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

<p><strong>Last week opportunity day meeting came out with a positive tone. We upgrade our recommendation to BUY (from HOLD) and revise up the target price by 25% to Bt4.45 incorporating upside from new Hemp business. Our valuation is derived using SOTP method, implying 15xPE’22E.</strong></p><div>• Expect the 2Q21 recurring profit to improve both YoY and QoQ, on the back of full quarter profit recognition from 121MWe solar power projects COD in 2H20 period and improving contribution from EPC segment.</div><div></div><div>• Positive 2021 earnings outlook from 161MW power generation capacity expansion in 2020, and partial contribution from Bt10.0bn EPC backlog.</div><div></div><div>• The hemp farm business is expected to commence by 4Q21 with a 1 rai pilot plant. Upon success the capacity will be expanded to 200 rai and above by 2023-25 period. We estimate the business to contribute Bt1.0/sh to GUNKUL.</div>

Last week opportunity day meeting came out with a positive tone. We upgrade our recommendation to BUY (from HOLD) and revise up the target price by 25% to Bt4.45 incorporating upside from new Hemp business. Our valuation is derived using SOTP method, implying 15xPE’22E.• Expect the 2Q21 recurring profit to improve both YoY and QoQ, on the back of full quarter profit recognition from 121MWe solar power projects COD in 2H20 period and improving contribution from EPC segment.• Positive 2021 earnings outlook from 161MW power generation capacity expansion in 2020, and partial contribution from Bt10.0bn EPC backlog.• The hemp farm business is expected to commence by 4Q21 with a 1 rai pilot plant. Upon success the capacity will be expanded to 200 rai and above by 2023-25 period. We estimate the business to contribute Bt1.0/sh to GUNKUL.

GUNKUL: Hemp Business to Commence by 4Q21

<p><strong>Last week opportunity day meeting came out with a positive tone. We maintain the BUY recommendation based on a target price of Bt3.45. Our valuation is derived using DCF method (WACC 7.8% and TG 1%). implying 13xPE’21E.</strong></p><div>• Expect 1Q21 core earnings to grow both YoY and QoQ on the back of earnings recognition from 140MW solar projects added in 4Q20.</div><div></div><div>• Positive 2021 earnings outlook from 161MW power generation capacity expansion in 2020, and partial contribution from Bt8.5bn EPC backlog.</div><div></div><div>• Bt17bn CAPEX allocation in 2021-23, for 400 to 500MW power projects expansion (targeting 1,000MW capacity by 2023, 80% growth from present level).</div><div></div><div>• Upside from Cannabis farming and hemp-based product development.</div>

Last week opportunity day meeting came out with a positive tone. We maintain the BUY recommendation based on a target price of Bt3.45. Our valuation is derived using DCF method (WACC 7.8% and TG 1%). implying 13xPE’21E.• Expect 1Q21 core earnings to grow both YoY and QoQ on the back of earnings recognition from 140MW solar projects added in 4Q20.• Positive 2021 earnings outlook from 161MW power generation capacity expansion in 2020, and partial contribution from Bt8.5bn EPC backlog.• Bt17bn CAPEX allocation in 2021-23, for 400 to 500MW power projects expansion (targeting 1,000MW capacity by 2023, 80% growth from present level).• Upside from Cannabis farming and hemp-based product development.

GUNKUL: Targets 80% Power Business Expansion by 2023

Thematic (Sector/Industry)

<p><strong>BCPG, GUNKUL, GULF top pick growth stocks</strong></p><ul>
<li>
<strong>Earnings upcycle in 2021:</strong> We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.</li>
<li>
<strong>Declining gas price to support SPP performance:</strong> The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.</li>
</ul><p><strong>EGCO, RATCH top pick value stocks</strong></p><ul>
<li>
<strong>Cheap valuation:</strong> The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.</li>
<li>
<strong>Decent dividend yield:</strong> We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.</li>
</ul><p><strong>Maintain HOLD rating on BGRIM, EA and GPSC</strong></p><ul><li>We have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.</li></ul>

BCPG, GUNKUL, GULF top pick growth stocks

Earnings upcycle in 2021: We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.

Declining gas price to support SPP performance: The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.
EGCO, RATCH top pick value stocks

Cheap valuation: The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.

Decent dividend yield: We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.
Maintain HOLD rating on BGRIM, EA and GPSCWe have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.

Thailand Power Sector: Overweight-Bright 2021 Performance

<p><strong>Yesterday opportunity day meeting came out in a positive tone. We maintain the BUY recommendation while revise up the target price to Bt3.45 (from previous Bt3.30) incorporating the new 50MWe project acquisition in Vietnam. Our valuation is derived using DCF method (WACC 7.8% and TG 1%). implying 11.4xPE’20E.</strong></p><div>• Positive view on M&amp;A of 50MWe green-field power plant in Vietnam, given a decent EIRR of 12% of the project with earnings contribution to begin by 1Q21.</div><div></div><div>• Expect 4Q20 earnings to improve YoY on the back of earnings recognition from  60MW Tri Viet &amp; BKAC (Vietnam) power plants acquired in 1Q20 and partial contribution from Bt8.0bn EPC backlog.</div><div></div><div>• Revise down the 2020 earnings by 10%, and up 2021-22 earnings by 3 to 8% </div><div></div><div>• GUNKUL is trading very cheap at 8.3x PE’21. And given the 10% EPS growth expected in 2021, we believe the present price weakness has created an investment opportunity.</div>

Yesterday opportunity day meeting came out in a positive tone. We maintain the BUY recommendation while revise up the target price to Bt3.45 (from previous Bt3.30) incorporating the new 50MWe project acquisition in Vietnam. Our valuation is derived using DCF method (WACC 7.8% and TG 1%). implying 11.4xPE’20E.• Positive view on M&amp;A of 50MWe green-field power plant in Vietnam, given a decent EIRR of 12% of the project with earnings contribution to begin by 1Q21.• Expect 4Q20 earnings to improve YoY on the back of earnings recognition from  60MW Tri Viet &amp; BKAC (Vietnam) power plants acquired in 1Q20 and partial contribution from Bt8.0bn EPC backlog.• Revise down the 2020 earnings by 10%, and up 2021-22 earnings by 3 to 8% • GUNKUL is trading very cheap at 8.3x PE’21. And given the 10% EPS growth expected in 2021, we believe the present price weakness has created an investment opportunity.

GUNKUL: Power Business to Drive 2021 Earnings

<p><strong>GUNKUL disposed 67MW solar project in Japan (SCOD in 2022) and booked special profit of Bt715m.</strong></p><ul>
<li>3Q20 earnings to improve both YoY and QoQ on the back of profit recognition of Bt715m recognized from 67MW Japan asset disposal.</li>
<li>60 to 150MW solar projects under study in Vietnam to be finalized with in 2020. Acquisition of new projects could bring further upside to our valuation.</li>
<li>GUNKUL is trading very cheap at 7.9x PE’21. Having the earnings upcycle coming in 2H20 and 9.3% CAGR EPS growth expectation for 2020-22, we believe the present price contraction has created an investment opportunity.</li>
</ul><p><strong>We maintain the BUY recommendation, while roll out the new target price of Bt3.30 (from previous Bt3.24) incorporating the asset disposal profit. Our valuation is derived using DCF method (WACC 7.8% and TG 1%). implying 11.4xPE’20E or 0.5x relative PE to Thai utility sector.</strong></p>

GUNKUL disposed 67MW solar project in Japan (SCOD in 2022) and booked special profit of Bt715m.
3Q20 earnings to improve both YoY and QoQ on the back of profit recognition of Bt715m recognized from 67MW Japan asset disposal.
60 to 150MW solar projects under study in Vietnam to be finalized with in 2020. Acquisition of new projects could bring further upside to our valuation.
GUNKUL is trading very cheap at 7.9x PE’21. Having the earnings upcycle coming in 2H20 and 9.3% CAGR EPS growth expectation for 2020-22, we believe the present price contraction has created an investment opportunity.
We maintain the BUY recommendation, while roll out the new target price of Bt3.30 (from previous Bt3.24) incorporating the asset disposal profit. Our valuation is derived using DCF method (WACC 7.8% and TG 1%). implying 11.4xPE’20E or 0.5x relative PE to Thai utility sector.

Thailand

Gunkul Engineering PCL is a power generation and engineering company that supplies hardware and accessory products used in electrical power transmission and distribution systems.

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

Gunkul Engineering (GUNKUL TB)

GUNKUL: Hemp Business to Commence by 4Q21

Last week opportunity day meeting came out with a positive tone. We upgrade our recommendation to BUY (from HOLD) and revise up the target price by...

Pi Securities PCL, Thailand

GUNKUL: Targets 80% Power Business Expansion by 2023

Last week opportunity day meeting came out with a positive tone. We maintain the BUY recommendation based on a target price of Bt3.45. Our...

Pi Securities PCL, Thailand

Thailand Power Sector: Overweight-Bright 2021 Performance

Power Sector: Overweight-Bright 2021 sector performance. BCPG, GUNKUL, GULF top pick growth stocks. EGCO, RATCH top pick value stocks

Pi Securities PCL, Thailand

GUNKUL: Power Business to Drive 2021 Earnings

Yesterday opportunity day meeting came out in a positive tone. We maintain the BUY recommendation while revise up the target price to Bt3.45 (from...

Pi Securities PCL, Thailand

GUNKUL: Profit from Japan Asset Disposal

GUNKUL disposed 67MW solar project in Japan (SCOD in 2022) and booked special profit of Bt716m. •3Q20 earnings to improve both YoY and QoQ on the...

Pi Securities PCL, Thailand

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)