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>KTX maintains a Neutral rating (FV = Bt12.17, based on a required return of 9.51%).</li><li>The valuation metrics suggest a neutral view on the short-term fundamentals and the long-term growth prospects, while the tactical upside is limited.</li><li>Among meat operators, we view that GFPT’s sole broiler business is more <span style="font-size: var(--content-font-size);">attractive compared to those who are exposed to downside risk </span>from the swine business, which has been pressured by weak swine prices. We expect GFPT’s 1Q24E earnings to grow YoY.</li></ul>

KTX maintains a Neutral rating (FV = Bt12.17, based on a required return of 9.51%).The valuation metrics suggest a neutral view on the short-term fundamentals and the long-term growth prospects, while the tactical upside is limited.Among meat operators, we view that GFPT’s sole broiler business is more attractive compared to those who are exposed to downside risk from the swine business, which has been pressured by weak swine prices. We expect GFPT’s 1Q24E earnings to grow YoY.

GFPT -Stable Broiler Price, Lower Costs; 1Q24E Earnings Growth at 55% YoY

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>On March 8, <a href="https://www.bloomberg.com/news/articles/2024-03-08/top-asia-poultry-firm-japfa-owners-said-to-mull-go-private-deal?embedded-checkout=true" target="_blank" rel="noopener">Bloomberg reported</a> that <a href="https://www.smartkarma.com/entities/japfa-ltd" target="_blank" data-smartkarma-citation="entities:15597:1" rel="noopener">Japfa Ltd (JAP SP)</a> owners were considering taking it private and started talks about a loan of around US$150 million. </li>
<li>Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years. </li>
<li>An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.  </li>
</ul>


On March 8, Bloomberg reported that Japfa Ltd (JAP SP) owners were considering taking it private and started talks about a loan of around US$150 million. 
Japfa has faced ongoing profitability issues since 2022 due to cost-of-living pressures. Privatisation interest is unsurprising, as the shares have been down 72% over the last three years. 
An attractive premium would be required, irrespective of the offer structure. At a S$0.26 offer (20% premium to last close), Japfa would trade in line with peer multiples.  


Japfa (JAP SP): Evaluating a Potential Privatisation

<ul><li>The 4Q23 and 2023 core profit beat our forecasts by 7% and 2%, respectively, due to better-than-expected earnings contributions from affiliates.</li><li>We maintain our 2024E core profit growth forecast of +12% to Bt1.45bn. The 1Q24E earnings momentum is expected to improve YoY and QoQ.</li><li>KTX maintains a Neutral rating, with a fair price of Bt12.03 (based on a required return of 9.12%).</li></ul>

The 4Q23 and 2023 core profit beat our forecasts by 7% and 2%, respectively, due to better-than-expected earnings contributions from affiliates.We maintain our 2024E core profit growth forecast of +12% to Bt1.45bn. The 1Q24E earnings momentum is expected to improve YoY and QoQ.KTX maintains a Neutral rating, with a fair price of Bt12.03 (based on a required return of 9.12%).

GFPT - Upbeat 4Q23 and 2023 Earnings; 1Q24E Profit to Grow Further

Technical Analysis

<ul><li>The SET initially weakened to the previous low of 1,352 points after the Fed failed to signal an interest rate cut in March and tech stocks continued to decline.</li><li>Although the index did not have a recovery signal, bouncing up and staying far from the support is considered a positive signal in the short term, indicating that it may rebound further.</li><li>We recommend buying on weakness, selling on strength while waiting for the positive signals to strengthen, believing that the index will remain volatile.</li></ul>

The SET initially weakened to the previous low of 1,352 points after the Fed failed to signal an interest rate cut in March and tech stocks continued to decline.Although the index did not have a recovery signal, bouncing up and staying far from the support is considered a positive signal in the short term, indicating that it may rebound further.We recommend buying on weakness, selling on strength while waiting for the positive signals to strengthen, believing that the index will remain volatile.

<ul><li>Technically, the SET Index is expected to weaken, with the support at 1,370/1,366 points and the resistance at 1,392/1,398 points.</li><li>The expectation is that he will signal the Fed's reluctance to hastily reduce the fed funds rate, contrary to the market's anticipation, suggesting a decreased probability of the Fed making a rate cut in March.</li><li>We recommend blue chip stocks with positive factors: GFPT, KBANK and WHA.</li></ul>

Technically, the SET Index is expected to weaken, with the support at 1,370/1,366 points and the resistance at 1,392/1,398 points.The expectation is that he will signal the Fed's reluctance to hastily reduce the fed funds rate, contrary to the market's anticipation, suggesting a decreased probability of the Fed making a rate cut in March.We recommend blue chip stocks with positive factors: GFPT, KBANK and WHA.

Thailand

GFPT Public Company Limited operates a fully integrated poultry business, encompassing feed mills, breeder and broiler farms, hatcheries, chicken evisceration, and processed food production. The company produces and distributes fresh, frozen, and cooked chicken products, as well as land and aquatic animal feed, for both domestic and international markets. GFPT was founded in 1981 and is headquartered in Bangkok, Thailand.

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GFPT (GFPT TB)

GFPT -Stable Broiler Price, Lower Costs; 1Q24E Earnings Growth at 55% YoY

The valuation metrics suggest a neutral view on the short-term fundamentals and the long-term growth prospects, while the tactical upside is limited.

Krungthai XSpring

Japfa (JAP SP): Evaluating a Potential Privatisation

An attractive takeover premium would be required, irrespective of the offer structure. Funding could be an issue due to the high current leverage.

Arun George

GFPT - Upbeat 4Q23 and 2023 Earnings; 1Q24E Profit to Grow Further

The 4Q23 and 2023 core profit beat our forecasts by 7% and 2%, respectively, due to better-than-expected earnings contributions from affiliates.

Krungthai XSpring

Technical Analysis

The SET initially weakened to the previous low of 1,352 points after the Fed failed to signal an interest rate cut in March and tech stocks...

Krungthai XSpring

Today's Dominant Ideas

Technically, the SET Index is expected to weaken, with the support at 1,370/1,366 points and the resistance at 1,392/1,398 points. The expectation...

Krungthai XSpring

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