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>We initiate our coverage on KCE with a Neutral rating and a FY2024E fair value of Bt35.50, based on a required rate of return of 4.91%.</li><li>While we believe KCE’s FY2024E core earnings will rebound to Bt2.1bn (+20% YoY), driven by cost savings, product mix improvement, and increased sales, we view the current valuation as unfavorable.</li><li>Our model also suggests that KCE’s valuation will remain unattractive until FY2025E (FV: Bt40.75), and a rerating to a Buy would only be possible in FY2026E (FV: Bt52.50) on the back of continued EV momentum and demand for safety auxiliary systems (ADAS) driving KCE’s sales.</li></ul>

We initiate our coverage on KCE with a Neutral rating and a FY2024E fair value of Bt35.50, based on a required rate of return of 4.91%.While we believe KCE’s FY2024E core earnings will rebound to Bt2.1bn (+20% YoY), driven by cost savings, product mix improvement, and increased sales, we view the current valuation as unfavorable.Our model also suggests that KCE’s valuation will remain unattractive until FY2025E (FV: Bt40.75), and a rerating to a Buy would only be possible in FY2026E (FV: Bt52.50) on the back of continued EV momentum and demand for safety auxiliary systems (ADAS) driving KCE’s sales.

Kce Electronics - Cost Savings and Product Mix Should Help Earnings Recover

<ul><li>Technically, the SET Index is expected to move sideways up, with the resistance at 1,417/1,427 points and the support at 1,405/1,400 points (10-day EMA).</li><li>Based on statistics from the past 31 quarters, there is a 70.97% probability that S50Z23 will close higher than 854.8 points on the date when the contracts expire.</li><li>According to a survey by the University of the Thai Chamber of Commerce, it is projected that spending during the New Year holiday (December 29, 2023, to January 1, 2024) would reach Bt105bn, up +2.8% YoY, the highest in four years.</li></ul>

Technically, the SET Index is expected to move sideways up, with the resistance at 1,417/1,427 points and the support at 1,405/1,400 points (10-day EMA).Based on statistics from the past 31 quarters, there is a 70.97% probability that S50Z23 will close higher than 854.8 points on the date when the contracts expire.According to a survey by the University of the Thai Chamber of Commerce, it is projected that spending during the New Year holiday (December 29, 2023, to January 1, 2024) would reach Bt105bn, up +2.8% YoY, the highest in four years.

<ul><li>We add KCE to the portfolio to benefit from the depreciation of the baht amid the accelerating recovery of demand in the auto sector.</li><li>We also add NEX to the portfolio in response to the robust earnings prospects in 2H23E due to EV deliveries, as stipulated in the contracts (2023E earnings are expected at Bt910mn, up 336.72%).</li></ul>

We add KCE to the portfolio to benefit from the depreciation of the baht amid the accelerating recovery of demand in the auto sector.We also add NEX to the portfolio in response to the robust earnings prospects in 2H23E due to EV deliveries, as stipulated in the contracts (2023E earnings are expected at Bt910mn, up 336.72%).

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

<ul>
<li>We downgrade to HOLD rating and cut our TP to Bt44.75(-35% from previous TP), based on 22.3xPE’23E(-0.5S.D.of 5-Year trading history).Despite 3Q22 earnings was higher than expected, our outlook for 2023</li>
<li>Analyst Meeting Details Management believes that, in 2023, the company’s revenue will grow between 5% to 10% YoY and will attain gross margin of 26% to 27% assuming</li>
<li>We believe that achieving revenue growth of 5% to 10% will be difficult considering based on a potential recession and high prolonged interest rates impacting automobile sales.</li>
</ul>


We downgrade to HOLD rating and cut our TP to Bt44.75(-35% from previous TP), based on 22.3xPE’23E(-0.5S.D.of 5-Year trading history).Despite 3Q22 earnings was higher than expected, our outlook for 2023
Analyst Meeting Details Management believes that, in 2023, the company’s revenue will grow between 5% to 10% YoY and will attain gross margin of 26% to 27% assuming
We believe that achieving revenue growth of 5% to 10% will be difficult considering based on a potential recession and high prolonged interest rates impacting automobile sales.


KCE : Recession Should Impact 2023 Growth

<ul>
<li>We maintain our BUY rating but cut and roll-over our TP to Bt69.00 (-19% from previous TP), based on 29.7xPE’23E (average of 5-Year trading history).2Q22 results were below our expectations</li>
<li>2Q22 earnings was below our expectation 2Q22 net profit was at Bt572m (-7% YoY, -3% QoQ), decreasing YoY mainly due to narrowing gross margin  and lower Other Income. </li>
<li>Revenue was at Bt4.7bn (+32% YoY, +3% QoQ).YoY growth was driven by prepreg &amp; laminate and PCB growth as well as FX gains from the weakened Baht. Stripping FX gains</li>
</ul>


We maintain our BUY rating but cut and roll-over our TP to Bt69.00 (-19% from previous TP), based on 29.7xPE’23E (average of 5-Year trading history).2Q22 results were below our expectations
2Q22 earnings was below our expectation 2Q22 net profit was at Bt572m (-7% YoY, -3% QoQ), decreasing YoY mainly due to narrowing gross margin  and lower Other Income. 
Revenue was at Bt4.7bn (+32% YoY, +3% QoQ).YoY growth was driven by prepreg &amp; laminate and PCB growth as well as FX gains from the weakened Baht. Stripping FX gains


Thailand

KCE Electronics Public Company Limited is a Thai manufacturer and distributor of custom Printed Circuit Boards (PCBs) under the "KCE" trademark. These PCBs are used in a wide range of applications, including automotive, industrial, computer, and telecommunication systems. The company was founded in 1982 and is headquartered in Bangkok, Thailand.

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KCE Electronics (KCE TB)

Kce Electronics - Cost Savings and Product Mix Should Help Earnings Recover

We initiate our coverage on KCE with a Neutral rating and a FY2024E fair value of Bt35.50, based on a required rate of return of 4.91%.

Krungthai XSpring

Today's Dominant Ideas

Technically, the SET Index is expected to move sideways up, with the resistance at 1,417/1,427 points and the support at 1,405/1,400 points...

Krungthai XSpring

Big Cap Tactical Picks

We add KCE to the portfolio to benefit from the depreciation of the baht amid the accelerating recovery of demand in the auto sector. We also add...

Krungthai XSpring

KCE : Recession Should Impact 2023 Growth

We downgrade to HOLD rating and cut our TP to Bt44.75 (-35% from previous TP), based on 22.3xPE’23E (-0.5S.D. of 5-Year trading history). Despite...

Pi Securities PCL, Thailand

KCE : 2H22 Outlook Is Better than 1H22

We maintain our BUY rating but cut and roll-over our TP to Bt69.00 (-19% from previous TP), based on 29.7xPE’23E (average of 5-Year trading...

Pi Securities PCL, Thailand

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