energy drink stocks.</strong></p><div>• Market expansion in CLMV is a key success factor for CBG. The company aims to penetrate the market in Vietnam by using the same strategy that has implemented successfully in Thailand, Cambodia and Myanmar.</div><div></div><div>• WOODY C+ LOCK is a main driver in domestic sales in the next three years driven by growing segment of functional driven following by health concern and aggressive point-of-sales expansion strategy.</div><div></div><div>• We expect 4Q20 earnings continue to break the record level given continuing growth momentum from CLMV and liquor’s distribution.</div><div>
<br>
</div><p><strong>We still like CBG for its 1) Bright outlook in CLMV energy drinks; 2) Potential growth from China market; 3) New S-Curve from new product (WOODY C+ LOCK); and 4) Solid liquor’s distribution sales growth momentum.</strong></p>

Yesterday analyst meeting came out with a positive tone. We maintain BUY rating with a target price of Bt141 based on 35xPE’21E, the average of the Thailand energy drink stocks.• Market expansion in CLMV is a key success factor for CBG. The company aims to penetrate the market in Vietnam by using the same strategy that has implemented successfully in Thailand, Cambodia and Myanmar.• WOODY C+ LOCK is a main driver in domestic sales in the next three years driven by growing segment of functional driven following by health concern and aggressive point-of-sales expansion strategy.• We expect 4Q20 earnings continue to break the record level given continuing growth momentum from CLMV and liquor’s distribution.
 
We still like CBG for its 1) Bright outlook in CLMV energy drinks; 2) Potential growth from China market; 3) New S-Curve from new product (WOODY C+ LOCK); and 4) Solid liquor’s distribution sales growth momentum.

CBG: WOODY C+ LOCK and Vietnam Market Are a Key Catalyst

<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> was hit quite hard in 2Q2020 in both its core retail and packaging businesses after a reasonable performance in 1Q2020 before the lockdown in Thailand and Vietnam took hold and during a period when consumers began stocking up. </p>
<p>The real impact on the company's packaging business came in mid-April when the Thai government put an alcohol ban in place, which was lifted in mid-May but led breweries to close operations for 4-6 weeks. </p>
<p>The ban was gradually lifted for retail stores initially followed by restaurants and bars and as a result, June saw recovery and July beer sales almost back to pre-COVID-19 levels. </p>
<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> non-alcohol bottling saw positive momentum from strong growth in sales of Vitamin C drinks. It also saw a strong response to its new 500ml cans, which are popular for home beer consumption. </p>
<p>The aluminium can division has also seen the benefits of new customers coming on stream and replacing the gap left by reduced demand from Carabao. It is also seeing some scale benefits as a result of this for its slim cans.</p>
<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)'</a>s core retail business under Big C saw a serious impact from COVID-19 in 2Q2020 with total sales down by -11.4%, with SSSG -17% but excluding its B-to-B business, SSSG fell an even greater -21.1% in 2Q2020.</p>
<p><a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> remains a well-rounded South East Asia recovery story through its packaging, with exposure to Thailand, Vietnam and Malaysia, as well as retail, with its number two position in Thailand in the hypermarket and supermarket space.</p>
<div class="content-highlight">
<p>Valuations look attractive versus history and with the prospect of a rapid recovery next year with the company trading in 22.0x FY21E PER versus its 5-year average forward PER of 29x, especially given a strong forecast recovery in earnings over the next two years. It also trades at a discount to Thai retail peers, despite a more positive earnings outlook. </p>
</div>

Berli Jucker (BJC TB) was hit quite hard in 2Q2020 in both its core retail and packaging businesses after a reasonable performance in 1Q2020 before the lockdown in Thailand and Vietnam took hold and during a period when consumers began stocking up. 
The real impact on the company's packaging business came in mid-April when the Thai government put an alcohol ban in place, which was lifted in mid-May but led breweries to close operations for 4-6 weeks. 
The ban was gradually lifted for retail stores initially followed by restaurants and bars and as a result, June saw recovery and July beer sales almost back to pre-COVID-19 levels. 
Berli Jucker (BJC TB) non-alcohol bottling saw positive momentum from strong growth in sales of Vitamin C drinks. It also saw a strong response to its new 500ml cans, which are popular for home beer consumption. 
The aluminium can division has also seen the benefits of new customers coming on stream and replacing the gap left by reduced demand from Carabao. It is also seeing some scale benefits as a result of this for its slim cans.
Berli Jucker (BJC TB)'s core retail business under Big C saw a serious impact from COVID-19 in 2Q2020 with total sales down by -11.4%, with SSSG -17% but excluding its B-to-B business, SSSG fell an even greater -21.1% in 2Q2020.
Berli Jucker (BJC TB) remains a well-rounded South East Asia recovery story through its packaging, with exposure to Thailand, Vietnam and Malaysia, as well as retail, with its number two position in Thailand in the hypermarket and supermarket space.

Valuations look attractive versus history and with the prospect of a rapid recovery next year with the company trading in 22.0x FY21E PER versus its 5-year average forward PER of 29x, especially given a strong forecast recovery in earnings over the next two years. It also trades at a discount to Thai retail peers, despite a more positive earnings outlook. 


Berli Jucker (BJC TB) - SE Asia's Consumer Recovery Proxy

Thailand

Carabao Group Public Company Limited is a Thailand-based holding company primarily investing in subsidiaries that produce, market, sell, and distribute energy drinks and other beverages both domestically and internationally. Their product range includes carbonated and non-carbonated energy drinks, vitamin C drinks, coffee products, and drinking water under brands like Carabao, Carabao Sport, and Woody C+ Lock. The company also manufactures and distributes packaging products such as bottles, glass products, and aluminum cans. Headquartered in Bangkok, Thailand, the company was established in 2001.

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Carabao Group (CBG TB)

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

CBG: Expect 4Q20 Earnings to Hit a Record High

We maintain BUY rating with a target price of Bt141 based on 35xPE’21E, the average of the Thailand energy drink stocks.

Pi Securities PCL, Thailand

Berli Jucker (BJC TB) - Consumer Kingpin on the Cusp of Recovery

Berli Jucker (BJC TB) remains an interesting proxy for domestic consumer recovery in SE Asia through its consumer packaging business, and more...

Angus Mackintosh

CBG: WOODY C+ LOCK and Vietnam Market Are a Key Catalyst

Yesterday analyst meeting came out with a positive tone. We maintain BUY rating with a target price of Bt141 based on 35xPE’21E, the average of the...

Pi Securities PCL, Thailand

Berli Jucker (BJC TB) - SE Asia's Consumer Recovery Proxy

Berli Jucker (BJC TB)

Angus Mackintosh

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