Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

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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>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

<p>With strong earnings from a equity income provide an attractive dividend yield at 6%-7%. Therefore, we maintain our BUY rating with a new target price of Bt2.4 (down from Bt2.6) based on 10xPE’21E which its a five-years average.</p><ul>
<li>The fall in 1Q20 earnings both YoY and QoQ was primarily pressured by weakening earnings from residential business which sunk 81%YoY to Bt80m. Meanwhile, equity income dropped only 5.6% YoY to Bt431m.</li>
<li><span>We expect 2Q20 earnings to soft down 25%YoY and 10%QoQ, given lower contribution from associated companies especially from HMPRO. Meanwhile, we expect residential transfer units to remain weak QoQ due to low visited rate, but likely to be the bottom quarter.</span></li>
<li><span>We maintain positive view in 2020-21E backed by stable equity income from associated companies (mostly from HMPRO) and several projects in pipeline worth over Bt48bn.</span></li>
</ul>

With strong earnings from a equity income provide an attractive dividend yield at 6%-7%. Therefore, we maintain our BUY rating with a new target price of Bt2.4 (down from Bt2.6) based on 10xPE’21E which its a five-years average.
The fall in 1Q20 earnings both YoY and QoQ was primarily pressured by weakening earnings from residential business which sunk 81%YoY to Bt80m. Meanwhile, equity income dropped only 5.6% YoY to Bt431m.
We expect 2Q20 earnings to soft down 25%YoY and 10%QoQ, given lower contribution from associated companies especially from HMPRO. Meanwhile, we expect residential transfer units to remain weak QoQ due to low visited rate, but likely to be the bottom quarter.
We maintain positive view in 2020-21E backed by stable equity income from associated companies (mostly from HMPRO) and several projects in pipeline worth over Bt48bn.


<p>Site visit at The ESSE at Singha Complex and The ESSE Sukhumvit 36 came out with a positive tone. We maintain BUY rating on S with a 2019 target price of Bt4.2 derived from a sum-of-the-parts (SOTP) methodology and implying 17.5xPE’19E</p><p><strong>Key takeaway</strong><strong>:</strong></p><ul>
<li>2H19 performance of residential business (70% of total sales) will be much better than 1H19. 70% of The ESSE ‘s total units with Bt3.5bn potential sales will be recognized by this year.</li>
<li>Hospitality business (30% of total sales) is under pressure by the close of Maya Bay in Phi Phi for the next five years. However, we do not include this project in our valuation.</li>
</ul>

Site visit at The ESSE at Singha Complex and The ESSE Sukhumvit 36 came out with a positive tone. We maintain BUY rating on S with a 2019 target price of Bt4.2 derived from a sum-of-the-parts (SOTP) methodology and implying 17.5xPE’19EKey takeaway:
2H19 performance of residential business (70% of total sales) will be much better than 1H19. 70% of The ESSE ‘s total units with Bt3.5bn potential sales will be recognized by this year.
Hospitality business (30% of total sales) is under pressure by the close of Maya Bay in Phi Phi for the next five years. However, we do not include this project in our valuation.


S: Better Outlook on Its 2H19 Performance

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: 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

QH: Expect 2Q20 to Be the Bottom Quarter

With strong earnings from a equity income provide an attractive dividend yield at 6%-7%. Therefore, we maintain our BUY rating with a new target...

Pi Securities PCL, Thailand

S: Better Outlook on Its 2H19 Performance

Site visit at The ESSE at Singha Complex and The ESSE Sukhumvit 36 came out with a positive tone. We maintain BUY rating on S with a 2019 target...

Pi Securities PCL, Thailand

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