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

<ul><li>Mr. Thibodi Wattanakul, Director of the State Enterprise Policy Office (SEPO), has tasked the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited and Dhanarak Asset Development Co., Ltd. to discuss guidelines for land lease rates.</li><li>These guidelines were resolved in March 2024 by the State Enterprise Policy Committee, chaired by the prime minister.</li><li>The discussion aims to explore the possibility of merging the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited with Dhanarak Asset Development Co., Ltd. or establishing it as a subsidiary of the latter. </li></ul>

Mr. Thibodi Wattanakul, Director of the State Enterprise Policy Office (SEPO), has tasked the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited and Dhanarak Asset Development Co., Ltd. to discuss guidelines for land lease rates.These guidelines were resolved in March 2024 by the State Enterprise Policy Committee, chaired by the prime minister.The discussion aims to explore the possibility of merging the Syndicate of Thai Hotels &amp; Tourists Enterprises Limited with Dhanarak Asset Development Co., Ltd. or establishing it as a subsidiary of the latter. 

The Erawan Group - SEPO to Consider Raising the Land Lease Rate at the Grand Hyatt Erawan Hotel

<ul><li>We expect the MPC to continue raising the policy interest rate in 2023E to the terminal rate of 2.0%, which is where the real rate will turn positive at +0.1%, based on a CPI of 1.9% as of the end of 4Q23E (Bloomberg consensus).</li><li>The 2023E Thai economy is projected to grow at its full potential at 4.5% YoY (vs. the current projection of 3.7% YoY) on the back of the expected recovery of tourism thanks to China’s sooner-than-anticipated reopening.</li><li>Meanwhile, inflation has continued to slow down. We continue to recommend reopening plays whose earnings are likely to recover in line with the Thai economic outlook. </li></ul>

We expect the MPC to continue raising the policy interest rate in 2023E to the terminal rate of 2.0%, which is where the real rate will turn positive at +0.1%, based on a CPI of 1.9% as of the end of 4Q23E (Bloomberg consensus).The 2023E Thai economy is projected to grow at its full potential at 4.5% YoY (vs. the current projection of 3.7% YoY) on the back of the expected recovery of tourism thanks to China’s sooner-than-anticipated reopening.Meanwhile, inflation has continued to slow down. We continue to recommend reopening plays whose earnings are likely to recover in line with the Thai economic outlook. 

MPC - MPC Raised the Policy Interest Rate by 0.25% to 1.50%

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

<ul>
<li>ERW reported 3Q22 net loss at Bt12m, the lowest loss in the past 11 quarter.The result came out above our and market estimates while lower-than-expected operating cost from hotel business </li>
<li>Net loss in 3Q22 improved significantly Loss from core operation reduced to Bt12m (vs. Bt623m loss in 3Q21 and Bt139m loss in 2Q22)on the back of revenue that hit 11-quarter</li>
<li>Effective control for cost from operations and benefit from high operating leverage play a vital role as gross profit margin expanded to 11-quarter high at35.5%while SG&amp;At sales decreased to 11-quarter </li>
</ul>


ERW reported 3Q22 net loss at Bt12m, the lowest loss in the past 11 quarter.The result came out above our and market estimates while lower-than-expected operating cost from hotel business 
Net loss in 3Q22 improved significantly Loss from core operation reduced to Bt12m (vs. Bt623m loss in 3Q21 and Bt139m loss in 2Q22)on the back of revenue that hit 11-quarter
Effective control for cost from operations and benefit from high operating leverage play a vital role as gross profit margin expanded to 11-quarter high at35.5%while SG&amp;At sales decreased to 11-quarter 


ERW : Much Quicker Recovery Relative to Peers but Mostly Priced In

<ul>
<li>We downgrade ERW to HOLD while cut target price to Bt4.20. (Previous TP:4.60) after earnings downgrade in 22-23E chiefly from rising cost pressure.The stock price rallies 25% in the past</li>
<li>Expect loss to be reduced by almost 60%QoQ in 3Q22 We expect the company to report 3Q22 net loss of Bt57m(vs. Bt623m loss in 3Q21 and Bt139m loss in 2Q22)</li>
<li>EBIT margin is assumed to turn positive for the first time since pandemic, thanks to recovery in traffic at hotels and well-managed cost control.</li>
</ul>


We downgrade ERW to HOLD while cut target price to Bt4.20. (Previous TP:4.60) after earnings downgrade in 22-23E chiefly from rising cost pressure.The stock price rallies 25% in the past
Expect loss to be reduced by almost 60%QoQ in 3Q22 We expect the company to report 3Q22 net loss of Bt57m(vs. Bt623m loss in 3Q21 and Bt139m loss in 2Q22)
EBIT margin is assumed to turn positive for the first time since pandemic, thanks to recovery in traffic at hotels and well-managed cost control.


ERW : Expect Turnaround in 4Q22, but Has Mostly Priced In

<ul>
<li>Maintain BUY rating for ERW while roll over target price to Bt4.60. (Previous TP: 4.20) 2Q22 net loss at Bt139m was in-line with market estimate while EBITDA has turned positive </li>
<li>Net loss in 2Q22 improved substantially Stripping out extra gains mainly from sales of 3 Ibis hotels, loss from core operation would be at Bt160m(vs.Bt556m loss in 2Q21 and Bt316m </li>
<li>Revenue was at Bt974m (+271%YoY +53%QoQ),supported by luxury segment (44% of total revenue in 2Q22)where occupancy jumped to 66% (42% in 1Q22) while average room rate (ARR) recovered 66% YoY</li>
</ul>


Maintain BUY rating for ERW while roll over target price to Bt4.60. (Previous TP: 4.20) 2Q22 net loss at Bt139m was in-line with market estimate while EBITDA has turned positive 
Net loss in 2Q22 improved substantially Stripping out extra gains mainly from sales of 3 Ibis hotels, loss from core operation would be at Bt160m(vs.Bt556m loss in 2Q21 and Bt316m 
Revenue was at Bt974m (+271%YoY +53%QoQ),supported by luxury segment (44% of total revenue in 2Q22)where occupancy jumped to 66% (42% in 1Q22) while average room rate (ARR) recovered 66% YoY


ERW : EBITDA Turned Positive in 2Q22 Supported by Solid Recovery in All

Thailand

The Erawan Group is a Thai hospitality company that invests in, develops, and operates hotels across luxury, midscale, economy, and budget segments, primarily in Thailand, the Philippines, and Japan. The company also engages in building rental and management, including commercial retail properties and office buildings. It was founded in 1982 and is headquartered in Bangkok, Thailand.

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Erawan Group (ERW TB)

The Erawan Group - SEPO to Consider Raising the Land Lease Rate at the Grand Hyatt Erawan Hotel

Mr. Thibodi emphasized that with the expiration of the hotel's land lease, managing the lease and hotel buildings should yield better returns than...

Krungthai XSpring

MPC - MPC Raised the Policy Interest Rate by 0.25% to 1.50%

We expect the MPC to continue raising the policy interest rate in 2023E to the terminal rate of 2.0%, which is where the real rate will turn...

Krungthai XSpring

ERW : Much Quicker Recovery Relative to Peers but Mostly Priced In

ERW reported 3Q22 net loss at Bt12m, the lowest loss in the past 11 quarter. The result came out above our and market estimates while lower-than...

Pi Securities PCL, Thailand

ERW : Expect Turnaround in 4Q22, but Has Mostly Priced In

We downgrade ERW to HOLD while cut target price to Bt4.20. (Previous TP: 4.60) after earnings downgrade in 22-23E chiefly from rising cost...

Pi Securities PCL, Thailand

ERW : EBITDA Turned Positive in 2Q22 Supported by Solid Recovery in All

Maintain BUY rating for ERW while roll over target price to Bt4.60. (Previous TP: 4.20) 2Q22 net loss at Bt139m was in-line with market estimate...

Pi Securities PCL, Thailand

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