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>New project launches for LH’s housing business in 2021 seems unexcited for us given the project value at Bt21bn (-28%) which concentrated in single houses. However, we still positive toward the company’s strategy on clearing out unsold inventories (Bt9.2bn) and existing projects (Bt62bn) while we forecasted revenue for residential property business to maintain its high base level at Bt31bn (+10%YoY).  CAPEX plan for land acquisition and investment in rental property seems challenging at Bt11bn (+62%YoY).</strong></p><div><strong>• Positive earnings outlook in 2021</strong></div><div></div><div><strong>• Unexcited launch plan for housing business</strong></div><p></p><p><strong>We maintain LH with a BUY rating and a new target price of Bt9.50 (previous TP: Bt8.60) derived from an SOTP methodology while implies 14.6xPE’21E, 15% discount from average of Thailand Real Estate sector.</strong></p>

New project launches for LH’s housing business in 2021 seems unexcited for us given the project value at Bt21bn (-28%) which concentrated in single houses. However, we still positive toward the company’s strategy on clearing out unsold inventories (Bt9.2bn) and existing projects (Bt62bn) while we forecasted revenue for residential property business to maintain its high base level at Bt31bn (+10%YoY).  CAPEX plan for land acquisition and investment in rental property seems challenging at Bt11bn (+62%YoY).• Positive earnings outlook in 2021• Unexcited launch plan for housing businessWe maintain LH with a BUY rating and a new target price of Bt9.50 (previous TP: Bt8.60) derived from an SOTP methodology while implies 14.6xPE’21E, 15% discount from average of Thailand Real Estate sector.

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

Delta Electronics (Thailand) / Index Rebalance

<p>Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the SET50 index with the changes taking effect after the close of trading on 30 December.</p><p><a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a>, <a href="https://www.smartkarma.com/entities/com7-pcl" target="_blank" data-smartkarma-citation="entities:27411:1" rel="noopener">Com7 PCL (COM7 TB)</a> and <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a> have been included in the index, replacing <a href="https://www.smartkarma.com/entities/banpu-power-pcl" target="_blank" data-smartkarma-citation="entities:23631:1" rel="noopener">Banpu Power PCL (BPP TB)</a>, <a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a> and <a href="https://www.smartkarma.com/entities/wha-corp-pcl" target="_blank" data-smartkarma-citation="entities:104:1" rel="noopener">WHA Corp Pcl (WHA TB)</a>. This was our base case scenario, though DELTA had the lowest probability of index inclusion.</p><p>Terrible timing! <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a> has gained 543.72% since it was deleted from the SET50 index at the June review, while <a href="https://www.smartkarma.com/entities/banpu-power-pcl" target="_blank" data-smartkarma-citation="entities:23631:1" rel="noopener">Banpu Power PCL (BPP TB)</a> has gained just 2.99% since it was included in the index at the June review. Not implementing this change in June would have led to the SET50 index return being over 3.5% higher than its actual return.</p><p>One-way turnover for the rebalance is 4.92%. The impact of the changes does not appear like a lot, but the active funds trading ahead of implementation date could cause the stocks to move around a lot compared to their peers.</p><p><em>This Insight is labelled Bullish as we expect DELTA to outperform its peers post the inclusion in the SET50 index. The stock could move lower post implementation date due to its higher valuations.</em></p>

Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the SET50 index with the changes taking effect after the close of trading on 30 December.Bangkok Commercial Asset Management (BAM TB), Com7 PCL (COM7 TB) and Delta Electronics Thai (DELTA TB) have been included in the index, replacing Banpu Power PCL (BPP TB), IRPC PCL (IRPC TB) and WHA Corp Pcl (WHA TB). This was our base case scenario, though DELTA had the lowest probability of index inclusion.Terrible timing! Delta Electronics Thai (DELTA TB) has gained 543.72% since it was deleted from the SET50 index at the June review, while Banpu Power PCL (BPP TB) has gained just 2.99% since it was included in the index at the June review. Not implementing this change in June would have led to the SET50 index return being over 3.5% higher than its actual return.One-way turnover for the rebalance is 4.92%. The impact of the changes does not appear like a lot, but the active funds trading ahead of implementation date could cause the stocks to move around a lot compared to their peers.This Insight is labelled Bullish as we expect DELTA to outperform its peers post the inclusion in the SET50 index. The stock could move lower post implementation date due to its higher valuations.

<p><strong>Expect 4Q20 earnings to reach the highest level of this year driven by; 1.) higher profit contribution from associates driven mainly by HMPRO as SSSG picked up strongly, 2.) recovery of recurring income from hotel and commercial property, and, 3.) transfer revenue from The Room Phayathai (43% sold of total project value Bt3.9bn). There is an earnings upside from divestment in assets in USA, we estimated one-time gain at Bt900-Bt1.1bn (Not include in our earnings forecast in 2020E.)</strong></p><div><strong>• Expect 4Q20 presales in property business to soften down</strong></div><div><strong>• Revise earnings up by 5-13% in 2020-22E</strong></div><p></p><p><strong>We maintain LH with a BUY rating and a new target price of Bt8.60 (previous TP: Bt8.50) after revised EPS up 5% in 2021E. Our target derived from an SOTP methodology while implies 13.2xPE’21E, average of Thailand Real Estate sector.</strong></p>

Expect 4Q20 earnings to reach the highest level of this year driven by; 1.) higher profit contribution from associates driven mainly by HMPRO as SSSG picked up strongly, 2.) recovery of recurring income from hotel and commercial property, and, 3.) transfer revenue from The Room Phayathai (43% sold of total project value Bt3.9bn). There is an earnings upside from divestment in assets in USA, we estimated one-time gain at Bt900-Bt1.1bn (Not include in our earnings forecast in 2020E.)• Expect 4Q20 presales in property business to soften down• Revise earnings up by 5-13% in 2020-22EWe maintain LH with a BUY rating and a new target price of Bt8.60 (previous TP: Bt8.50) after revised EPS up 5% in 2021E. Our target derived from an SOTP methodology while implies 13.2xPE’21E, average of Thailand Real Estate sector.

LH: Expect 4Q20 Core Earnings to Be the Highest Level of 2020

<p><strong>We initiate coverage of LH with a BUY rating, based on a target price of Bt8.50, which is derived from an SOTP methodology. The target price implies 13.7xPE’21E, or a 10% discount to the Thailand Real Estate sector.</strong></p>
<p><strong>The Story:</strong></p>
<div>• Solid and well-diversified business structure</div>
<div>• Equity income provides an earnings buffer</div>
<div>• Property segment is still performing well</div>
<div>• Focusing on low-rise amid oversupply in condominium market</div>
<div>• Anticipate gradual recovery in hospitality segment</div>
<div>• Cheap valuation with attractive dividend yield</div>
<p></p>
<p><strong>Risks: Tightened credit approval, Slower-than-expected economic recovery, lawsuit in the supreme court</strong></p>

We initiate coverage of LH with a BUY rating, based on a target price of Bt8.50, which is derived from an SOTP methodology. The target price implies 13.7xPE’21E, or a 10% discount to the Thailand Real Estate sector.
The Story:
• Solid and well-diversified business structure
• Equity income provides an earnings buffer
• Property segment is still performing well
• Focusing on low-rise amid oversupply in condominium market
• Anticipate gradual recovery in hospitality segment
• Cheap valuation with attractive dividend yield

Risks: Tightened credit approval, Slower-than-expected economic recovery, lawsuit in the supreme court

LH: Most Secure Property Developer in Thailand

<p><strong>We maintain BUY rating with a target price of Bt9.2 based on 7.5xPE’21E, the average of top 10 stocks in the Thai Real Estate sector.</strong></p><ul>
<li>ORI has 3Q20 presales of Bt7.5bn (+14%QoQ), better than market expectation. We foresee presales momentum to speed up in 4Q20 through aggressive new projects launch in 4Q20.</li>
<li><span>We expect 3Q20 earnings to stay flat YoY as there is no transfer of high value projects. However, we expect earnings to grow strongly both YoY and QoQ in 4Q20 driven by (1) revenue recognition from secured backlog over Bt7bn and (2) aggressive launch of new four low-rise projects worth Bt4.9bn.</span></li>
</ul><p><strong>We still like this stock on the backs of; (1) Secured backlog of Bt20bn to back 2021 earnings recovery; (2) Solid presales momentum; (3) Attractive dividend yield of 4%-6% in 2020E-21E.</strong></p>

We maintain BUY rating with a target price of Bt9.2 based on 7.5xPE’21E, the average of top 10 stocks in the Thai Real Estate sector.
ORI has 3Q20 presales of Bt7.5bn (+14%QoQ), better than market expectation. We foresee presales momentum to speed up in 4Q20 through aggressive new projects launch in 4Q20.
We expect 3Q20 earnings to stay flat YoY as there is no transfer of high value projects. However, we expect earnings to grow strongly both YoY and QoQ in 4Q20 driven by (1) revenue recognition from secured backlog over Bt7bn and (2) aggressive launch of new four low-rise projects worth Bt4.9bn.
We still like this stock on the backs of; (1) Secured backlog of Bt20bn to back 2021 earnings recovery; (2) Solid presales momentum; (3) Attractive dividend yield of 4%-6% in 2020E-21E.

ORI: Expect Flat 3Q20 Earnings but Strong Recovery in 4Q20

Thailand

Land & Houses Public Company Limited is a real estate developer focused on developing and selling single detached houses, duo homes, townhouses, and residence condominium projects. It also operates a rental and service business, including shopping malls, hotels, and apartments. The company was founded in 1973 and is headquartered in Bangkok, Thailand.

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Land & Houses (LH TB)

LH: Positive Toward 2021 Business Plan

We maintain LH with a BUY rating and a new target price of Bt9.50 (previous TP: Bt8.60) derived from an SOTP methodology while implies 14.6xPE’21E,...

Pi Securities PCL, Thailand

SET50 Index Rebalance: DELTA to Buy

BAM, COM7 and DELTA have been added to the SET50 index replacing BPP, IRPC and WHA with the changes effective after the close on 30 Dec. With 11...

Brian Freitas

LH: Expect 4Q20 Core Earnings to Be the Highest Level of 2020

We maintain LH with a BUY rating and a new target price of Bt8.60 (previous TP: Bt8.50) after revised EPS up 5% in 2021E. Our target derived from...

Pi Securities PCL, Thailand

LH: Most Secure Property Developer in Thailand

We initiate coverage of LH with a BUY rating, based on a target price of Bt8.50, which is derived from an SOTP methodology. The target price...

Pi Securities PCL, Thailand

ORI: Expect Flat 3Q20 Earnings but Strong Recovery in 4Q20

3Q20 ORI presales better than market expectation. We foresee presales momentum to speed up in 4Q20 through aggressive new projects launch in 4Q20.

Pi Securities PCL, Thailand

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