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

Pi Research

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

<ul>
<li>3Q22 net profit came out better than market and our expectation at Bt1.3bn(-10%YoY, -19%QoQ).YoY andQoQ decrease in earnings dragged by a drop in average TC rate to five-quarter low atUS$19,840 </li>
<li>3Q22 profit fell QoQ and YoY but above our expectation PSL reports 3Q22 net profit at Bt1.3bn (-10%YoY,-19%QoQ).A drop in earnings was pressured by contraction in in PSL’s average earnings</li>
<li>However, average market TC rate for Supramax and Handy-sized are reported at US19,728 (-33%YoY -32%QoQ) and US$18,709(-42%YoY -32%QoQ). Handy-sized segment remained discount to market due to smaller fleet size relative </li>
</ul>


3Q22 net profit came out better than market and our expectation at Bt1.3bn(-10%YoY, -19%QoQ).YoY andQoQ decrease in earnings dragged by a drop in average TC rate to five-quarter low atUS$19,840 
3Q22 profit fell QoQ and YoY but above our expectation PSL reports 3Q22 net profit at Bt1.3bn (-10%YoY,-19%QoQ).A drop in earnings was pressured by contraction in in PSL’s average earnings
However, average market TC rate for Supramax and Handy-sized are reported at US19,728 (-33%YoY -32%QoQ) and US$18,709(-42%YoY -32%QoQ). Handy-sized segment remained discount to market due to smaller fleet size relative 


PSL : Demand for Dry Bulk Trading Should Remain Supportive

<ul>
<li>We upgrade PSL with BUY rating and target price of Bt18.0.We anticipate a strong recovery in dry bulk freight rate in 4Q22 to 1Q23 following an improvement in market conditions</li>
<li>3Q22 profit is expected to drop to five quarter low We expect PSL to post 3Q22 net profit at Bt1.1bn (-29%YoY, -36%QoQ), the lowest level in the past five quarter.</li>
<li>However, average market TC rate for Supramax and Handy-sized should be reported at US$19,728 and US$18,709 per day (-42%YoY -32%QoQ) A discount to market is due to smaller fleet size </li>
</ul>


We upgrade PSL with BUY rating and target price of Bt18.0.We anticipate a strong recovery in dry bulk freight rate in 4Q22 to 1Q23 following an improvement in market conditions
3Q22 profit is expected to drop to five quarter low We expect PSL to post 3Q22 net profit at Bt1.1bn (-29%YoY, -36%QoQ), the lowest level in the past five quarter.
However, average market TC rate for Supramax and Handy-sized should be reported at US$19,728 and US$18,709 per day (-42%YoY -32%QoQ) A discount to market is due to smaller fleet size 


PSL : Demand Should Recover Firmly in 4Q22

<ul>
<li>Maintain HOLD rating for PSL with target price of Bt18.0.We believe the net profit of Bt1.7bn reported in2Q22should be the peak quarter of this year as market TC rates (BSI,BHSI)</li>
<li>2Q22 profit hit 1.7bn, above market expectation PSL report 2Q22 net profit at Bt1.7bn (+101%YoY,+28%QoQ),the second highest level in a decade. This supported by high profitable level of TCE rate</li>
<li>However, average market TC rate for Supramax and Handy-sized are reported at US$28,901 (+13%YoY +15%QoQ) and US$27,566 (+22%YoY +14%QoQ). A discount to market is due to smaller fleet size</li>
</ul>


Maintain HOLD rating for PSL with target price of Bt18.0.We believe the net profit of Bt1.7bn reported in2Q22should be the peak quarter of this year as market TC rates (BSI,BHSI)
2Q22 profit hit 1.7bn, above market expectation PSL report 2Q22 net profit at Bt1.7bn (+101%YoY,+28%QoQ),the second highest level in a decade. This supported by high profitable level of TCE rate
However, average market TC rate for Supramax and Handy-sized are reported at US$28,901 (+13%YoY +15%QoQ) and US$27,566 (+22%YoY +14%QoQ). A discount to market is due to smaller fleet size


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.

<ul><li>2Q22E earnings expected to increase 88% YoY and 18% QoQ, driven by strong freight rates</li><li>Upward earnings revision in 2022- 23E by 54- 115% reflects extended upcycle</li><li>Neutral view on the stock, as freight rates should have already peaked out</li></ul><ul style="list-style-type: none;"><li> </li></ul>

2Q22E earnings expected to increase 88% YoY and 18% QoQ, driven by strong freight ratesUpward earnings revision in 2022- 23E by 54- 115% reflects extended upcycleNeutral view on the stock, as freight rates should have already peaked out 

<ul>
<li>We downgrade PSL to HOLD rating while trim target price to Bt16.0 (Previous TP:Bt21.20) derived from 1.5xPBV’22E, Asia-ex-Japan transportation sector. We believe peak point of the market upcycle</li>
<li>We anticipate a slowdown in demand for dry bulk commodities trading to continue at least until 1H22, which was mainly pressured by tension between Russia-Ukraine and China city lockdown.</li>
<li>Supply side in short-term will still benefit from trend of containerized cargoes and issue over port congestion, but these factors are likely to fade in 2H22</li>
</ul>


We downgrade PSL to HOLD rating while trim target price to Bt16.0 (Previous TP:Bt21.20) derived from 1.5xPBV’22E, Asia-ex-Japan transportation sector. We believe peak point of the market upcycle
We anticipate a slowdown in demand for dry bulk commodities trading to continue at least until 1H22, which was mainly pressured by tension between Russia-Ukraine and China city lockdown.
Supply side in short-term will still benefit from trend of containerized cargoes and issue over port congestion, but these factors are likely to fade in 2H22


PSL: Short-Term Outlook Is Lack of Interest, but Positive for Long-Term

Thailand

Precious Shipping is a Thailand-based ship-owner providing global dry-bulk transportation services. The company operates dry bulk ships on a tramp shipping basis, employing its vessels on both time and voyage charters, and handles cargoes such as cement, agricultural products, steel, fertilizers, ores, coal, and logs. It was founded in 1989 and is headquartered in Bangkok, Thailand.

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Precious Shipping (PSL TB)

PSL : Demand for Dry Bulk Trading Should Remain Supportive

3Q22 net profit came out better than market and our expectation at Bt1.3bn (-10%YoY, -19%QoQ). YoY and QoQ decrease in earnings dragged by a drop...

Pi Securities PCL, Thailand

PSL : Demand Should Recover Firmly in 4Q22

We upgrade PSL with BUY rating and target price of Bt18.0. We anticipate a strong recovery in dry bulk freight rate in 4Q22 to 1Q23 following an...

Pi Securities PCL, Thailand

PSL : Rate Peak Has Surpassed

Maintain HOLD rating for PSL with target price of Bt18.0. We believe the net profit of Bt1.7bn reported in 2Q22 should be the peak quarter of this...

Pi Securities PCL, Thailand

Small Cap Update - Precious Shipping PSL

2Q22E earnings expected to increase 88% YoY and 18% QoQ, driven by strong freight rates. Upward earnings revision in 2022- 23E by 54- 115% reflects...

Krungthai XSpring

PSL: Short-Term Outlook Is Lack of Interest, but Positive for Long-Term

We downgrade PSL to HOLD rating while trim target price to Bt16.0 (Previous TP:Bt21.20) derived from 1.5xPBV’22E, Asia-ex-Japan transportation...

Pi Securities PCL, Thailand

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