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>A possible global recession that would weigh on rubber prices and the GPM are the key reasons for our downward revision to NER’s 2023-25E earnings, which should show a contraction in 2023E before resuming their momentum in 2024-25E, driven by production capacity expansion.</li><li>The high-norm beta for NER reflects the cyclical nature of rubber prices and the business’s high sensitivity to the impact of the economic growth of Thailand’s key trading partners, as well as the pace of growth of related downstream industries, i.e., the tire industry and automotive/EV industries.</li><li>Hence, NER’s share price has underperformed on the SET downtrend.</li></ul>

A possible global recession that would weigh on rubber prices and the GPM are the key reasons for our downward revision to NER’s 2023-25E earnings, which should show a contraction in 2023E before resuming their momentum in 2024-25E, driven by production capacity expansion.The high-norm beta for NER reflects the cyclical nature of rubber prices and the business’s high sensitivity to the impact of the economic growth of Thailand’s key trading partners, as well as the pace of growth of related downstream industries, i.e., the tire industry and automotive/EV industries.Hence, NER’s share price has underperformed on the SET downtrend.

North East Rubber - Challenges Behind Downward Earnings Revision

IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<ul>
<li>
<a href="https://www.smartkarma.com/entities/halcyon-agri-corp-ltd" target="_blank" data-smartkarma-citation="entities:18191:1" rel="noopener">Halcyon Agri (HACL SP)</a>’s S$0.413 per share MGO from <a href="https://www.smartkarma.com/entities/china-hainan-rubber-industry-group" target="_blank" data-smartkarma-citation="entities:10551:1" rel="noopener">China Hainan Rubber Industry (601118 CH)</a> has met the 50%+ minimum acceptance condition.</li>
<li>The closing date is extended from 24 March to 10 April. The payment settlement is within seven business days of receipt of a valid acceptance.</li>
<li>The offeror currently represents 50.003% of outstanding shares. At the last close, the gross and annualised spread for a 10 April payment is 2.0% and 41.8%, respectively. </li>
</ul>



Halcyon Agri (HACL SP)’s S$0.413 per share MGO from China Hainan Rubber Industry (601118 CH) has met the 50%+ minimum acceptance condition.
The closing date is extended from 24 March to 10 April. The payment settlement is within seven business days of receipt of a valid acceptance.
The offeror currently represents 50.003% of outstanding shares. At the last close, the gross and annualised spread for a 10 April payment is 2.0% and 41.8%, respectively. 


Halcyon Agri (HACL SP): Hainan Rubber’s Offer Is Declared Unconditional

<ul>
<li>The IFA opines that <a href="https://www.smartkarma.com/entities/china-hainan-rubber-industry-group" target="_blank" data-smartkarma-citation="entities:10551:1" rel="noopener">China Hainan Rubber Industry (601118 CH)</a>'s MGO at S$0.413 per share is fair and reasonable. The <a href="https://www.smartkarma.com/entities/halcyon-agri-corp-ltd" target="_blank" data-smartkarma-citation="entities:18191:1" rel="noopener">Halcyon Agri (HACL SP)</a> Board recommends accepting the offer.</li>
<li>Since the offer opened on 24 February, there have been no acceptances. Perhaps minorities held off until the full-year results and the IFA report. Board recommendation should drive acceptance.</li>
<li>The 50%+ minimum acceptance condition requires around 40% of minorities acceptance rate (47% excluding the Gondobintoro Family). This remains achievable. At the last close, the gross spread is 2.0%.</li>
</ul>


The IFA opines that China Hainan Rubber Industry (601118 CH)'s MGO at S$0.413 per share is fair and reasonable. The Halcyon Agri (HACL SP) Board recommends accepting the offer.
Since the offer opened on 24 February, there have been no acceptances. Perhaps minorities held off until the full-year results and the IFA report. Board recommendation should drive acceptance.
The 50%+ minimum acceptance condition requires around 40% of minorities acceptance rate (47% excluding the Gondobintoro Family). This remains achievable. At the last close, the gross spread is 2.0%.


Halcyon Agri (HACL SP): Board Recommends Conditional MGO

<div><div><div><ul><li>We maintainan Outperformrating. Our valuation matrix suggests upside to our current FV of Bt7.62/share, based on a required rate of return at 13.6%.</li><li>Meanwhile, the 24M FV remains on an uptrend (at Bt8.30) given the strong demand for rubber, driven by growth in the related downstream industries, i.e., tire, auto and EV. As for the tactical risks, our valuation matrix points to neutrality.</li><li>NER’s earnings yields look attractive at around 16.9% in 2023E and 19.9% in 2024E. </li></ul></div></div></div>

We maintainan Outperformrating. Our valuation matrix suggests upside to our current FV of Bt7.62/share, based on a required rate of return at 13.6%.Meanwhile, the 24M FV remains on an uptrend (at Bt8.30) given the strong demand for rubber, driven by growth in the related downstream industries, i.e., tire, auto and EV. As for the tactical risks, our valuation matrix points to neutrality.NER’s earnings yields look attractive at around 16.9% in 2023E and 19.9% in 2024E. 

North East Rubber - China’s Reopening to Boost Rubber Sales Growth

John Shearer (Holdings) / Equity Bottom-Up

<ul><li>The SET Index is expected to move sideways up, with the resistance at 1,651/1,660 points and the support at 1,640/1,630 points.</li><li>Tactically, investors are suggested to do trading buy on weakness in the short term on reopening plays, such as health care, tourism and department store stocks, as they should benefit from China's reopening and the TAT's upward revision to the 2023E tourist arrival target.</li><li>The TAT raised the target for 2023E tourist arrivals to 25mn after China announced a sooner-than-expected relaxation of its COVID-19 containment measures.</li></ul>

The SET Index is expected to move sideways up, with the resistance at 1,651/1,660 points and the support at 1,640/1,630 points.Tactically, investors are suggested to do trading buy on weakness in the short term on reopening plays, such as health care, tourism and department store stocks, as they should benefit from China's reopening and the TAT's upward revision to the 2023E tourist arrival target.The TAT raised the target for 2023E tourist arrivals to 25mn after China announced a sooner-than-expected relaxation of its COVID-19 containment measures.

Krungthai XSpring Zoom Eng. December 29, 2022

Thailand

North East Rubber Public Company Limited manufactures and sells rubber products, including ribbed smoked sheets, standard Thai rubber, and mixture rubber, primarily for the automotive industry. The company also produces specialty products like Cattleflex livestock rubber mats. It exports its products to various countries, including China, Singapore, Japan, Cambodia, and India. North East Rubber Public Company Limited was established on June 12, 2006, and is headquartered in Prakhon Chai, Thailand.

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North East Rubber (NER TB)

North East Rubber - Challenges Behind Downward Earnings Revision

A possible global recession that would weigh on rubber prices and the GPM are the key reasons for our downward revision to NER’s 2023-25E earnings

Krungthai XSpring

Halcyon Agri (HACL SP): Hainan Rubber’s Offer Is Declared Unconditional

The offer (S$0.413 per share) is unconditional and closes on 10 April. Payment is within seven business days of receipt of a valid acceptance. At...

Arun George

Halcyon Agri (HACL SP): Board Recommends Conditional MGO

The 50%+ minimum acceptance condition requires around 40% of minorities acceptance rate. This remains achievable. At the last close, the gross...

Arun George

North East Rubber - China’s Reopening to Boost Rubber Sales Growth

We maintainan Outperformrating. Our valuation matrix suggests upside to our current FV of Bt7.62/share, based on a required rate of return at 13.6%.

Krungthai XSpring

Krungthai XSpring Zoom Eng. December 29, 2022

The SET Index is expected to move sideways up, with the resistance at 1,651/1,660 points and the support at 1,640/1,630 points. Tactically,...

Krungthai XSpring

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