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 and Retail Business / Equity Bottom-Up

<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)

<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.


<ul>
<li>We expect the 3Q22net profit to fall 64% QoQ to Bt2.4bn,levelling off from an all-time high in 2Q22,due to stock loss and dip in oil marketing margin to low base </li>
<li>Oil marketing margin to plunge in 3Q22We expect 3Q22earnings to fall 64%QoQ to Bt2.4bn dragged by weak contribution from mobility business owing to lower sales volume and oil marketing margin.</li>
<li>The oil sales volume is expected to be at 6.3bn liters (+21% YoY, -8% QoQ), improving YoY on the back of economy reopening. While drop QoQ due to seasonality (rain).</li>
</ul>


We expect the 3Q22net profit to fall 64% QoQ to Bt2.4bn,levelling off from an all-time high in 2Q22,due to stock loss and dip in oil marketing margin to low base 
Oil marketing margin to plunge in 3Q22We expect 3Q22earnings to fall 64%QoQ to Bt2.4bn dragged by weak contribution from mobility business owing to lower sales volume and oil marketing margin.
The oil sales volume is expected to be at 6.3bn liters (+21% YoY, -8% QoQ), improving YoY on the back of economy reopening. While drop QoQ due to seasonality (rain).


OR : 3Q22 Earnings to Be Hit by Weak Marketing Margin

<ul>
<li>We remain positive on OR’s non-oil segment (mainly café amazon) growth outlook in 2022 and ahead after the site visit at Café amazon concept store and Amazon inspiring campus</li>
<li>Oil &amp; retail business model a wise strategy The non-oil businesses have proven to be successful and contributed to 21% to total EBITDA with more than 25%EBITDA margin in 2022</li>
<li>We expect the EBITDA contribution from non-oil business segment continue to grow from café-Amazon store expansion and higher profitability.The non-oil revenue is projected to grow at 8.5% CAGR during 2022-25E</li>
</ul>


We remain positive on OR’s non-oil segment (mainly café amazon) growth outlook in 2022 and ahead after the site visit at Café amazon concept store and Amazon inspiring campus
Oil &amp; retail business model a wise strategy The non-oil businesses have proven to be successful and contributed to 21% to total EBITDA with more than 25%EBITDA margin in 2022
We expect the EBITDA contribution from non-oil business segment continue to grow from café-Amazon store expansion and higher profitability.The non-oil revenue is projected to grow at 8.5% CAGR during 2022-25E


OR : Enhanced Profitability from Non-Oil Business

Thailand

PTT Oil and Retail Business Public Company Limited is a Thailand-based company engaged in the sales and distribution of petroleum products, retail business, and other services, including the operation of fuel stations, convenience stores, and Cafe Amazon coffee shops. The company also provides lube oil blending, bottling, and fuel-related services. It was incorporated in 2007 and is headquartered in Bangkok, Thailand.

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PTT Oil and Retail Business (OR TB)

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

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

OR : 3Q22 Earnings to Be Hit by Weak Marketing Margin

We expect the 3Q22 net profit to fall 64% QoQ to Bt2.4bn, levelling off from an all-time high in 2Q22, due to stock loss and dip in oil marketing...

Pi Securities PCL, Thailand

OR : Enhanced Profitability from Non-Oil Business

We remain positive on OR’s non-oil segment (mainly café amazon) growth outlook in 2022 and ahead after the site visit at Café amazon concept store...

Pi Securities PCL, Thailand

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