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>Earnings is expected to improve QoQ in 4Q22 and recover YoY in 2023 support by higher consumer purchasing power causing by adjustment of minimum daily wages, higher consumption from FIFA</li>
<li>Core business performance should be recover QoQ   Domestic sales (35% of total sales): Strong revenue growth momentum for domestic energy drinks to persist in 4Q22 and throughout 2023 supported </li>
<li>CLMV sales(30% of total sales)is expected to recover both YoY and QoQ in 4Q22 to Bt1.5bn or two-years average sales in CLMV,driven by a recovery in Cambodia sales after flood </li>
</ul>


Earnings is expected to improve QoQ in 4Q22 and recover YoY in 2023 support by higher consumer purchasing power causing by adjustment of minimum daily wages, higher consumption from FIFA
Core business performance should be recover QoQ   Domestic sales (35% of total sales): Strong revenue growth momentum for domestic energy drinks to persist in 4Q22 and throughout 2023 supported 
CLMV sales(30% of total sales)is expected to recover both YoY and QoQ in 4Q22 to Bt1.5bn or two-years average sales in CLMV,driven by a recovery in Cambodia sales after flood 


CBG : Key Positive Catalyst Should Depend on Sales Performance from Vietnam

<ul>
<li>Downgrade recommendation to HOLD from BUY with a lower target price of Bt105 (Previous TP: Bt120). Our new target price reflects 2023 earnings downward revision by 12% to factored</li>
<li>3Q22 earnings fell both YoY and QoQ  Its net profit came out at Bt475m (-21%YoY, -36%QoQ). After earnings revision,the 9M22 result accounted for 75% of full-year net profit in 2022.</li>
<li>Revenue remained solid at Bt4.7bn (+19%YoY, -11%QoQ) supported by 1) an increase in sales of Carabao dang energy drinks by 19%YoY in domestic market</li>
</ul>


Downgrade recommendation to HOLD from BUY with a lower target price of Bt105 (Previous TP: Bt120). Our new target price reflects 2023 earnings downward revision by 12% to factored
3Q22 earnings fell both YoY and QoQ  Its net profit came out at Bt475m (-21%YoY, -36%QoQ). After earnings revision,the 9M22 result accounted for 75% of full-year net profit in 2022.
Revenue remained solid at Bt4.7bn (+19%YoY, -11%QoQ) supported by 1) an increase in sales of Carabao dang energy drinks by 19%YoY in domestic market


CBG : Weak Margin Pressured on 3Q22 Results

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)

<div><div><div><div><ul><li>We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.</li><li>Our recommended stocks are CBG and SCGP.</li><li><div><div><p>The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.</p></div></div></li></ul></div></div></div></div>

We propose a new set of global plays in accordance with the de- globalization trend, shifting the allocation toward Asia-based companies with better growth prospects than those that generate the bulk of their revenue in Western markets.Our recommended stocks are CBG and SCGP.The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth potential.

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

<ul>
<li>Maintain BUY recommendation for CBG with a target price of Bt120 (Previous TP: Bt125). We expect the company to report 3Q22 net profit at Bt615m (+2%YoY, -17%QoQ).</li>
<li>Expect weak CLMV sales to drag 3Q22 earnings   We expect 3Q22 net profit to be at Bt615m. Revenue in 3Q22 is expected at Bt4.7bn (+20%YoY, -10%QoQ)</li>
<li>Gross profit margin in 3Q22 is assumed to drop to 30.6% from 34.1% in 3Q21 and 30.8% in 2Q22. The YoY and QoQ</li>
</ul>


Maintain BUY recommendation for CBG with a target price of Bt120 (Previous TP: Bt125). We expect the company to report 3Q22 net profit at Bt615m (+2%YoY, -17%QoQ).
Expect weak CLMV sales to drag 3Q22 earnings   We expect 3Q22 net profit to be at Bt615m. Revenue in 3Q22 is expected at Bt4.7bn (+20%YoY, -10%QoQ)
Gross profit margin in 3Q22 is assumed to drop to 30.6% from 34.1% in 3Q21 and 30.8% in 2Q22. The YoY and QoQ


CBG : Expect Weak CLMV Sales to Drag 3Q22 Earnings

<ul>
<li>Maintain BUY recommendation for CBG with a target price of Bt125. Management targets its branded own products GPM in 2H22 should improve slightly to 38%-40% from 38% in 2Q22</li>
<li>Positive catalyst from 5-6 new products launch in 2022 2Q22 energy drinks sales in UK market surged to Bt46m(+45%YoY)driven by a launch of new flavor (Mango)in new packaging (PET bottle).</li>
<li>The positive news from last week analyst meeting is an introduction of “Kanzou X2”in August 2022,the premium energy drinks with health benefits(liver nourishment)at a retail price of Bt15 per bottle.</li>
</ul>


Maintain BUY recommendation for CBG with a target price of Bt125. Management targets its branded own products GPM in 2H22 should improve slightly to 38%-40% from 38% in 2Q22
Positive catalyst from 5-6 new products launch in 2022 2Q22 energy drinks sales in UK market surged to Bt46m(+45%YoY)driven by a launch of new flavor (Mango)in new packaging (PET bottle).
The positive news from last week analyst meeting is an introduction of “Kanzou X2”in August 2022,the premium energy drinks with health benefits(liver nourishment)at a retail price of Bt15 per bottle.


Thailand

Carabao Group PCL, through its subsidiary, manufactures and distributes energy drinks.

Carabao Group (CBG TB)

CBG : Key Positive Catalyst Should Depend on Sales Performance from Vietnam

Earnings is expected to improve QoQ in 4Q22 and recover YoY in 2023 support by higher consumer purchasing power causing by adjustment of minimum...

Pi Securities PCL, Thailand

CBG : Weak Margin Pressured on 3Q22 Results

Downgrade recommendation to HOLD from BUY with a lower target price of Bt105 (Previous TP: Bt120).Our new target price reflects 2023 earnings...

Pi Securities PCL, Thailand

Changing Landscape for Global Plays - Shifting the Allocation of Global Plays Toward Asia

The global economy is less synchronized than in the past, meaning that a global plays strategy should be more area focused to enhance the growth...

Krungthai XSpring

CBG : Expect Weak CLMV Sales to Drag 3Q22 Earnings

Maintain BUY recommendation for CBG with a target price of Bt120 (Previous TP: Bt125). We expect the company to report 3Q22 net profit at Bt615m...

Pi Securities PCL, Thailand

CBG : Waiting for GPM Recovery

Maintain BUY recommendation for CBG with a target price of Bt125. Management targets its branded own products GPM in 2H22 should improve slightly...

Pi Securities PCL, Thailand