Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Thematic (Sector/Industry)

In this review, we highlight the importance for investors to: 1) not 'jump the gun' and sell on companies that are in decline; and 2) think logically about the macro picture, since those may have an impact on whether companies can recover or would lose relevance in the marketplace altogether.From our observations, the companies in Thailand that do turn around tend to follow one or more of these four measures, namely: 1) operations: a complete transformation rather than minor patch-ups (eg. KARMART, IVL); 2) competitive strategy: changing the frame of reference (PIZZA...now part of MINT); 3) debt restructuring (BLAND, TPI); and 4) marketing: re-branding (eg. DTAC, BTS). Whether you are stuck with certain investments or thinking about investing in potential turnaround plays, observing these four traits or steps could be helpful.

In this review, we highlight the importance for investors to: 1) not 'jump the gun' and sell on companies that are in decline; and 2) think logically about the macro picture, since those may have an impact on whether companies can recover or would lose relevance in the marketplace altogether.From our observations, the companies in Thailand that do turn around tend to follow one or more of these four measures, namely: 1) operations: a complete transformation rather than minor patch-ups (eg. KARMART, IVL); 2) competitive strategy: changing the frame of reference (PIZZA...now part of MINT); 3) debt restructuring (BLAND, TPI); and 4) marketing: re-branding (eg. DTAC, BTS). Whether you are stuck with certain investments or thinking about investing in potential turnaround plays, observing these four traits or steps could be helpful.

Turnarounds: Finding A Phoenix In the Land of the Dead

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>The consensus anticipates a modest improvement in the profits of industrial companies, with growth forecast at -8% YoY, compared to September's -9% YoY, to CNY5411.99bn.</li><li>Keep an eye on the earnings guidance of DDD, STEC, SENA, KEX, SENX, RATCH, AMATAV, SCCC, PRTR, S, FTI, PDJ, PLUS/Digital Online, JMART, PTTEP, TLI, GPSC, CKP and WHAUP, which is expected to affect the prices of the related stocks.</li><li>The consensus forecasts a growth rate of -4% MoM, reaching 0.7mn units, which is less favorable than the figure recorded in September.</li></ul>

The consensus anticipates a modest improvement in the profits of industrial companies, with growth forecast at -8% YoY, compared to September's -9% YoY, to CNY5411.99bn.Keep an eye on the earnings guidance of DDD, STEC, SENA, KEX, SENX, RATCH, AMATAV, SCCC, PRTR, S, FTI, PDJ, PLUS/Digital Online, JMART, PTTEP, TLI, GPSC, CKP and WHAUP, which is expected to affect the prices of the related stocks.The consensus forecasts a growth rate of -4% MoM, reaching 0.7mn units, which is less favorable than the figure recorded in September.

<ul><li>The SET Index is expected to move sideways down, with the resistance at 1,630/1,635 points and the support at 1,611 points (50-week EMA)/1,600 points.</li><li>Today's investment momentum is negative after the Cabinet approved a financial transaction tax of 0.11%.</li><li>We switch our rating to Buy (from Neutral), with a new fair value of Bt46.30 (vs. 33.41 previously), while the required return has been lowered to 6.3% (vs. 8.1% previously), implying 17% upside.</li></ul>

The SET Index is expected to move sideways down, with the resistance at 1,630/1,635 points and the support at 1,611 points (50-week EMA)/1,600 points.Today's investment momentum is negative after the Cabinet approved a financial transaction tax of 0.11%.We switch our rating to Buy (from Neutral), with a new fair value of Bt46.30 (vs. 33.41 previously), while the required return has been lowered to 6.3% (vs. 8.1% previously), implying 17% upside.

<ul><li>The SET Index is expected to move sideways, with the resistance at 1,650/1,666 points and the support at 1,627/1,613 points.</li><li>We recommend trading buy on SABUY, PTG and CPN.</li><li>Technically, there is a signal for a further increase in the index, with the next target at 1,666 points, after it hit a higher high yesterday; the loss-stopping point would be at 1,627 points (10-day EMA).</li></ul>

The SET Index is expected to move sideways, with the resistance at 1,650/1,666 points and the support at 1,627/1,613 points.We recommend trading buy on SABUY, PTG and CPN.Technically, there is a signal for a further increase in the index, with the next target at 1,666 points, after it hit a higher high yesterday; the loss-stopping point would be at 1,627 points (10-day EMA).

Technical Analysis: Recommendation: Selective Speculation

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

We visited two companies with very different trajectories. <ul>
<li>Renewable power specialist DEMCO is struggling, despite doing really well in the past, while jeweler Pranda, once struggling, is on the recovery path.</li>
<li>DEMCO reported gross profit and revenue decline of 8% and 7% respectively. Their earnings more than doubled, but that's solely due to dividends from Wind Energy, an investment that cost them Bt800m and is embroiled in scandal.</li>
<li>Pranda's operating cash flows surged from Bt12m to Bt230m, as they restructured their store network.</li>
<li>We'd still be caution on PDJ, as management doesn't feel the restructuring is over. More stores could be closed down in the future.</li>
</ul>

We visited two companies with very different trajectories. 
Renewable power specialist DEMCO is struggling, despite doing really well in the past, while jeweler Pranda, once struggling, is on the recovery path.
DEMCO reported gross profit and revenue decline of 8% and 7% respectively. Their earnings more than doubled, but that's solely due to dividends from Wind Energy, an investment that cost them Bt800m and is embroiled in scandal.
Pranda's operating cash flows surged from Bt12m to Bt230m, as they restructured their store network.
We'd still be caution on PDJ, as management doesn't feel the restructuring is over. More stores could be closed down in the future.


Thailand

Pranda Jewelry Public Company Limited manufactures and distributes fine jewelry, including gold, silver, and gemstone jewelry, under brands such as Prima Gold, Prima Art, Merii, and Gemondo. The company operates globally with production facilities in Thailand and Vietnam, and distribution networks across North America, Europe, and Asia. Pranda Jewelry is headquartered in Bangkok, Thailand, and was founded in 1973.

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Pranda Jewelry (PDJ TB)

Turnarounds: Finding A Phoenix In the Land of the Dead

In this review, we highlight the importance for investors to: 1) not 'jump the gun' and sell on companies that are in decline; and 2) think...

Athaporn Arayasantiparb, CFA

Today's Dominant Ideas

The consensus anticipates a modest improvement in the profits of industrial companies, with growth forecast at -8% YoY, compared to September's...

Krungthai XSpring

Two-Year Earnings to Mark a 39% CAGR

The SET Index is expected to move sideways down, with the resistance at 1,630/1,635 points and the support at 1,611 points (50-week EMA)/1,600...

Krungthai XSpring

Technical Analysis: Recommendation: Selective Speculation

The SET Index is expected to move sideways, with the resistance at 1,650/1,666 points and the support at 1,627/1,613 points. We recommend trading...

Krungthai XSpring

Shaky Situations at DEMCO and Pranda

We visited two companies with very different trajectories. Renewable power specialist DEMCO is struggling, despite doing really well in the past,...

Athaporn Arayasantiparb, CFA

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