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.

Equity Capital Markets

PTT Oil and Retail Business / Equity Capital Markets

<div><p><a href="https://www.smartkarma.com/entities/ptt-oil-and-retail" target="_blank" data-smartkarma-citation="entities:28939:1" rel="noopener">PTT Oil and Retail (OR TB)</a>/PTTOR is the flagship company for the oil and retail business of <a href="https://www.smartkarma.com/entities/ptt-pcl" target="_blank" data-smartkarma-citation="entities:197:1" rel="noopener">PTT PCL (PTT TB)</a> in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market.</p></div><div><p>PTTOR has launched its IPO at a price range of THB16.00-18.00 per share to raise as much as THB47.0 billion ($1.6 billion). Cornerstone investors will account for around two-thirds of the offer shares. Nine international cornerstones which include Fidelity, JP Morgan Asset Management and GIC will take up $270 million of the offer shares. Nineteen domestic cornerstone investors will take up $758 million of the offer shares. The books will open on 22 January and the first day of trading is set for 11 February. </p></div><div><div><div class="content-highlight"><p>In <a href="https://www.smartkarma.com/insights/ptt-oil-and-retail-pttor-ipo-initiation-octane-ratings" target="_blank" data-smartkarma-citation="insights:46230" rel="noopener">PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings</a>, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence. Overall, we think that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. </p></div></div></div>

PTT Oil and Retail (OR TB)/PTTOR is the flagship company for the oil and retail business of PTT PCL (PTT TB) in Thailand and in the Southeast Asia region such as Cambodia, Laos, Myanmar and Philippines. PTTOR is the largest player in Thailand’s fuel retail market.PTTOR has launched its IPO at a price range of THB16.00-18.00 per share to raise as much as THB47.0 billion ($1.6 billion). Cornerstone investors will account for around two-thirds of the offer shares. Nine international cornerstones which include Fidelity, JP Morgan Asset Management and GIC will take up $270 million of the offer shares. Nineteen domestic cornerstone investors will take up $758 million of the offer shares. The books will open on 22 January and the first day of trading is set for 11 February. In PTT Oil and Retail (PTTOR) IPO Initiation: Octane Ratings, we stated that PTTOR remains a market-leading business and well-placed to ride the recovery in oil prices, easing of lockdown restrictions and consumer confidence. Overall, we think that a reasonable P/E valuation and solid cornerstone support makes PTTOR tempting at the proposed pricing range. 

PTT Oil and Retail (PTTOR) IPO: Valuation Insights

Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

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).

Equity Bottom-Up

<p>We have visited many of two interesting companies recently, namely Singha Hotels (SHR) and PTG Energy, the country's second largest gas station operator.</p><ul>
<li>
<strong>Singha Hotels</strong>' losses in H1'20 widened over six-fold YoY to Bt946m as revenues dropped 34% to just Bt1.5bn, and the company expects earnings to be flat in H2'20. The company could not cut costs as aggressively as Minor did, bleeding Bt120/month on fixed cash costs alone.</li>
<li>Management clarified that most of their investments would be organic (refurbishment and improvements) rather than M&amp;A due to the tougher operating conditions. In the long-run, UK based hotels would fall from 74% to 21% of portfolio, and homegrown, own-managed hotels would rise to 48% of the portfolio.</li>
<li>
<strong>PTG Energy</strong> reported H1'20 earnings of Bt717m, down 24% YoY, on the back of a 15% revenue decline to Bt51.4bn during the same period. The company put up a brave face talking about its strong MKM (marketing margin) even as volumes plunged more than 30% for key categories.</li>
<li>We are rather bearish on the company, which appears to focus more on market share than profitability during this precarious period. They are investing some Bt3.5bn in capex and hoping to move up the rankings against key rivals.</li>
</ul>

We have visited many of two interesting companies recently, namely Singha Hotels (SHR) and PTG Energy, the country's second largest gas station operator.

Singha Hotels' losses in H1'20 widened over six-fold YoY to Bt946m as revenues dropped 34% to just Bt1.5bn, and the company expects earnings to be flat in H2'20. The company could not cut costs as aggressively as Minor did, bleeding Bt120/month on fixed cash costs alone.
Management clarified that most of their investments would be organic (refurbishment and improvements) rather than M&amp;A due to the tougher operating conditions. In the long-run, UK based hotels would fall from 74% to 21% of portfolio, and homegrown, own-managed hotels would rise to 48% of the portfolio.

PTG Energy reported H1'20 earnings of Bt717m, down 24% YoY, on the back of a 15% revenue decline to Bt51.4bn during the same period. The company put up a brave face talking about its strong MKM (marketing margin) even as volumes plunged more than 30% for key categories.
We are rather bearish on the company, which appears to focus more on market share than profitability during this precarious period. They are investing some Bt3.5bn in capex and hoping to move up the rankings against key rivals.


Small Cap Diary: Singha Hotels, PTG Energy

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Index Rebalance

<p>The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the SET50 index in December and the changes will be effective from 2 January 2020. Passive funds and index arb desks will need to trade at (or by) the close on 30 December 2019.</p><p>We see a possibility of <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" rel="noopener" data-smartkarma-citation="entities:12409:1">VGI Global Media (VGI TB)</a> being added to the SET50 index in this review and <a href="https://www.smartkarma.com/entities/banpu-power-pcl" target="_blank" rel="noopener" data-smartkarma-citation="entities:23631:1">Banpu Power PCL (BPP TB)</a> as a possible deletion candidate.</p><p>This Insight covers the SET50 index methodology, our expected changes, historical impact on additions/deletions to the index and suggest trades for this rebalance.</p>

The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the SET50 index in December and the changes will be effective from 2 January 2020. Passive funds and index arb desks will need to trade at (or by) the close on 30 December 2019.We see a possibility of VGI Global Media (VGI TB) being added to the SET50 index in this review and Banpu Power PCL (BPP TB) as a possible deletion candidate.This Insight covers the SET50 index methodology, our expected changes, historical impact on additions/deletions to the index and suggest trades for this rebalance.

SET50 Index Rebalance Preview - Better Early Than Late

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<p>This week in StubWorld ...</p><ul class=""><li><strong><a href="https://www.smartkarma.com/entities/14210" target="_blank" data-smartkarma-citation="entities:14210:1">Genting Bhd (GENT MK)</a></strong>is trading at a one-year low discount to NAV as concerns linger on the timing of the planned launch of 20th Century Fox World.</li><li>With a high margin coffee business a key component of a forthcoming IPO, <strong><a href="https://www.smartkarma.com/entities/197" target="_blank" data-smartkarma-citation="entities:197:1">PTT PCL (PTT TB)</a></strong> is more than just an oil ETF.</li></ul><p>This, and other relationships discussed below, trade with: 1) a minimum liquidity threshold of US$1mn on a 90-day moving average; and 2) a minimum 20% 'market capitalisation' threshold, whereby the value of the holding/Opco held must be at least 20% of the parent's market cap.</p><p>A detailed NAV for a number of these parent/holding relationships highlighted can be found in our Holdco monitor.</p><p>My comments on Genting, PTT <em>and</em><strong><a href="https://www.smartkarma.com/entities/11074" target="_blank" data-smartkarma-citation="entities:11074:1">Takara Holdings Inc (2531 JP)</a></strong> follow my weekly setup/unwind tables.</p><p><em>(Market cap and liquidity noted below are in US$. Liquidity is assessed on a 3-month average)</em></p>

This week in StubWorld ...Genting Bhd (GENT MK)is trading at a one-year low discount to NAV as concerns linger on the timing of the planned launch of 20th Century Fox World.With a high margin coffee business a key component of a forthcoming IPO, PTT PCL (PTT TB) is more than just an oil ETF.This, and other relationships discussed below, trade with: 1) a minimum liquidity threshold of US$1mn on a 90-day moving average; and 2) a minimum 20% 'market capitalisation' threshold, whereby the value of the holding/Opco held must be at least 20% of the parent's market cap.A detailed NAV for a number of these parent/holding relationships highlighted can be found in our Holdco monitor.My comments on Genting, PTT andTakara Holdings Inc (2531 JP) follow my weekly setup/unwind tables.(Market cap and liquidity noted below are in US$. Liquidity is assessed on a 3-month average)

<p><strong>Syrian Tensions. </strong>The Western allied nations (America, France, and Britain) decided to launch a second attack on Syria on the same basis of the earlier attacks ( <a href="https://www.smartkarma.com/insights/war-in-syria-return-to-inflation" target="_blank" data-smartkarma-citation="insights:9874">War in Syria: Return to Inflation?</a>) ie use of chemical warfare against rebels and civilians. The real elephant in the room is Russia, from an economic standpoint, since any trade between Thailand and Syria is a negligible afterthought. With their earlier problems in London following suspected poisoning of defectors, they face the risk of…</p>

Syrian Tensions. The Western allied nations (America, France, and Britain) decided to launch a second attack on Syria on the same basis of the earlier attacks ( War in Syria: Return to Inflation?) ie use of chemical warfare against rebels and civilians. The real elephant in the room is Russia, from an economic standpoint, since any trade between Thailand and Syria is a negligible afterthought. With their earlier problems in London following suspected poisoning of defectors, they face the risk of…

Snippets #8: Syrian Tensions, PTT's New IPO!

Thailand

PTG Energy Public Company Limited is a leading integrated energy and lifestyle platform company in Thailand, primarily engaged in the distribution of petroleum and LPG products through a nationwide network of PT service stations. The company also operates non-oil businesses including convenience stores (Max Mart), coffee shops (Punthai Coffee), auto care centers, and provides services such as e-Money and logistics. PTG Energy was founded in 1988 and is headquartered in Bangkok, Thailand.

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PTG Energy (PTG TB)

PTT Oil and Retail (PTTOR) IPO: Valuation Insights

PTTOR has launched its IPO to raise as much as THB47.0 billion ($1.6 billion). A reasonable P/E valuation and solid cornerstone support make PTTOR...

Arun George

Small Cap Diary: Singha Hotels, PTG Energy

<p>We have visited many of the country's top three hotel operators. In this review, we checked two smaller ones, namely Singha Hotels and Dusit...

Athaporn Arayasantiparb, CFA

SET50 Index Rebalance Preview - Better Early Than Late

The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the SET50 index in December and the changes will be...

Brian Freitas

StubWorld: Genting, PTT, Takara

This week in StubWorld ... Genting Bhd (GENT MK)is trading at a one-year low discount to NAV as concerns linger on the timing of the planned...

David Blennerhassett

Snippets #8: Syrian Tensions, PTT's New IPO!

Syrian Tensions. The Western allied nations (America, France, and Britain) decided to launch a second attack on Syria on the same basis of the...

Athaporn Arayasantiparb, CFA

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