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>3Q24 profit declined YoY and QoQ due to a larger drop in sales compared to the increase in the gross margin, which pressured operating expenses to sales.</li><li>Reduced purchasing power and stiffer competition in the hotpot restaurant sector make the long-term growth outlook less attractive.</li><li>We expect 2-year profit growth at a CAGR of 5%.</li></ul>

3Q24 profit declined YoY and QoQ due to a larger drop in sales compared to the increase in the gross margin, which pressured operating expenses to sales.Reduced purchasing power and stiffer competition in the hotpot restaurant sector make the long-term growth outlook less attractive.We expect 2-year profit growth at a CAGR of 5%.

Mk Restaurant Group - 3Q24 Earnings Declined YoY and QoQ, Below Forecast by 6%

<ul><li>The current valuation has been revised to undervalued (from neutral previously), as the stock price decline has created upside of around 7.5%.</li><li>Meanwhile, the tactical view has been adjusted to neutral (from limited downside risk).</li><li>Long-term growth outlook: The view has been revised to slow (previously neutral) owing to an expected CAGR of just 3% over the next two years (2024-26E), which is below KTX’s growth benchmark of 5-10%.</li></ul>

The current valuation has been revised to undervalued (from neutral previously), as the stock price decline has created upside of around 7.5%.Meanwhile, the tactical view has been adjusted to neutral (from limited downside risk).Long-term growth outlook: The view has been revised to slow (previously neutral) owing to an expected CAGR of just 3% over the next two years (2024-26E), which is below KTX’s growth benchmark of 5-10%.

Mk Restaurant Group - Lower SSSG to Pressure 3Q24E Earnings

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

Thailand

MK Restaurants Group PCL operates restaurants. The Company supplies traditional Thai food.

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MK Restaurants Group (M TB)

Mk Restaurant Group - 3Q24 Earnings Declined YoY and QoQ, Below Forecast by 6%

3Q24 profit declined YoY and QoQ due to a larger drop in sales compared to the increase in the gross margin, which pressured operating expenses to...

Krungthai XSpring

Mk Restaurant Group - Lower SSSG to Pressure 3Q24E Earnings

The current valuation has been revised to undervalued (from neutral previously), as the stock price decline has created upside of around 7.5%.

Krungthai XSpring

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

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