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.

Thematic (Sector/Industry)

<ul>
<li>The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in October, with expected declines of around 2-5%, based on the five-year historical trend.</li>
<li>Typically, broiler and swine prices rebound by 5-16% in 1Q of the following year.</li>
<li>For 3Q24E, companies in the meat sector, particularly those focused on swine in Thailand, Vietnam, and China, are expected to see strong YoY and QoQ profit growth, with earnings reports anticipated within the first 15 days of November. </li>
</ul>


The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in October, with expected declines of around 2-5%, based on the five-year historical trend.
Typically, broiler and swine prices rebound by 5-16% in 1Q of the following year.
For 3Q24E, companies in the meat sector, particularly those focused on swine in Thailand, Vietnam, and China, are expected to see strong YoY and QoQ profit growth, with earnings reports anticipated within the first 15 days of November. 


Agribusiness and Food and Beverage Sectors - October 4, 2024

<ul><li>In 3Q24E, the earnings of the agribusiness and food sector are expected to recover both YoY and QoQ, particularly for major meat operators with swine businesses in Thailand, Vietnam, and China.</li><li>Their earnings are anticipated to turn around from losses in 3Q23 to profits in 3Q24E, with momentum expected to continue growing QoQ.</li><li>KTX has revised up its earnings projection for TFG but lowered the projection for RBF, as its 3Q24E earnings are expected to decline YoY and QoQ. </li></ul>

In 3Q24E, the earnings of the agribusiness and food sector are expected to recover both YoY and QoQ, particularly for major meat operators with swine businesses in Thailand, Vietnam, and China.Their earnings are anticipated to turn around from losses in 3Q23 to profits in 3Q24E, with momentum expected to continue growing QoQ.KTX has revised up its earnings projection for TFG but lowered the projection for RBF, as its 3Q24E earnings are expected to decline YoY and QoQ. 

Agribusiness and Food and Beverage Sectors - Sep 5, 2024

<ul><li>The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.</li><li>In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.</li><li>Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. </li></ul>

The projected outlook for agricultural and food businesses in 2Q24E indicates a notable recovery both YoY and QoQ.In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits, with further growth expected from their reported better-than- expected operating results in 1Q24.Consequently, we have revised our profit forecasts upward for CPF, TFG and SAPPE. While acknowledging the sector's rebound in operating results, driving up share prices, we maintain a Neutral rating due to stretched valuations, as indicated by the earnings yield method. 

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

Cross Asset Strategy

<ul><li>The Thai equity market may rebound thanks to lower Thai inflation in September, while the weakening of the USD/THB carry trade to -3 S.D. suggests that the baht may begin to appreciate again.</li><li>These factors may prompt foreign investors to become buyers after having sold off for two weeks ahead of the decisions by the Fed and the MPC to raise their policy interest rates.</li><li>We recommend buying SET100-listed stocks that will benefit from the potential return of foreign fund flows, focusing on domestic plays, as they may be less impacted by external factors.</li></ul>

The Thai equity market may rebound thanks to lower Thai inflation in September, while the weakening of the USD/THB carry trade to -3 S.D. suggests that the baht may begin to appreciate again.These factors may prompt foreign investors to become buyers after having sold off for two weeks ahead of the decisions by the Fed and the MPC to raise their policy interest rates.We recommend buying SET100-listed stocks that will benefit from the potential return of foreign fund flows, focusing on domestic plays, as they may be less impacted by external factors.

<div><div><div><div><ul><li>We recommend buying M to speculate on the expected strong recovery of its 2Q22E earnings following the reopening of the country.</li><li>We project the firm’s earnings to turn around from the Bt99mn loss reported in 2Q21 to a net profit of Bt392mn in 2Q22E, up 494% YoY and 45% QoQ, driven by the expected increase in SSSG at its chain restaurants, i.e., MK at +60%, Yayoi at +53% and Laem Charoen at +54%.</li><li><span style="font-size: var(--content-font-size);">AH’s main business is OEM auto parts, contributing 74% of revenue in 2021.</span></li></ul></div></div></div></div>

We recommend buying M to speculate on the expected strong recovery of its 2Q22E earnings following the reopening of the country.We project the firm’s earnings to turn around from the Bt99mn loss reported in 2Q21 to a net profit of Bt392mn in 2Q22E, up 494% YoY and 45% QoQ, driven by the expected increase in SSSG at its chain restaurants, i.e., MK at +60%, Yayoi at +53% and Laem Charoen at +54%.AH’s main business is OEM auto parts, contributing 74% of revenue in 2021.

Thailand

MK Restaurant Group Public Company Limited engages in the sale of food and beverages through restaurants, primarily operating sukiyaki and Japanese restaurants under brands like MK, Yayoi, Miyazaki, and Hakata. The company also provides training services and manufactures and distributes food products. It was founded in 1962 and is headquartered in Bangkok, Thailand.

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MK Restaurant Group (M TB)

Agribusiness and Food and Beverage Sectors - October 4, 2024

The combination of the Vegetarian Festival and the school holiday break is anticipated to exert downward pressure on broiler and swine prices in...

Krungthai XSpring

Agribusiness and Food and Beverage Sectors - Sep 5, 2024

In 3Q24E, the earnings of the agribusiness and food sector are expected to recover both YoY and QoQ, particularly for major meat operators with...

Krungthai XSpring

Agri & Food: Momentum in 2Q24E Expected to Grow YoY and QoQ

In particular, major meat operators, including those engaged in the swine business in Vietnam, are anticipated to shift from losses in 2Q23 to profits

Krungthai XSpring

SET to Rebound on Expected Fund Inflows

The Thai equity market may rebound thanks to lower Thai inflation in September, while the weakening of the USD/THB carry trade to -3 S.D. suggests...

Krungthai XSpring

Small Cap Top Picks - August 8, 2022

We recommend buying M to speculate on the expected strong recovery of its 2Q22E earnings following the reopening of the country.

Krungthai XSpring

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