Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

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<p>On the 5 July 2021, <a href="https://www.smartkarma.com/entities/major-cineplex-group-pcl" target="_blank" data-smartkarma-citation="entities:16662:1" rel="noopener">Major Cineplex Group (MAJOR TB)</a>'s board <a href="https://major.listedcompany.com/newsroom/050720211745440725E.pdf" target="_blank" rel="noopener">approved</a> the entering of a MOU with <a href="https://www.smartkarma.com/entities/central-pattana-pcl-0b7fb113-16e1-4535-be8b-02dce5bbcd92" target="_blank" data-smartkarma-citation="entities:17188:1" rel="noopener">Central Pattana Pub (CPN TB)</a> in relation to its shares in shopping mall operator <a href="https://www.smartkarma.com/entities/siam-future-development-pcl" target="_blank" data-smartkarma-citation="entities:4373:1" rel="noopener">Siam Future Development (SF TB)</a>, at a price of Bt12/share. An IFA was appointed to assess the sale and its opinion on the <a href="https://major.listedcompany.com/newsroom/060820211832280109E.pdf" target="_blank" rel="noopener">19 July</a>, concluded the "<em>Transaction is reasonable with price and conditions that are fair</em>". A SPA was <a href="https://major.listedcompany.com/newsroom/250820211847500685E.pdf" target="_blank" rel="noopener">entered into</a> on the 25 August with an expected completion on the 30 August. </p>
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<p>CPN <a href="https://www.set.or.th/set/newsdetails.do?newsId=16302807319920&amp;language=en&amp;country=US" target="_blank" rel="noopener">completed</a> the purchase of shares in Siam Future on 30 August 2021. After the completion of shares purchase, the number of shares held by CPN was 56.26%. In Thailand, the obligation to make a mandatory offer is triggered when an acquirer obtains shares of the target company of more than 25%, 50%, or 75% of the total voting rights of the target company.  Therefore, CPN was required to make a Tender Offer for the remaining shares in Siam Future, also at Bt12/share. A mandatory Tender Offer is always unconditional. </p>
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<p>The Tender Offer doc (247-4) for Siam Future was <a href="https://www.set.or.th/set/pdfnews.do?newsId=16311444618740&amp;sequence=2021100646" target="_blank" rel="noopener">tabled</a> on the 9 September. The Offer period was for 25 business days - and closed on the 18 October. The payment date was the 20 October. The IFA reckoned the Offer was <a href="https://www.set.or.th/set/pdfnews.do?newsId=16326998697600&amp;sequence=2021104947" target="_blank" rel="noopener">fair</a>. At the close of the Offer, CPN held <a href="https://www.set.or.th/set/pdfnews.do?newsId=16346869712030&amp;sequence=2021112797" target="_blank" rel="noopener">96.24%</a>. </p>
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<p>There are no provisions regarding minority squeeze-out mechanisms under Thai law. However, if the board of directors approves a proposed de-listing,  an independent financial adviser provides its opinion to shareholders on the merits of the proposal, <em>and</em> the company gains approval (≥ 75% for, ≤10% against) from its shareholders to voluntarily delist, then a company can be delisted. The company is permitted to purchase shares tendered in accordance with SEC and Capital Market Supervisory Board rules. </p>
<p>On page 57 (of Siam Future's Tender Offer doc's <a href="https://www.set.or.th/set/pdfnews.do?newsId=16311444618740&amp;sequence=2021100646" target="_blank" rel="noopener">PDF</a>), it states:</p>
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<p>After the Tender Offer,<strong> the Offeror has an intention to delist the Business from being a listed company on the SET during the period of 12 months after the end of the Offer Period</strong>. Currently, the Offeror is under the possibility study of proceeding such transaction under relevant rules and regulations, including but not limited to, assessment of possibility of obtaining the approval from the shareholders meeting of the Business, of which has not reached a conclusion on delisting of the Business from being a listed company on the SET.</p>
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<p>With 96.24% held, a Delisting Offer from CPN is likely imminent. Such an Offer at the prior Tender Offer price provides 20% upside to the current price. </p>


On the 5 July 2021, Major Cineplex Group (MAJOR TB)'s board approved the entering of a MOU with Central Pattana Pub (CPN TB) in relation to its shares in shopping mall operator Siam Future Development (SF TB), at a price of Bt12/share. An IFA was appointed to assess the sale and its opinion on the 19 July, concluded the "Transaction is reasonable with price and conditions that are fair". A SPA was entered into on the 25 August with an expected completion on the 30 August. 


CPN completed the purchase of shares in Siam Future on 30 August 2021. After the completion of shares purchase, the number of shares held by CPN was 56.26%. In Thailand, the obligation to make a mandatory offer is triggered when an acquirer obtains shares of the target company of more than 25%, 50%, or 75% of the total voting rights of the target company.  Therefore, CPN was required to make a Tender Offer for the remaining shares in Siam Future, also at Bt12/share. A mandatory Tender Offer is always unconditional. 


The Tender Offer doc (247-4) for Siam Future was tabled on the 9 September. The Offer period was for 25 business days - and closed on the 18 October. The payment date was the 20 October. The IFA reckoned the Offer was fair. At the close of the Offer, CPN held 96.24%. 

There are no provisions regarding minority squeeze-out mechanisms under Thai law. However, if the board of directors approves a proposed de-listing,  an independent financial adviser provides its opinion to shareholders on the merits of the proposal, and the company gains approval (≥ 75% for, ≤10% against) from its shareholders to voluntarily delist, then a company can be delisted. The company is permitted to purchase shares tendered in accordance with SEC and Capital Market Supervisory Board rules. 
On page 57 (of Siam Future's Tender Offer doc's PDF), it states:

After the Tender Offer, the Offeror has an intention to delist the Business from being a listed company on the SET during the period of 12 months after the end of the Offer Period. Currently, the Offeror is under the possibility study of proceeding such transaction under relevant rules and regulations, including but not limited to, assessment of possibility of obtaining the approval from the shareholders meeting of the Business, of which has not reached a conclusion on delisting of the Business from being a listed company on the SET.

With 96.24% held, a Delisting Offer from CPN is likely imminent. Such an Offer at the prior Tender Offer price provides 20% upside to the current price. 

Buy Siam Future Development (SF TB). Then Buy Some More

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

Global Power Synergy Company Ltd / Equity Bottom-Up

<p>GPSC’s 1H21 earnings contained no surprises, prompting us to keep our full-year forecasts unchanged. We remain confident in the company’s growth prospects after its fast step to expand its renewable portfolio to 34% with the recent acquisitions in Avaada (solar projects) in India and offshore wind projects in Taiwan. We maintain a Hold rating.</p>

GPSC’s 1H21 earnings contained no surprises, prompting us to keep our full-year forecasts unchanged. We remain confident in the company’s growth prospects after its fast step to expand its renewable portfolio to 34% with the recent acquisitions in Avaada (solar projects) in India and offshore wind projects in Taiwan. We maintain a Hold rating.

Earnings Review: Global Power Synergy Plc.

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

<p><strong>Last week analyst meeting came out in a positive tone. We maintain the BUY recommendation based on a target price of Bt95.0, derived using DCF methodology (WACC of 5.3% and TG 1%). Our valuation implies 30x PE’22E.</strong></p><div>• Expect 3Q21 earnings to improve both YoY and QoQ on the back of 1) profit recognition from 659MWe new capacity additions in 2Q21 and 2) seasonal high equity income gain from XPCL due to batter water inflow.</div><div></div><div>• 4Q21 earnings would soften QoQ due to seasonal low domestic electricity sales and weak profit gain from XPCL.</div><div></div><div><div>• Positive 2021-23 earnings outlook backed by 14% CAGR power generation capacity expansion. GPSC has 5.4GWe projects in operation as of 2Q21 and further 1.7GWe project will go online in 2022-23 period increasing the capacity to 7.1GWe (+31% growth).</div></div>

Last week analyst meeting came out in a positive tone. We maintain the BUY recommendation based on a target price of Bt95.0, derived using DCF methodology (WACC of 5.3% and TG 1%). Our valuation implies 30x PE’22E.• Expect 3Q21 earnings to improve both YoY and QoQ on the back of 1) profit recognition from 659MWe new capacity additions in 2Q21 and 2) seasonal high equity income gain from XPCL due to batter water inflow.• 4Q21 earnings would soften QoQ due to seasonal low domestic electricity sales and weak profit gain from XPCL.• Positive 2021-23 earnings outlook backed by 14% CAGR power generation capacity expansion. GPSC has 5.4GWe projects in operation as of 2Q21 and further 1.7GWe project will go online in 2022-23 period increasing the capacity to 7.1GWe (+31% growth).

GPSC: New Capacity Addition to Drive 2H21 Earnings

<p><strong>We maintain the BUY recommendation, while  revise up the target price by 7% to Bt95.0, incorporating the Bt6.0/sh contribution from investment in Avaada Energy (India). Our valuation is derived using DCF methodology (WACC of 5.3% and TG 1%), implying 30x PE’22E.</strong></p><div>• GPSC announced investment of Bt30bn in overseas renewable energy projects, including Bt15bn for 41.65 stake in Avaada energy India (1.6GWe) and another Bt15bn for 25% stake in Ci Changfang &amp; Ci Xidao Taiwan (149MWe).</div><div></div><div>• Net positive view on the investment as both the projects deliver an EIRR above 8% (GPSC’s average). We include the contribution of Bt6.0/sh from Avaada to our valuation, while Bt2.5/sh from Taiwan project is left as an upside due to late deal closure (2Q22)</div>

We maintain the BUY recommendation, while  revise up the target price by 7% to Bt95.0, incorporating the Bt6.0/sh contribution from investment in Avaada Energy (India). Our valuation is derived using DCF methodology (WACC of 5.3% and TG 1%), implying 30x PE’22E.• GPSC announced investment of Bt30bn in overseas renewable energy projects, including Bt15bn for 41.65 stake in Avaada energy India (1.6GWe) and another Bt15bn for 25% stake in Ci Changfang &amp; Ci Xidao Taiwan (149MWe).• Net positive view on the investment as both the projects deliver an EIRR above 8% (GPSC’s average). We include the contribution of Bt6.0/sh from Avaada to our valuation, while Bt2.5/sh from Taiwan project is left as an upside due to late deal closure (2Q22)

GPSC: 34% Capacity Expansion from New Overseas Investment

<p><strong>Last week analyst meeting came out in a positive tone. We maintain the BUY rating with a target price of Bt89.0, derived using DCF methodology (WACC of 4.5% and TG 1%). Our valuation implies 30x PE’22E.</strong></p><div>• Expect 2Q21 earnings to improve both YoY and QoQ, on the back seasonal better IPP operation (improving availability rate of GHECO-one and GIPP) and improved contribution from XPCL.</div><div></div><div>• Target selective growth by investing in renewable energy projects in India, Taiwan, Vietnam  etc. We estimate each 100MWe capacity expansion will bring Bt1.4/sh upside to GPSC.</div><div>•S-curve from new ESS business. 30MWh battery pilot plant set to COD in 2Q21.</div>

Last week analyst meeting came out in a positive tone. We maintain the BUY rating with a target price of Bt89.0, derived using DCF methodology (WACC of 4.5% and TG 1%). Our valuation implies 30x PE’22E.• Expect 2Q21 earnings to improve both YoY and QoQ, on the back seasonal better IPP operation (improving availability rate of GHECO-one and GIPP) and improved contribution from XPCL.• Target selective growth by investing in renewable energy projects in India, Taiwan, Vietnam  etc. We estimate each 100MWe capacity expansion will bring Bt1.4/sh upside to GPSC.•S-curve from new ESS business. 30MWh battery pilot plant set to COD in 2Q21.

GPSC: Overseas Expansion and ESS Business to Drive Growth

Thailand

Global Power Synergy Company Ltd. (GPSC) provides utilities services. The Company generates and distributes electricity, steam, and processed water. GPSC serves customers in Thailand.

Global Power Synergy Company Ltd (GPSC TB)

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Global Power Synergy Company Ltd (GPSC TB)

Buy Siam Future Development (SF TB). Then Buy Some More

Buy Siam Future. Then buy some more. I think you're looking at a minimum 10% upside from here - if using Big C Supercenter's delisting example -...

David Blennerhassett

Earnings Review: Global Power Synergy Plc.

Sustainable growth, moving toward renewable energy, GPSC’s 1H21 earnings contained no surprises, prompting us to keep our full-year forecasts...

Krungthai XSpring

GPSC: New Capacity Addition to Drive 2H21 Earnings

Last week analyst meeting came out in a positive tone. We maintain the BUY recommendation based on a target price of Bt95.0, derived using DCF...

Pi Securities PCL, Thailand

GPSC: 34% Capacity Expansion from New Overseas Investment

We maintain the BUY recommendation, while revise up the target price by 7% to Bt95.0, incorporating the Bt6.0/sh contribution from investment in...

Pi Securities PCL, Thailand

GPSC: Overseas Expansion and ESS Business to Drive Growth

Last week analyst meeting came out in a positive tone. We maintain the BUY rating with a target price of Bt89.0, derived using DCF methodology...

Pi Securities PCL, Thailand

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