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

PTT Oil & Retail Business  / Equity Bottom-Up

<ul><li>OR’s share price has largely factored in the weak 4Q23 performance.</li><li>Meanwhile, the marketing margin of the mobility business may face challenges, although the company can manage the marketing margins between diesel and gasoline to mitigate the impact of the increased costs of refined oils under the Euro 5 standard, given the capped retail price of diesel.</li><li>Furthermore, the contributions from the lifestyle and global businesses are expected to bolster earnings over the next 3-4 years.</li></ul>

OR’s share price has largely factored in the weak 4Q23 performance.Meanwhile, the marketing margin of the mobility business may face challenges, although the company can manage the marketing margins between diesel and gasoline to mitigate the impact of the increased costs of refined oils under the Euro 5 standard, given the capped retail price of diesel.Furthermore, the contributions from the lifestyle and global businesses are expected to bolster earnings over the next 3-4 years.

Ptt Oil and Retail Business - Downbeat 4Q23 NP

<ul><li>We expect OR to deliver a 2Q23E NP of Bt2.77bn (-58% YoY, -7% QoQ).</li><li>Its earnings may have been pressured on a YoY basis by the mobility business, whose gross margin per liter is expected to narrow to Bt0.98/liter (vs. the high base of Bt1.61/liter in 2Q22).</li><li>On a QoQ basis, we expect the mobility business to show a weak performance given smaller oil sales volume of 6,897mn liters (-1.5% QoQ), mainly from the commercial market given the decline in diesel sales volume to power plants, as well as a lower gross margin to Bt0.98/liter (vs. Bt1.01/liter in 1Q23).</li></ul>

We expect OR to deliver a 2Q23E NP of Bt2.77bn (-58% YoY, -7% QoQ).Its earnings may have been pressured on a YoY basis by the mobility business, whose gross margin per liter is expected to narrow to Bt0.98/liter (vs. the high base of Bt1.61/liter in 2Q22).On a QoQ basis, we expect the mobility business to show a weak performance given smaller oil sales volume of 6,897mn liters (-1.5% QoQ), mainly from the commercial market given the decline in diesel sales volume to power plants, as well as a lower gross margin to Bt0.98/liter (vs. Bt1.01/liter in 1Q23).

Earnings Review - PTT Oil and Retail Business (OR)

Thematic (Sector/Industry)

<ul><li>The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which is not a surprise to the market.</li><li>The financial position of the Oil Fund is at a manageable level.</li><li>The marketing margin being left untouched eases concern and is likely to create positive sentiment for oil retailers, especially PTG, whose exposure to diesel volume sold through oil service stations is higher than peers at 77% (vs. 45-57% for peers). </li></ul>

The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which is not a surprise to the market.The financial position of the Oil Fund is at a manageable level.The marketing margin being left untouched eases concern and is likely to create positive sentiment for oil retailers, especially PTG, whose exposure to diesel volume sold through oil service stations is higher than peers at 77% (vs. 45-57% for peers). 

Industry Update – Energy (Oil Retailers)

<ul><li>We initiate OR with an Outperform rating (FV: Bt22.16), based on a required rate of return of 5.4%.</li><li>Our valuation matrix suggests that the current share price is fully valued.</li><li>The long- term earnings growth should gain positive momentum, with an expected 16% CAGR in 2023-25E, driven by the recovery in the mobility business and the expansion of the lifestyle business, while the tactical risk is neutral.</li></ul>

We initiate OR with an Outperform rating (FV: Bt22.16), based on a required rate of return of 5.4%.Our valuation matrix suggests that the current share price is fully valued.The long- term earnings growth should gain positive momentum, with an expected 16% CAGR in 2023-25E, driven by the recovery in the mobility business and the expansion of the lifestyle business, while the tactical risk is neutral.

PTT Oil and Retail Business - Empowering All Toward Inclusive Growth

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

<ul>
<li>We maintain the BUY call with a TP of Bt30,0. OR’s 3Q22 net profit plunged to a 9-quarter low of Bt701m (-63%YoY, -89%QoQ),falling out lower than ours and market expectation.</li>
<li>3Q22 profit hit by weak marketing margin The 3Q22 net profit fall to Bt701m (-63%YoY, -89%QoQ),dragged by weak contribution from mobility business (owing to lower sales and oil marketing margin) </li>
<li>Oil marketing margin came out at Bt0.68/liter (-38%YoY, -58%QoQ),15% beneath our assumption.The dip was primarily from the retail market,both gasoline and diesel had lower marketing margin due to higher cost.</li>
</ul>


We maintain the BUY call with a TP of Bt30,0. OR’s 3Q22 net profit plunged to a 9-quarter low of Bt701m (-63%YoY, -89%QoQ),falling out lower than ours and market expectation.
3Q22 profit hit by weak marketing margin The 3Q22 net profit fall to Bt701m (-63%YoY, -89%QoQ),dragged by weak contribution from mobility business (owing to lower sales and oil marketing margin) 
Oil marketing margin came out at Bt0.68/liter (-38%YoY, -58%QoQ),15% beneath our assumption.The dip was primarily from the retail market,both gasoline and diesel had lower marketing margin due to higher cost.


Thailand

PTT Oil and Retail Business Public Company Limited distributes petroleum products. The Company offers oil, gas, fuels, LPG, lubricants, and other related items. PTT Oil and Retail Business serves customers in Thailand.

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PTT Oil & Retail Business (OR TB)

Ptt Oil and Retail Business - Downbeat 4Q23 NP

Furthermore, the contributions from the lifestyle and global businesses are expected to bolster earnings over the next 3-4 years.

Krungthai XSpring

Earnings Review - PTT Oil and Retail Business (OR)

We expect OR to deliver a 2Q23E NP of Bt2.77bn (-58% YoY, -7% QoQ). Its earnings may have been pressured on a YoY basis by the mobility business

Krungthai XSpring

Industry Update – Energy (Oil Retailers)

The Oil Fund will be used as the mechanism to cap the diesel price after the Bt5/liter excise tax reduction scheme expires on July 20, 2023, which...

Krungthai XSpring

PTT Oil and Retail Business - Empowering All Toward Inclusive Growth

We initiate OR with an Outperform rating (FV: Bt22.16), based on a required rate of return of 5.4%. Our valuation matrix suggests that the current...

Krungthai XSpring

OR : Weak 3Q22 Earnings as Expected

We maintain the BUY call with a TP of Bt30,0. OR’s 3Q22 net profit plunged to a 9-quarter low of Bt701m (-63% YoY, -89% QoQ), falling out lower...

Pi Securities PCL, Thailand

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