CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

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A. Stotz Investment Research

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Equity Bottom-Up

<div>Welcome to Business DNA, a chance for us to dig into the essential makeup of business leaders and their organizations. Our focus is not on the short term but rather on understanding the driving forces of a business. Our guest today is Suksan Yasasin, CEO of Chayo Group Public Company Limited.</div>

Welcome to Business DNA, a chance for us to dig into the essential makeup of business leaders and their organizations. Our focus is not on the short term but rather on understanding the driving forces of a business. Our guest today is Suksan Yasasin, CEO of Chayo Group Public Company Limited.

Business DNA: Suksan Yasasin of Chayo Group

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

Thai Airways International / Equity Bottom-Up

Five interesting news/developments that could impact Thai equities:<ul>
<li>
Updates on Thai Airways restructuring. The Planner gives out details about potential merger with Thai Smile and who will likely call the shots (bondholders, Boeing, Airbus) in the long run.</li>
<li>
Four New Airports. Bhumjaithai's Transport Minister pushes AOT to expand four more airports even as passenger throughput falls by more than half. Some locations such as Buriram seem politically oriented but make less business sense.</li>
<li>
Debt Exploding, as budget deficits lead Thai government to authorize Bt214bn of new loans. Public debt to GDP could rise to 57% by next year, prompting the State to raise its debt ceiling above 60%.</li>
<li>
Everyone wants power! From PTT to EA, everyone wants a piece of the action in the power sector. Increasing stakes in power companies, running electric ferries on the Chao Phrya, you name it.</li>
<li>
TTA's Ship Comes Home. The shipper is guiding for a strong revenue growth of 31% and expansion of both its fleet and restaurant outlets.</li>
</ul>

Five interesting news/developments that could impact Thai equities:

Updates on Thai Airways restructuring. The Planner gives out details about potential merger with Thai Smile and who will likely call the shots (bondholders, Boeing, Airbus) in the long run.

Four New Airports. Bhumjaithai's Transport Minister pushes AOT to expand four more airports even as passenger throughput falls by more than half. Some locations such as Buriram seem politically oriented but make less business sense.

Debt Exploding, as budget deficits lead Thai government to authorize Bt214bn of new loans. Public debt to GDP could rise to 57% by next year, prompting the State to raise its debt ceiling above 60%.

Everyone wants power! From PTT to EA, everyone wants a piece of the action in the power sector. Increasing stakes in power companies, running electric ferries on the Chao Phrya, you name it.

TTA's Ship Comes Home. The shipper is guiding for a strong revenue growth of 31% and expansion of both its fleet and restaurant outlets.


Snippets #44: More Turbulence at THAI, Four New Airports!

We have a SELL recommendation on CHAYO with our target price of Bt6.90, implying a downside of 16% from the current price. We derive our target price from the PB/ROE of Thai Diversified Financials and apply a 15% small-cap discount.
Investment thesis:
<ul>
<li>Rising level of bad loans in Thailand can boost core business</li>
<li>Economic uncertainty helps to expand the customer base for debt collection</li>
<li>Debt collection to further benefit from increasing mobile usage</li>
<li>High growth is priced in, warrant exercise to fund growth</li>
</ul>
Interim: The 2Q20 results were mainly in line with our expectations, slightly higher provisioning. We still think that CHAYO lags on enormous growth opportunities.
Risks: Increased competition in acquiring non-performing loans, loss from unsecured debt management, adverse regulatory changes, and potential litigation issues arising from debt collection service. A risk to our recommendation is that sentiment drives the share price considerably higher.

We have a SELL recommendation on CHAYO with our target price of Bt6.90, implying a downside of 16% from the current price. We derive our target price from the PB/ROE of Thai Diversified Financials and apply a 15% small-cap discount.
Investment thesis:

Rising level of bad loans in Thailand can boost core business
Economic uncertainty helps to expand the customer base for debt collection
Debt collection to further benefit from increasing mobile usage
High growth is priced in, warrant exercise to fund growth

Interim: The 2Q20 results were mainly in line with our expectations, slightly higher provisioning. We still think that CHAYO lags on enormous growth opportunities.
Risks: Increased competition in acquiring non-performing loans, loss from unsecured debt management, adverse regulatory changes, and potential litigation issues arising from debt collection service. A risk to our recommendation is that sentiment drives the share price considerably higher.

CHAYO: Remarkable Growth, but Would Need More

We initiate coverage on CHAYO with a SELL recommendation based on a target price of Bt6.90, implying a downside of 12% from the current price. We derive our target price from the PB/ROE of Thai Diversified Financials and apply a 15% small-cap discount.
Investment thesis:
<ul>
<li>Rising level of bad loans in Thailand can boost core business</li>
<li>Economic uncertainty helps to expand the customer base for debt collection</li>
<li>Debt collection to further benefit from increasing mobile usage</li>
<li>High growth is priced in, warrant exercise to fund growth</li>
</ul>
Risks: Increased competition in acquiring non-performing loans, loss from unsecured debt management, adverse regulatory changes, and potential litigation issues arising from debt collection service. A risk to our recommendation is that sentiment drives the share price considerably higher.

We initiate coverage on CHAYO with a SELL recommendation based on a target price of Bt6.90, implying a downside of 12% from the current price. We derive our target price from the PB/ROE of Thai Diversified Financials and apply a 15% small-cap discount.
Investment thesis:

Rising level of bad loans in Thailand can boost core business
Economic uncertainty helps to expand the customer base for debt collection
Debt collection to further benefit from increasing mobile usage
High growth is priced in, warrant exercise to fund growth

Risks: Increased competition in acquiring non-performing loans, loss from unsecured debt management, adverse regulatory changes, and potential litigation issues arising from debt collection service. A risk to our recommendation is that sentiment drives the share price considerably higher.

CHAYO: When the Going Gets Tough, CHAYO Gets Going

During this period, we visited around 10 companies. These were the two we liked best of the pack.<ul>
<li>
Osotspa, one of the country's oldest conglomerates, pointed to passing of overhangs and all-rounded strong growth in smaller businesses such as Vitamin C, canned coffee, and childcare products.</li>
<li>
Chaiyo, the country's second largest debt collector but the better performer. They've almost doubled their earnings and expanded their gross margins by a whopping 13%.</li>
</ul>

During this period, we visited around 10 companies. These were the two we liked best of the pack.

Osotspa, one of the country's oldest conglomerates, pointed to passing of overhangs and all-rounded strong growth in smaller businesses such as Vitamin C, canned coffee, and childcare products.

Chaiyo, the country's second largest debt collector but the better performer. They've almost doubled their earnings and expanded their gross margins by a whopping 13%.


Thailand

Chayo Group Public Company Limited and its subsidiaries specialize in investing and managing non-performing loans, offering debt tracking and collection services for financial institutions and private companies. They also provide customer service, money lending, and sell goods via digital channels. The company was founded on March 11, 1997, and is headquartered in Bangkok, Thailand.

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Chayo Group (CHAYO TB)

Business DNA: Suksan Yasasin of Chayo Group

Suksan Yasasin’s father passed away when he was only two years old. In 1997, a company was established, which later became Chayo Group Public...

A. Stotz Investment Research

Snippets #44: More Turbulence at THAI, Four New Airports!

Five interesting

Athaporn Arayasantiparb, CFA

CHAYO: Remarkable Growth, but Would Need More

The 2Q20 results were in line with our expectations, slightly higher provisioning. We still think that CHAYO lags on enormous growth opportunities.

A. Stotz Investment Research

CHAYO: When the Going Gets Tough, CHAYO Gets Going

We initiate coverage on CHAYO with a SELL recommendation based on a target price of Bt6.90, implying a downside of 12% from the current price. We...

A. Stotz Investment Research

The Best of May/June 2019 Company Visits

During this period, we visited around 10 companies. These were the two we liked best of the pack. Osotspa, one of the country's oldest...

Athaporn Arayasantiparb, CFA

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