Technical Analyst, Vermilion Research

Joe Jasper

Technical Analyst

Technical and Quantitative Research

Vermilion Research

Vermilion’s objective is to deliver timely, actionable, and unique technical research to professional investors through the application of our various technical indicators.

Our research strategists seek to highlight securities which we believe are at major inflection points, based on our various technical and quantitative indicators, and offer asymmetric risk/return profiles. Our unique research methodology, centered on relative strength, enables our strategists to deliver superior investment recommendations.

Our process begins by organizing the universe of actively traded stocks into discrete sectors, then into industry groups. We then apply our technical and quantitative tools to identify developing price trends. Once attractive trends are identified within a selected sector or group, we screen for individual stocks which we believe offer the best risk/reward profile. We provide a historical perspective that often reveals, through our long-term charts, how price patterns often repeat themselves over time.

Technical Analysis

MSCI Emerging Markets Index / Technical Analysis

<p>As we highlighted in last week’s <em>Int’l Compass</em>, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global <strong>Materials </strong>remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted <strong>Energy </strong>to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.</p>

As we highlighted in last week’s Int’l Compass, the weight of the evidence suggests commodities are in the early stages of a new secular bull market. Global Materials remains a favorite Sector overweight and we believe outperformance is likely to continue considering the Sector’s long-term bullish RS reversal. Additionally, we are upgrading equal-weighted Energy to overweight due to bullish price and RS inflections -- add exposure with a focus on small- and mid-caps.

Global Commodity-Related Equity Sectors In Secular Bull

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

<p><strong>The stock outperformed the SET index by +15% in last two months on the back of recovering crude price, and surpassed our previous target price of Bt108. We expect PTTEP to continue the rally as the reference Dubai crude price is anticipated to average at 55 US$/BBL in 2021 (+30 YoY).</strong></p><div>• Expect weak 4Q20 earnings of Bt5.5bn (-53% YoY, -23% QoQ) on the back of lower average selling price (ASP) and hedging loss.</div><div></div><div>• Expect a 22% EPS growth in 2021E from improving volume sales and recovering crude price.</div><div></div><div>• Expect Brent crude’s upward rally in 2021 backed by production cut of OPEC+ and widespread vaccine deployment.</div><p></p><p><strong>We maintain our BUY  recommendation, while revise up the target price to Bt125 (from previous Bt108) on the back of the earnings revision. Our valuation is derived using DCF methodology (WACC 9.4%, TG 2%), implying 16.5x PE’21.</strong></p>

The stock outperformed the SET index by +15% in last two months on the back of recovering crude price, and surpassed our previous target price of Bt108. We expect PTTEP to continue the rally as the reference Dubai crude price is anticipated to average at 55 US$/BBL in 2021 (+30 YoY).• Expect weak 4Q20 earnings of Bt5.5bn (-53% YoY, -23% QoQ) on the back of lower average selling price (ASP) and hedging loss.• Expect a 22% EPS growth in 2021E from improving volume sales and recovering crude price.• Expect Brent crude’s upward rally in 2021 backed by production cut of OPEC+ and widespread vaccine deployment.We maintain our BUY  recommendation, while revise up the target price to Bt125 (from previous Bt108) on the back of the earnings revision. Our valuation is derived using DCF methodology (WACC 9.4%, TG 2%), implying 16.5x PE’21.

PTTEP: Bright 2021 Earnings Outlook from Recovering Crude Price

<p><strong>Amid the COVID-19 crisis and facing a hard hit from crude price downfall PTTEP targets petroleum sales growth at 6% CAGR in next 5 years. The company rolled out 5-year investment plan allocating US$23.6bn aiming long term growth.</strong></p><div>• PTTEP rolled out an investment plan of US$23.6bn (US$14.0bn CAPEX and US$8.7bn OPEX) to maintain the production from existing projects and accelerating key development projects aiming long term growth.</div><div></div><div>• The company foresee  decommissioning expense of US$686m in 2022 on developing G1/61 (Erawan)and G2/61 (Bangkot)projects. Though this will only impacts the cash outflow but not the earnings, on a worst case scenario we estimate the impact to our target price is Bt4.5/sh (4.0% of our DCF based TP).</div><p></p><p>Given a minimal impact to our earnings forecast (&lt;3.0%) from sales volume adjustment, we maintain target price and  BUY recommendation. Our target price of Bt108.0 is derived using DCF methodology  (WACC 9.5% and TG 2%). Our valuation implies 13.2x PE’21</p>

Amid the COVID-19 crisis and facing a hard hit from crude price downfall PTTEP targets petroleum sales growth at 6% CAGR in next 5 years. The company rolled out 5-year investment plan allocating US$23.6bn aiming long term growth.• PTTEP rolled out an investment plan of US$23.6bn (US$14.0bn CAPEX and US$8.7bn OPEX) to maintain the production from existing projects and accelerating key development projects aiming long term growth.• The company foresee  decommissioning expense of US$686m in 2022 on developing G1/61 (Erawan)and G2/61 (Bangkot)projects. Though this will only impacts the cash outflow but not the earnings, on a worst case scenario we estimate the impact to our target price is Bt4.5/sh (4.0% of our DCF based TP).Given a minimal impact to our earnings forecast (&lt;3.0%) from sales volume adjustment, we maintain target price and  BUY recommendation. Our target price of Bt108.0 is derived using DCF methodology  (WACC 9.5% and TG 2%). Our valuation implies 13.2x PE’21

PTTEP: Target to Achieve 6% CAGR Sales Growth in 2021-25

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Cross Asset Strategy

<div class="content-highlight">
<p>The week that was in <a href="mailto:ASEAN@Smartkarma" target="_blank" rel="noopener">ASEAN@Smartkarma</a> is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.</p>
<p>We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  </p>
</div><h3>Macro Insights</h3><p>In <a href="https://www.smartkarma.com/insights/agong-asserts-himself-preventing-change-of-pm-but-disallowing-emergency-rule" target="_blank" data-smartkarma-citation="insights:44572" rel="noopener">Agong Asserts Himself, Preventing Change of PM but Disallowing Emergency Rule,</a> CrossASEAN Chief Economist <a href="https://www.smartkarma.com/profiles/prasenjit-k-basu" target="_blank" data-smartkarma-citation="accounts:612" rel="noopener">Prasenjit K. Basu</a> comments on the ongoing political upheaval in Malaysia. </p><p>In <a href="https://www.smartkarma.com/insights/trouble-down-south-it-s-not-just-the-virus" target="_blank" data-smartkarma-citation="insights:44698" rel="noopener">Trouble Down South: It's Not Just the Virus,</a><a href="https://www.smartkarma.com/profiles/dr-jim-walker" target="_blank" data-smartkarma-citation="accounts:1628" rel="noopener">Dr. Jim Walker</a> gives his prescriptions on why South East Asia has been such a poor performer this year. </p><p>In <a href="https://www.smartkarma.com/insights/thai-strategy-2021-part-1-key-themes" target="_blank" data-smartkarma-citation="insights:40842" rel="noopener">Thai Strategy 2021 (Part 1): Key Themes,</a> out Thai guru <a href="https://www.smartkarma.com/profiles/athaporn-arayasantiparb-cfa" target="_blank" data-smartkarma-citation="accounts:766" rel="noopener">Athaporn Arayasantiparb, CFA</a> lays out his thoughts for the outlook for the Thai market next year. </p><h3>Equity Bottom-Up Insights</h3><p>In his Indonesian Insight, <a href="https://www.smartkarma.com/insights/matahari-department-store-lppf-ij-too-early-to-be-early" target="_blank" data-smartkarma-citation="insights:44460" rel="noopener">Matahari Department Store (LPPF IJ) - Too Early to Be Early,</a> Cross ASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" data-smartkarma-citation="accounts:937" rel="noopener">Angus Mackintosh</a> circles back to the country's largest department store operator post its recent results. </p><p>In <a href="https://www.smartkarma.com/insights/akr-corporindo-akra-ij-great-omnibus-expectations" target="_blank" data-smartkarma-citation="insights:44611" rel="noopener">AKR Corporindo (AKRA IJ) - Great Omnibus Expectations,</a> CrossASEAN insight provider <a href="https://www.smartkarma.com/profiles/angus-mackintosh" target="_blank" rel="noopener">Angus Mackintosh</a> revisits <a href="https://www.smartkarma.com/entities/akr-corporindo-tbk-pt" target="_blank" rel="noopener">AKR Corporindo (AKRA IJ)</a> after its recent 3Q2020 results that continued to demonstrate its resilience, with an across the board improvement in margins, despite a decline in sales.</p><p>In a Malaysian Insight, <a href="https://www.smartkarma.com/insights/ql-resources-ql-take-profit" target="_blank" data-smartkarma-citation="insights:44598" rel="noopener">QL Resources (QL): Take Profit?,</a> CrossASEAN Insight Provider <a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" data-smartkarma-citation="accounts:1006" rel="noopener">Henry Soediarko</a> revisits this commodity turned retail play, through its Family Mart business. </p><p>In <a href="https://www.smartkarma.com/insights/far-east-hospitality-trust-feht-beneficiary-of-opening-up" target="_blank" data-smartkarma-citation="insights:44649" rel="noopener">Far East Hospitality Trust (FEHT): Beneficiary of Opening Up,</a> CrossASEAN Insight Provider<a href="https://www.smartkarma.com/profiles/henry-soediarko" target="_blank" rel="noopener"> Henry Soediarko</a> takes an initial look at<a href="https://www.smartkarma.com/entities/far-east-hospitality-trust" target="_blank" rel="noopener"> Far East Hospitality Trust (FEHT SP),</a> the only hospitality REIT in Singapore with a 100% domestic hospitality exposure and a higher fixed rental component, offering a defensive exposure during this difficult market environment. </p><p>In <a href="https://www.smartkarma.com/insights/bca-profit-returns" target="_blank" data-smartkarma-citation="insights:44605" rel="noopener">BCA – Profit Returns,</a> banking specialist <a href="https://www.smartkarma.com/profiles/daniel-tabbush" target="_blank" data-smartkarma-citation="accounts:12" rel="noopener">Daniel Tabbush</a> revisits <a href="https://www.smartkarma.com/entities/bank-central-asia-tbk-pt" target="_blank" data-smartkarma-citation="entities:440:1" rel="noopener">Bank Central Asia (BBCA IJ)</a> and finds the bank clawing back some of the ROA it lost during 2Q2020 in the most recent quarter. </p><p>In <a href="https://www.smartkarma.com/insights/bts-potential-positive-catalysts-ahead" target="_blank" data-smartkarma-citation="insights:44691" rel="noopener">BTS: Potential Positive Catalysts Ahead,</a><a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> revisit this Thai transportation play with a more positive slant.</p><p>In <a href="https://www.smartkarma.com/insights/pttep-4q20-earnings-to-soften-from-lower-asp-and-volume-sales" target="_blank" data-smartkarma-citation="insights:44740" rel="noopener">PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales,</a> our friends at <a href="https://www.smartkarma.com/companies/country-group" target="_blank" data-smartkarma-citation="companies:965" rel="noopener">Country Group</a> assess the prospects for <a href="https://www.smartkarma.com/entities/ptt-exploration-and-production-public-company-limited" target="_blank" data-smartkarma-citation="entities:261:1" rel="noopener">PTT E&amp;P (PTTEP TB)</a> going into the end of the year.</p><h3>Credit Insights</h3><p>In this Insight, <a href="https://www.smartkarma.com/insights/japfa-comfeed-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44743" rel="noopener">Japfa Comfeed - Earnings Flash - 9M FY 2020 Results,</a> Senior Credit Analyst<a href="https://www.smartkarma.com/profiles/trung-nguyen" target="_blank" rel="noopener"> Trung Nguyen</a> discusses <a href="https://www.smartkarma.com/entities/japfa-comfeed-indonesia-tbk-pt" target="_blank" data-smartkarma-citation="entities:8258:1" rel="noopener">Japfa Comfeed Indonesia (JPFA IJ)'</a>s 9M2020 results, which came in worse than expected (following a dismal Q22020), as the impact of COVID-19 reduced consumers' purchasing power and hit demand. </p><p>In <a href="https://www.smartkarma.com/insights/pan-brothers-earnings-flash-9m-fy-2020-results-lucror-analytics" target="_blank" data-smartkarma-citation="insights:44708" rel="noopener">Pan Brothers - Earnings Flash - 9M FY 2020 Results,</a><a href="https://www.smartkarma.com/companies/lucror-analytics" target="_blank" rel="noopener">Lucror Analytics</a> zeros in on the Pan Brothers’ Q3 and 9M2020 earnings. Pan Brothers’ cash flow generation remained poor, and it continued to report large working capital weakness. It appears unlikely that Pan Brothers will be able to increase the size of its syndication facility, given the low commitment from banks at the moment. </p>


The week that was in ASEAN@Smartkarma is filled with another eclectic mix of differentiated, substantive, and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights over the past week.
We add below a NEW section, which includes emerging themes in ASEAN and selects important news flow or developments for commentary, which may impact SE Asian companies and markets.  
Macro InsightsIn Agong Asserts Himself, Preventing Change of PM but Disallowing Emergency Rule, CrossASEAN Chief Economist Prasenjit K. Basu comments on the ongoing political upheaval in Malaysia. In Trouble Down South: It's Not Just the Virus,Dr. Jim Walker gives his prescriptions on why South East Asia has been such a poor performer this year. In Thai Strategy 2021 (Part 1): Key Themes, out Thai guru Athaporn Arayasantiparb, CFA lays out his thoughts for the outlook for the Thai market next year. Equity Bottom-Up InsightsIn his Indonesian Insight, Matahari Department Store (LPPF IJ) - Too Early to Be Early, Cross ASEAN Insight Provider Angus Mackintosh circles back to the country's largest department store operator post its recent results. In AKR Corporindo (AKRA IJ) - Great Omnibus Expectations, CrossASEAN insight provider Angus Mackintosh revisits AKR Corporindo (AKRA IJ) after its recent 3Q2020 results that continued to demonstrate its resilience, with an across the board improvement in margins, despite a decline in sales.In a Malaysian Insight, QL Resources (QL): Take Profit?, CrossASEAN Insight Provider Henry Soediarko revisits this commodity turned retail play, through its Family Mart business. In Far East Hospitality Trust (FEHT): Beneficiary of Opening Up, CrossASEAN Insight Provider Henry Soediarko takes an initial look at Far East Hospitality Trust (FEHT SP), the only hospitality REIT in Singapore with a 100% domestic hospitality exposure and a higher fixed rental component, offering a defensive exposure during this difficult market environment. In BCA – Profit Returns, banking specialist Daniel Tabbush revisits Bank Central Asia (BBCA IJ) and finds the bank clawing back some of the ROA it lost during 2Q2020 in the most recent quarter. In BTS: Potential Positive Catalysts Ahead,Country Group revisit this Thai transportation play with a more positive slant.In PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales, our friends at Country Group assess the prospects for PTT E&amp;P (PTTEP TB) going into the end of the year.Credit InsightsIn this Insight, Japfa Comfeed - Earnings Flash - 9M FY 2020 Results, Senior Credit Analyst Trung Nguyen discusses Japfa Comfeed Indonesia (JPFA IJ)'s 9M2020 results, which came in worse than expected (following a dismal Q22020), as the impact of COVID-19 reduced consumers' purchasing power and hit demand. In Pan Brothers - Earnings Flash - 9M FY 2020 Results,Lucror Analytics zeros in on the Pan Brothers’ Q3 and 9M2020 earnings. Pan Brothers’ cash flow generation remained poor, and it continued to report large working capital weakness. It appears unlikely that Pan Brothers will be able to increase the size of its syndication facility, given the low commitment from banks at the moment. 

The Week that Was in ASEAN@Smartkarma - South East Asia Lags, the Bank's Return, and Nimble Staples

<p><strong>Yesterday analyst meeting came out in a neutral tone. We maintain our BUY  recommendation based on a target price of Bt108 derived from DCF methodology (WACC 9.5% and TG 2%). Our valuation implies 13.3x PE’21.</strong></p><ul>
<li>PTTEP reported 3Q20 net profit of Bt7.2bn (-35%YoY, +67%QoQ), improving QoQ on the back of increased volume sales and average selling price (ASP).</li>
<li>Expect 4Q20 earnings to soften both YoY and QoQ , due to drop in ASP as the gas price is expected to decline by 13% to US$5.4/MMBTU (from 6.2 US/MMBTU in 3Q20)</li>
<li>We expect a 10% downside risk in our earnings forecast for 2021-22 period, as we anticipate  8 to 10% drop in PTTEP’s volume sales (from previous guidance) due to global oil demand destruction amid COVID-19 induced economic slowdown.</li>
<li>Thus we recommend trading and gradually accumulate the stock beginning 1Q21.</li>
</ul>

Yesterday analyst meeting came out in a neutral tone. We maintain our BUY  recommendation based on a target price of Bt108 derived from DCF methodology (WACC 9.5% and TG 2%). Our valuation implies 13.3x PE’21.
PTTEP reported 3Q20 net profit of Bt7.2bn (-35%YoY, +67%QoQ), improving QoQ on the back of increased volume sales and average selling price (ASP).
Expect 4Q20 earnings to soften both YoY and QoQ , due to drop in ASP as the gas price is expected to decline by 13% to US$5.4/MMBTU (from 6.2 US/MMBTU in 3Q20)
We expect a 10% downside risk in our earnings forecast for 2021-22 period, as we anticipate  8 to 10% drop in PTTEP’s volume sales (from previous guidance) due to global oil demand destruction amid COVID-19 induced economic slowdown.
Thus we recommend trading and gradually accumulate the stock beginning 1Q21.


PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales

Thailand

PTT Exploration and Production Public Company Limited explores for crude oil and natural gas, develops fields for production, and produces oil and natural gas. The Company is a subsidiary of the Petroleum Authority of Thailand.

PTT Exploration & Production P (PTTEP-R TB)

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PTT Exploration & Production P (PTTEP-R TB)

PTTEP: Bright 2021 Earnings Outlook from Recovering Crude Price

The stock outperformed the SET index by +15% in last two months on the back of recovering crude price, and surpassed our previous target price of...

Pi Securities PCL, Thailand

PTTEP: Target to Achieve 6% CAGR Sales Growth in 2021-25

Amid the COVID-19 crisis and facing a hard hit from crude price downfall PTTEP targets petroleum sales growth at 6% CAGR in next 5 years.

Pi Securities PCL, Thailand

The Week that Was in ASEAN@Smartkarma - South East Asia Lags, the Bank's Return, and Nimble Staples

The Week that Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights from across South East...

Angus Mackintosh

PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales

Yesterday analyst meeting came out in a neutral tone. 4Q20 earnings to soften from lower ASP and volume sales. We maintain our BUY ...

Pi Securities PCL, Thailand

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Global Commodity-Related Equity Sectors In Secular Bull

We believe commodities are in the early stages of a new secular bull market. Global Materials & Energy remain our favorite Sector overweights - add...

Vermilion Research

PTTEP: Bright 2021 Earnings Outlook from Recovering Crude Price

The stock outperformed the SET index by +15% in last two months on the back of recovering crude price, and surpassed our previous target price of...

Pi Securities PCL, Thailand

PTTEP: Target to Achieve 6% CAGR Sales Growth in 2021-25

Amid the COVID-19 crisis and facing a hard hit from crude price downfall PTTEP targets petroleum sales growth at 6% CAGR in next 5 years.

Pi Securities PCL, Thailand

The Week that Was in ASEAN@Smartkarma - South East Asia Lags, the Bank's Return, and Nimble Staples

The Week that Was in ASEAN@Smartkarma is filled with an eclectic mix of differentiated, substantive, and actionable insights from across South East...

Angus Mackintosh

PTTEP: 4Q20 Earnings to Soften from Lower ASP and Volume Sales

Yesterday analyst meeting came out in a neutral tone. 4Q20 earnings to soften from lower ASP and volume sales. We maintain our BUY ...

Pi Securities PCL, Thailand