Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/974/original/BANNER-TTOtherDec20_GreyOrange.png?1608781028" class="editor-image img-responsive" data-smartkarma-image-id="179974"></figure></section><p>In a previous note we argued <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a>, at its IPO price of 28 baht per share, was attractively priced relative to comps in the Chinese express sector.</p><p>However, after shares jumped 83% to 51.25 baht in their trading debut on December 24, KEX's EV/Revenue and EV/EBITDA multiples increased substantially (even as its Chinese comps faded).</p><p>A day after its public debut, KEX is still a unique Thai play on eCommerce and the company enjoys strong market position in a growing segment. However, at 50+ baht per share it is no longer cheap.</p><p>By the way, Merry Christmas!</p>

In a previous note we argued Kerry Express Thailand (KEX TB), at its IPO price of 28 baht per share, was attractively priced relative to comps in the Chinese express sector.However, after shares jumped 83% to 51.25 baht in their trading debut on December 24, KEX's EV/Revenue and EV/EBITDA multiples increased substantially (even as its Chinese comps faded).A day after its public debut, KEX is still a unique Thai play on eCommerce and the company enjoys strong market position in a growing segment. However, at 50+ baht per share it is no longer cheap.By the way, Merry Christmas!

Kerry Express Thailand: Just One Day Into Public Life, KEX Suddenly Looks Expensive

Head of Research, IPOs & Placements, Aequitas Research

Sumeet Singh

Head of Research, IPOs & Placements

IPOs and Placements coverage across Asia Pacific

Aequitas Research

We cover all listing across the Asia Pacific along with follow-up placements. As of Dec 2020, our team had covered 539 IPOs with a hit rate of 73.5% and 685 placements with a hit rate of 66.8%.

We combine fundamental bottom-up views with our proprietary quantitative framework to provide a holistic coverage across new listings and placements. Our coverage includes pre-IPO notes before the deal is launched, follow-up analysis once the deal is live and post-listing trading analysis as well.

<div><p><a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> raised around US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed <a href="https://www.smartkarma.com/entities/kerry-logistics-network-ltd" target="_blank" data-smartkarma-citation="entities:367:1" rel="noopener">Kerry Logistics Network (636 HK)</a> and also counts <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a> as a major shareholder.</p></div><div><p>I've covered various aspects of the deal in my earlier note, <a href="https://www.smartkarma.com/insights/kerry-express-thailand-ipo-time-for-delivery" target="_blank" rel="noopener">Kerry Express Thailand IPO - Time for Delivery.</a></p></div><p>In this note, I'll talk about the deal updates and provide implied valuations at different share price levels.</p>

Kerry Express Thailand (KEX TB) raised around US$277m in its Thailand IPO. The company is a subsidiary of Hong Kong listed Kerry Logistics Network (636 HK) and also counts VGI PCL (VGI TB) as a major shareholder.I've covered various aspects of the deal in my earlier note, Kerry Express Thailand IPO - Time for Delivery.In this note, I'll talk about the deal updates and provide implied valuations at different share price levels.

Kerry Express Thailand IPO Trading - Delivering a Christmas Present

Equity Bottom-Up

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/178/841/original/BANNER-LOGISTICS.png?1608076389" class="editor-image img-responsive" data-smartkarma-image-id="178841"></figure></section><p>While still solid, YoY express parcel volume growth in China moderated somewhat in November. Slower growth came as a surprise, as November includes the big "11-11" online shopping holiday. </p><p>An ongoing price war drove down ASPs in November (again). We don't believe companies can offset YoY price declines of 20-30% with unit cost reductions, so margins are likely falling (again). </p><p>Our investment thesis for Chinese express is that growing financial pressures will result in consolidation in 2021. Under this scenario, struggling <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a>, closely aligned with Alibaba's logistics efforts, becomes a potential acquisition target. We rate Best BUY.</p>

While still solid, YoY express parcel volume growth in China moderated somewhat in November. Slower growth came as a surprise, as November includes the big "11-11" online shopping holiday. An ongoing price war drove down ASPs in November (again). We don't believe companies can offset YoY price declines of 20-30% with unit cost reductions, so margins are likely falling (again). Our investment thesis for Chinese express is that growing financial pressures will result in consolidation in 2021. Under this scenario, struggling BEST Inc (BEST US), closely aligned with Alibaba's logistics efforts, becomes a potential acquisition target. We rate Best BUY.

TRACKING TRAFFIC/Chinese Express: Volume Growth Moderates | Pricing Stays Depressed

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

<p>Five interesting news/trends we detected recently include:</p><ul>
<li>
<strong>Pa Daeng </strong>sells 7 power plants to BAFS for Bt1.7bn but then turns around to buy two hotels worth Bt5-10bn. Looks like they are moving from the defensive to recovery theme.</li>
<li>
<strong>GPSC</strong>, PTT's power arm and acquirer of Glow, announces it will increase the Group's renewable footprint from 11% to 30% in 5 years at a cost of Bt70bn.</li>
<li>
<strong>JKN diversifies outside media</strong> and targets almost doubling since 2019 to Bt3bn in 2021. Hospitals, hair clinic, drinks....nothing seems off-limits.</li>
<li>
<strong>CAT Telecom is currently looking to lease towers from private operators, </strong>poising AIS against the allies (True Corp and DTAC). We believe the allies have a slight leg up in this face-off, with DTAC enjoying the highest 4% upside.</li>
<li>
<strong>Market movements. </strong>Call this a snippet within a snippet for lack of a better word. We summarize some of the smaller movements on insider selling and IPO implications.</li>
</ul>

Five interesting news/trends we detected recently include:

Pa Daeng sells 7 power plants to BAFS for Bt1.7bn but then turns around to buy two hotels worth Bt5-10bn. Looks like they are moving from the defensive to recovery theme.

GPSC, PTT's power arm and acquirer of Glow, announces it will increase the Group's renewable footprint from 11% to 30% in 5 years at a cost of Bt70bn.

JKN diversifies outside media and targets almost doubling since 2019 to Bt3bn in 2021. Hospitals, hair clinic, drinks....nothing seems off-limits.

CAT Telecom is currently looking to lease towers from private operators, poising AIS against the allies (True Corp and DTAC). We believe the allies have a slight leg up in this face-off, with DTAC enjoying the highest 4% upside.

Market movements. Call this a snippet within a snippet for lack of a better word. We summarize some of the smaller movements on insider selling and IPO implications.


Snippets #47: Pa Daeng's Trades, Battle for CAT's 5G Network

<p><a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> recently announced an IPO price range of 25-28 baht per share and plans to finally list its shares in late December. In this note we update KEX's EV/Revenue and EV/EBITDA valuations relative to those of the Chinese express delivery sector, which we believe are the most appropriate 'comps' for this issue. </p><p>In this note we also highlight recent competitor actions in the Thai express market. In its Q320 earnings call, Chinese express company <a href="https://www.smartkarma.com/entities/best-inc" target="_blank" data-smartkarma-citation="entities:25494:1" rel="noopener">BEST Inc (BEST US)</a> announced it was considering 'strategic options' for all non-core businesses, including its express operation in Thailand. In the long-run, Best's  withdrawal from the market could be an opportunity for KEX, or a threat. </p><p>In the near-term, however, Best's potential actions in Thailand don't alter our thinking about KEX's IPO. We believe KEX at the IPO price range is attractively valued, particularly for a clear market leader in a fast-growing sector exposesd to several positive secular trends. </p>

Kerry Express Thailand (KEX TB) recently announced an IPO price range of 25-28 baht per share and plans to finally list its shares in late December. In this note we update KEX's EV/Revenue and EV/EBITDA valuations relative to those of the Chinese express delivery sector, which we believe are the most appropriate 'comps' for this issue. In this note we also highlight recent competitor actions in the Thai express market. In its Q320 earnings call, Chinese express company BEST Inc (BEST US) announced it was considering 'strategic options' for all non-core businesses, including its express operation in Thailand. In the long-run, Best's  withdrawal from the market could be an opportunity for KEX, or a threat. In the near-term, however, Best's potential actions in Thailand don't alter our thinking about KEX's IPO. We believe KEX at the IPO price range is attractively valued, particularly for a clear market leader in a fast-growing sector exposesd to several positive secular trends. 

Kerry Express Thailand (KEX) IPO: Update on Valuation Range & Competitor Actions

Thailand

Kex Express is a nationwide parcel delivery company in Thailand, providing integrated logistics solutions for C2C, B2C, and B2B segments, including domestic and international parcel delivery. They also offer ocean freight, cross-border land transportation, and customs clearance services. The company is headquartered in Bangkok, Thailand, and was founded in 2006.

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

Kex Express (KEX TB)

Kerry Express Thailand: Just One Day Into Public Life, KEX Suddenly Looks Expensive

After it jumped by 83% to 51.25 baht per share in its trading debut, it's suddenly much tougher to argue that KEX is attractively priced versus peers.

Tracking Traffic

Kerry Express Thailand IPO Trading - Delivering a Christmas Present

Kerry Express Thailand (KEX TB) raised around US$277m in its IPO. Given its brand recognition, strong investor backing and sole way to play the e...

Sumeet Singh

TRACKING TRAFFIC/Chinese Express: Volume Growth Moderates | Pricing Stays Depressed

Recent strong volume growth moderated in November, and express industry revenue growth lagged the performance of leading eComm platforms....

Tracking Traffic

Snippets #47: Pa Daeng's Trades, Battle for CAT's 5G Network

Country Group gets busy: Selling power, buying hotels, issuing warrants, while AIS and the other two telcos duke it out to supply towers to CAT's...

Athaporn Arayasantiparb, CFA

Kerry Express Thailand (KEX) IPO: Update on Valuation Range & Competitor Actions

We update our views of KEX's IPO valuation ahead of its late December listing. We also highlight the potential sale of a domestic competitor. We...

Tracking Traffic

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)