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

We initiate coverage of ERW with a BUY rating and a 2020 target price of Bt7.97, based on  32.4xPE’20E, which represents a relative PE of 1.31x to the Thai Consumer Discretionary Sector.
The story:
<ul>
<li>Well-diversified hotel portfolio in Thailand</li>
<li>Foreign tourist numbers starting to recover</li>
<li>Expect strong earnings growth in 2020E</li>
<li>Hop INN to benefit from domestic tourism growth</li>
<li>Plenty of room for overseas expansion</li>
</ul>
Risks:
<ul>
<li>High competition in the hotel industry</li>
<li>Dependency on third-party hotel management companies</li>
<li>Appreciation of the Thai baht</li>
</ul>

We initiate coverage of ERW with a BUY rating and a 2020 target price of Bt7.97, based on  32.4xPE’20E, which represents a relative PE of 1.31x to the Thai Consumer Discretionary Sector.
The story:

Well-diversified hotel portfolio in Thailand
Foreign tourist numbers starting to recover
Expect strong earnings growth in 2020E
Hop INN to benefit from domestic tourism growth
Plenty of room for overseas expansion

Risks:

High competition in the hotel industry
Dependency on third-party hotel management companies
Appreciation of the Thai baht


ERW: Pure Hotel Player in Key Strategic Locations

We initiate coverage of S with a BUY rating, based on a target price of Bt4.2 derived from a sum-of-the-parts (SOTP) methodology and implying 16.5xPE’19E, a 23% discount to the average of its peers in the Thai real estate sector.The story:<ul>
<li>Asset value to drive long-term sustainable growth</li>
<li>19 projects under development worth a combined Bt36bn to drive sales over the next three years</li>
<li>REITs will be a key catalyst to boost recurring income</li>
<li>Higher revenue contribution from hotel business</li>
</ul>Risks:<ul>
<li>Tightened credit approval</li>
<li>Raw material costs &amp; F/X fluctuation</li>
</ul><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/082/655/original/Picture4.jpg?1553132311" class="editor-image img-responsive" data-smartkarma-image-id="82655"></figure><div class="content-caption">Sources: CGS Research, company data</div>Background: In 2014, Santi Bhirombhakdi** and his property arm, Singha Property Management, acquired a major stake in RASA, a listed property company on the SET, and changed its name to “Singha Estate Public Company Limited”,  or “S”. This new major shareholder quickly unveiled plans to transform S into a holding company. During 2015-17, the company made several acquisitions including (1) a 51.56% stake in NVD, a low-rise property developer that operates under the “Nirvana” brand with a current market value of Bt2.7bn; (2) Suntowers, an office complex worth Bt4.5bn; and (3) a mixed-use commercial complex owned by the major holder’s family business worth over Bt6bn. It also set up a joint venture with a partner to invest in and operate 26 hotels in the UK worth Bt8.6bn.<div class="content-remarks">Note:  ** Owner of Boon Rawd Brewerey, Thailand’s oldest brewery and maker of Singha Beer</div>Revenue breakdown:The residential property segment contributed 41% of S’s 2018 total revenue. This segment includes the development and sale of high-rise and-low rise projects such as single detached houses, townhomes, home offices, and condominiums.The commercial property segment contributed 36% of total revenue. This business includes space for rent, common-service charges for utilities, security systems, and other service fees. The company owns two commercial property projects -- The Lighthouse (a community mall) and Suntowers (an office complex).S owns 37 hotels with a combined 4,271 rooms comprising (1) two hotels with 297 rooms in Thailand, namely Santiburi Beach Resort &amp; Spa and Phi Phi Island Village Beach Resort; (2) 22 hotels in England and 7 in Scotland (total of 3,115 rooms) under a 50:50 JV with FICO Group; and (3) 6 Outrigger-branded hotels with 859 rooms. This segment accounts for 18% of sales.The company also provides construction materials such as precast concrete and aluminum, as well as hotel management services. These two segments contribute 3% and 2% respectively.

We initiate coverage of S with a BUY rating, based on a target price of Bt4.2 derived from a sum-of-the-parts (SOTP) methodology and implying 16.5xPE’19E, a 23% discount to the average of its peers in the Thai real estate sector.The story:
Asset value to drive long-term sustainable growth
19 projects under development worth a combined Bt36bn to drive sales over the next three years
REITs will be a key catalyst to boost recurring income
Higher revenue contribution from hotel business
Risks:
Tightened credit approval
Raw material costs &amp; F/X fluctuation
Sources: CGS Research, company dataBackground: In 2014, Santi Bhirombhakdi** and his property arm, Singha Property Management, acquired a major stake in RASA, a listed property company on the SET, and changed its name to “Singha Estate Public Company Limited”,  or “S”. This new major shareholder quickly unveiled plans to transform S into a holding company. During 2015-17, the company made several acquisitions including (1) a 51.56% stake in NVD, a low-rise property developer that operates under the “Nirvana” brand with a current market value of Bt2.7bn; (2) Suntowers, an office complex worth Bt4.5bn; and (3) a mixed-use commercial complex owned by the major holder’s family business worth over Bt6bn. It also set up a joint venture with a partner to invest in and operate 26 hotels in the UK worth Bt8.6bn.Note:  ** Owner of Boon Rawd Brewerey, Thailand’s oldest brewery and maker of Singha BeerRevenue breakdown:The residential property segment contributed 41% of S’s 2018 total revenue. This segment includes the development and sale of high-rise and-low rise projects such as single detached houses, townhomes, home offices, and condominiums.The commercial property segment contributed 36% of total revenue. This business includes space for rent, common-service charges for utilities, security systems, and other service fees. The company owns two commercial property projects -- The Lighthouse (a community mall) and Suntowers (an office complex).S owns 37 hotels with a combined 4,271 rooms comprising (1) two hotels with 297 rooms in Thailand, namely Santiburi Beach Resort &amp; Spa and Phi Phi Island Village Beach Resort; (2) 22 hotels in England and 7 in Scotland (total of 3,115 rooms) under a 50:50 JV with FICO Group; and (3) 6 Outrigger-branded hotels with 859 rooms. This segment accounts for 18% of sales.The company also provides construction materials such as precast concrete and aluminum, as well as hotel management services. These two segments contribute 3% and 2% respectively.

S: Outshines Thai Property Peers on High Recurring Profit

Thailand

The Erawan Group Public Company Limited develops and operates luxurious hotels, office buildings and shopping centers in the heart of Bangkok.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Erawan Group (ERW TB)

ERW: Pure Hotel Player in Key Strategic Locations

We initiate coverage of ERW with a BUY rating and a 2020 target price of Bt7.97, based on 32.4xPE’20E, which represents a relative PE of 1.31x to...

Pi Securities PCL, Thailand

S: Outshines Thai Property Peers on High Recurring Profit

We initiate coverage of S with a BUY rating, based on a target price of Bt4.2 derived from a sum-of-the-parts (SOTP) methodology and implying...

Pi Securities PCL, Thailand

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)