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

<ul>
<li>We maintain the HOLD recommendation with a TP of Bt3.30. IRPC’s 3Q22 earnings turned to a loss of Bt2.5bn (compared to a profit both YoY an QoQ),</li>
<li>3Q22 earning hit by weak GIM and stock loss The 3Q22 earnings turned to a loss of Bt2.5bn (compared to a profit of Bt2.2bn in 3Q21 and Bt3.8bn in 2Q22).</li>
<li>The accounting gross integrated margin (accounting GIM) fall to US$0.73/bbl (-95% YoY, -96% QoQ), underwritten by weak market GIM on top of hedging and stock loss.</li>
</ul>


We maintain the HOLD recommendation with a TP of Bt3.30. IRPC’s 3Q22 earnings turned to a loss of Bt2.5bn (compared to a profit both YoY an QoQ),
3Q22 earning hit by weak GIM and stock loss The 3Q22 earnings turned to a loss of Bt2.5bn (compared to a profit of Bt2.2bn in 3Q21 and Bt3.8bn in 2Q22).
The accounting gross integrated margin (accounting GIM) fall to US$0.73/bbl (-95% YoY, -96% QoQ), underwritten by weak market GIM on top of hedging and stock loss.


IRPC : Weak GIM and Stock Loss Dragged 3Q22 Profit

Equity Analyst, Event-driven, Quiddity Advisors

Janaghan Jeyakumar, CFA

Equity Analyst, Event-driven

Quiddity Advisors

Pan-Asia Catalysts/Events

Event-Driven

<ul>
<li>In this insight, we take a look at the potential index changes for the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> between now and the December 2022 Rebalance.</li>
<li>There is an ongoing market consultation with significant implications for constituent selection and there is also a potential intra-review change due to the DTAC-TRUE merger.</li>
<li>Based on the latest available data, there could three or four index changes during the December 2022 Rebalance depending on the outcome of the DTAC-TRUE merger.</li>
</ul>


In this insight, we take a look at the potential index changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) between now and the December 2022 Rebalance.
There is an ongoing market consultation with significant implications for constituent selection and there is also a potential intra-review change due to the DTAC-TRUE merger.
Based on the latest available data, there could three or four index changes during the December 2022 Rebalance depending on the outcome of the DTAC-TRUE merger.


Thailand SET50 Quiddity Leaderboard Dec 22: BJC Is the Most Interesting Name

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

<ul>
<li>Last week we had the implementation of the first two tranches of the <a href="https://www.smartkarma.com/entities/nikkei-225" target="_blank" data-smartkarma-citation="entities:22909:1" rel="noopener">Nikkei 225 (NKY INDEX)</a> rebalance with the third tranche to be implemented at the close on Monday.</li>
<li>Thursday saw the NIFTY indices implementation while Friday marked the end of the review period for the December rebalance of the Hang Seng family of indices.</li>
<li>There were large inflows to China, Taiwan, Korea and Hong Kong ETFs during the week while there were some outflows from Japan.</li>
</ul>


Last week we had the implementation of the first two tranches of the Nikkei 225 (NKY INDEX) rebalance with the third tranche to be implemented at the close on Monday.
Thursday saw the NIFTY indices implementation while Friday marked the end of the review period for the December rebalance of the Hang Seng family of indices.
There were large inflows to China, Taiwan, Korea and Hong Kong ETFs during the week while there were some outflows from Japan.


Index Rebalance & ETF Flow Recap: S&P/ASX, China A50, SET50, Bilibili, Leapmotor, Onewo, CALB

Delta Electronics Thailand  / Event-Driven

<ul>
<li>The SET has commenced a market consultation on lowering the turnover ratio level from 5% to 2% while selecting stocks to be added to and deleted from the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">SET50 INDEX</a>.</li>
<li>The change to the turnover ratio level could lead to three changes in December that result in one-way turnover of 7.44% and in a one-way trade of THB 6.79bn.</li>
<li>Separately, the <a href="https://www.smartkarma.com/entities/total-access-communication" target="_blank" data-smartkarma-citation="entities:948:1" rel="noopener">Total Access Communication (DTAC TB)</a> / <a href="https://www.smartkarma.com/entities/true-corp-pcl" target="_blank" data-smartkarma-citation="entities:8:1" rel="noopener">True Corp Pcl (TRUE TB)</a> merger could result in an ad hoc inclusion prior to the regular rebalance in December.</li>
</ul>


The SET has commenced a market consultation on lowering the turnover ratio level from 5% to 2% while selecting stocks to be added to and deleted from the SET50 INDEX.
The change to the turnover ratio level could lead to three changes in December that result in one-way turnover of 7.44% and in a one-way trade of THB 6.79bn.
Separately, the Total Access Communication (DTAC TB) / True Corp Pcl (TRUE TB) merger could result in an ad hoc inclusion prior to the regular rebalance in December.


SET50 Index: Market Consultation & DTAC/TRUE Merger Impact

<ul>
<li>We initiate coverage of IRPC with a HOLD rating and target price of Bt3.30, pegged to 0.7x PBV’23E, a 20% discount to sector peers. Our valuation implies 10.5x PE’23E </li>
<li>Bright refinery outlook will be offset by weak performance of petrochemical business IRPC is a fully integrated refinery and petrochemical player with a 215kbd refining capacity,the 3rd largest in Thailand. </li>
<li>We have a negative view of IRPC’s 2H22-23 outlook, due to: 1) lower sales volume owing to maintenance shutdowns in 4Q22, and 2) a lower gross integrated margin (GIM)</li>
</ul>


We initiate coverage of IRPC with a HOLD rating and target price of Bt3.30, pegged to 0.7x PBV’23E, a 20% discount to sector peers. Our valuation implies 10.5x PE’23E 
Bright refinery outlook will be offset by weak performance of petrochemical business IRPC is a fully integrated refinery and petrochemical player with a 215kbd refining capacity,the 3rd largest in Thailand. 
We have a negative view of IRPC’s 2H22-23 outlook, due to: 1) lower sales volume owing to maintenance shutdowns in 4Q22, and 2) a lower gross integrated margin (GIM)


Thailand

IRPC PCL produces a variety of petrochemical products including polypropylene, high density polyethylene and expandable polystyrene primarily used in packaging materials. Through its subsidiaries, the Company produces and distributes gasoline, liquefied petroleumgas (LPG), asphalt, as well as electricity and construction materials.

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IRPC PCL (IRPC TB)

IRPC : Weak GIM and Stock Loss Dragged 3Q22 Profit

We maintain the HOLD recommendation with a TP of Bt3.30. IRPC’s 3Q22 earnings turned to a loss of Bt2.5bn (compared to a profit both YoY an QoQ),...

Pi Securities PCL, Thailand

Thailand SET50 Quiddity Leaderboard Dec 22: BJC Is the Most Interesting Name

I expect RATCH to replace DTAC in the SET 50 index prior to the December Rebalance. DELTA, BJC, and COM7 could be added and KCE, BLA, and SAWAD...

Janaghan Jeyakumar, CFA

Index Rebalance & ETF Flow Recap: S&P/ASX, China A50, SET50, Bilibili, Leapmotor, Onewo, CALB

This recap highlights Insights covering Asian index rebalances (announcements/ forecasts/ IPO Fast Entry/ M&A driven changes). We also highlight...

Brian Freitas

SET50 Index: Market Consultation & DTAC/TRUE Merger Impact

We look at potential index changes following SET's proposal to reduce the monthly turnover ratio from 5% to 2%. Separately, the DTAC/TRUE merger...

Brian Freitas

IRPC : Lacking Competitive Advantage

We initiate coverage of IRPC with a HOLD rating and target price of Bt3.30, pegged to 0.7x PBV’23E, a 20% discount to sector peers. Our valuation...

Pi Securities PCL, Thailand

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