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>We downgrade our recommendation to SELL rating, from HOLD, with 2022E target price at Bt24.00, derived from 30x PER. The new products introduction was impressive. However, it seems to be priced in the 62%YTD stock increase.</strong></p><div>• RS introduced collagen product under brand “well u” and functional drink under brand “Camu C”. It expected these product to contribute Bt1.0bn revenue in 2021E.</div><div></div><div>• RS also shared its roadmap on the cannabis products that it is developing 8 product SKUs, focusing on beverage and supplement. The products will launch under brands S.O.M., well u, and Camu C. RS expected cannabis product to contribute Bt2.0bn revenue per year in the future.</div><div></div><div><strong>We like RS because of its growth potential from new product development ability and marketing skill. However, the stock is trading quite premium at beyond +1SD of its historical average.</strong></div>

We downgrade our recommendation to SELL rating, from HOLD, with 2022E target price at Bt24.00, derived from 30x PER. The new products introduction was impressive. However, it seems to be priced in the 62%YTD stock increase.• RS introduced collagen product under brand “well u” and functional drink under brand “Camu C”. It expected these product to contribute Bt1.0bn revenue in 2021E.• RS also shared its roadmap on the cannabis products that it is developing 8 product SKUs, focusing on beverage and supplement. The products will launch under brands S.O.M., well u, and Camu C. RS expected cannabis product to contribute Bt2.0bn revenue per year in the future.We like RS because of its growth potential from new product development ability and marketing skill. However, the stock is trading quite premium at beyond +1SD of its historical average.

<p><strong>We maintain HOLD rating with 2022E target price at Bt24.00, derived from 30x PER, which is +1SD of its 3-year trading average of forward PE.</strong></p><div>• RS delivered 47% earnings growth in 2020, thanks to historical high revenue in multi-platform commerce business.</div><div></div><div>• In 2021E, RS would still focus in commerce business. It will expand the product lines and also introduce new product categories, which would be mainly distributed via new sale channels.</div><div></div><div>• RS will introduce new innovative food supplement under brand “well u”, which will be distributed through Exclusive Distribution Network (EDN), its new distribution model.</div><div></div><div>• RS is studying and preparing to produce hemp-derived products, such as beauty &amp; skincare products, beverages, and dog treats.</div><div>
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</div><p><strong>We like RS because of its growth potential from new product development ability and marketing skill. However, the stock is trading quite premium at beyond +1SD of its historical average.</strong></p>

We maintain HOLD rating with 2022E target price at Bt24.00, derived from 30x PER, which is +1SD of its 3-year trading average of forward PE.• RS delivered 47% earnings growth in 2020, thanks to historical high revenue in multi-platform commerce business.• In 2021E, RS would still focus in commerce business. It will expand the product lines and also introduce new product categories, which would be mainly distributed via new sale channels.• RS will introduce new innovative food supplement under brand “well u”, which will be distributed through Exclusive Distribution Network (EDN), its new distribution model.• RS is studying and preparing to produce hemp-derived products, such as beauty &amp; skincare products, beverages, and dog treats.
 
We like RS because of its growth potential from new product development ability and marketing skill. However, the stock is trading quite premium at beyond +1SD of its historical average.

RS: Stream of New Products Launch in 2021

<p><strong>We upgrade our recommendation on RS to BUY rating, from HOLD, with new 2022E target price at Bt24.00, from Bt16.70, derived from 30x PER, which is +1SD of its 3-year trading average of forward PE. We marked our valuation to 2022 to reflect fully resource utilization in the new firm.</strong></p><div>• RS set 2021E target revenue at Bt5.7bn, driven by on-going growth in multi-platform commerce (MPC) business.</div><div></div><div>• It will launch new product lines namely functional drinks, innovative health foods, and petfood.</div><div></div><div>• We think the M&amp;A of Chase is a good deal in both business and stock aspects.</div><div></div><div>• We revised up 2021-22E earnings by 5% and 13%, respectively, in response to the contribution from Chase.</div><div></div><div>• RS planed to close 1-2 more deals in 2021.</div><p></p><p><strong>We are positive about the M&amp;A and new products introduction. Meanwhile, the current economic condition could post some challenge to the company performance.</strong></p>

We upgrade our recommendation on RS to BUY rating, from HOLD, with new 2022E target price at Bt24.00, from Bt16.70, derived from 30x PER, which is +1SD of its 3-year trading average of forward PE. We marked our valuation to 2022 to reflect fully resource utilization in the new firm.• RS set 2021E target revenue at Bt5.7bn, driven by on-going growth in multi-platform commerce (MPC) business.• It will launch new product lines namely functional drinks, innovative health foods, and petfood.• We think the M&amp;A of Chase is a good deal in both business and stock aspects.• We revised up 2021-22E earnings by 5% and 13%, respectively, in response to the contribution from Chase.• RS planed to close 1-2 more deals in 2021.We are positive about the M&amp;A and new products introduction. Meanwhile, the current economic condition could post some challenge to the company performance.

<p><strong>On January 18th, 2021, RS announced the board of directors’ resolutions to acquire 35% of newly issued shares of Chase Asia Co., Ltd. and its business group, in a total deal value of Bt920m.</strong></p><div>• Chase and the business group business operations involve in providing loan, non-performing asset management, debt collection, and litigation to execution.</div><div></div><div>• The source of fund will be loan from KBANK at an interest rate of MLR less fixed rate. This could uptick current D/E ratio by 0.5x to 1.7x.</div><div></div><div>• We think the acquisition price was reasonable at about 13-15x PE.</div><div></div><div>• We estimated pre-synergies impact to our 2021E NP forecast of 6-7%.</div><div></div><div>• The information is positive, while the stock increased 27% in the last two weeks.</div><div></div><div>• RS will hold a conference call today, which could provide more information about the deal.</div><p></p><p><strong>We are under-reviewing our projection and recommendation.</strong></p>

On January 18th, 2021, RS announced the board of directors’ resolutions to acquire 35% of newly issued shares of Chase Asia Co., Ltd. and its business group, in a total deal value of Bt920m.• Chase and the business group business operations involve in providing loan, non-performing asset management, debt collection, and litigation to execution.• The source of fund will be loan from KBANK at an interest rate of MLR less fixed rate. This could uptick current D/E ratio by 0.5x to 1.7x.• We think the acquisition price was reasonable at about 13-15x PE.• We estimated pre-synergies impact to our 2021E NP forecast of 6-7%.• The information is positive, while the stock increased 27% in the last two weeks.• RS will hold a conference call today, which could provide more information about the deal.We are under-reviewing our projection and recommendation.

RS: Entering Finance Businesses Focused on AMC

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).

<p>In two recent company visits, we met with two companies that clearly benefit from the <em>remote economy </em>popularized and made necessary by the pandemic. <strong>Humanica </strong>provides HR software, and RS now has established presence in e-commerce. This is what they said:</p><ul>
<li>
<strong>Humanica reported </strong>9M'20 earnings of Bt121m, up 15.9%, on the back of 22.4% revenue growth and 1% ROE improvement (to 13.4%). The company has been actively signing up new clients from its many new products (Benix, Conicle, Microsoft Payroll, etc) and even taking market share from giants such as SAP and PeopleSoft. Gulp!</li>
<li>
<strong>Spotlight of the Benix acquisition</strong>. This little benefits startup (only Bt500m in registered capital) is likely to breakeven in 2022 and list in less than 5 years. Benix leveraging Humanica's huge client base can allow them to grow rapidly.</li>
<li>
<strong>RS Plc reported </strong>Q3'20 earnings of Bt131m (up 41% YoY, 20% QoQ) on the back of Bt938m revenues (up 6% YoY,13% QoQ), clearly facing no headwinds from the pandemic as they use the opportunity to enter e-commerce.</li>
<li>Looking ahead, RS will introduce new products such as bird's nest while ploughing ahead to its Bt10bn revenue target by 2024 using the celebrity-led marketing schemes that worked so well.</li>
</ul>

In two recent company visits, we met with two companies that clearly benefit from the remote economy popularized and made necessary by the pandemic. Humanica provides HR software, and RS now has established presence in e-commerce. This is what they said:

Humanica reported 9M'20 earnings of Bt121m, up 15.9%, on the back of 22.4% revenue growth and 1% ROE improvement (to 13.4%). The company has been actively signing up new clients from its many new products (Benix, Conicle, Microsoft Payroll, etc) and even taking market share from giants such as SAP and PeopleSoft. Gulp!

Spotlight of the Benix acquisition. This little benefits startup (only Bt500m in registered capital) is likely to breakeven in 2022 and list in less than 5 years. Benix leveraging Humanica's huge client base can allow them to grow rapidly.

RS Plc reported Q3'20 earnings of Bt131m (up 41% YoY, 20% QoQ) on the back of Bt938m revenues (up 6% YoY,13% QoQ), clearly facing no headwinds from the pandemic as they use the opportunity to enter e-commerce.
Looking ahead, RS will introduce new products such as bird's nest while ploughing ahead to its Bt10bn revenue target by 2024 using the celebrity-led marketing schemes that worked so well.


Silicon Stories N: Humanica and RS Tout Their Online Credentials

Thailand

R.S. Public Company Limited is a Thai entertainment and media company that has transformed into an 'Entertainmerce' business model, integrating commerce with media and music. The company operates through multi-platform commerce, media business (digital TV and radio), and music and showbiz, offering a diverse range of products and content, including health and beauty products, pet care services, digital television, and music labels. The company was founded in 1976 and is headquartered in Bangkok, Thailand.

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R.S. (RS TB)

RS: Go Big with New Products

We downgrade our recommendation to SELL rating, from HOLD, with 2022E target price at Bt24.00, derived from 30x PER. The new products introduction...

Pi Securities PCL, Thailand

RS: Stream of New Products Launch in 2021

We maintain HOLD rating with 2022E target price at Bt24.00, derived from 30x PER, which is +1SD of its 3-year trading average of forward PE.

Pi Securities PCL, Thailand

RS: Ambitious Goal for 2021

We upgrade our recommendation on RS to BUY rating, from HOLD, with new 2022E target price at Bt24.00, from Bt16.70, derived from 30x PER, which is...

Pi Securities PCL, Thailand

RS: Entering Finance Businesses Focused on AMC

On January 18th, 2021, RS announced the board of directors’ resolutions to acquire 35% of newly issued shares of Chase Asia Co., Ltd. and its...

Pi Securities PCL, Thailand

Silicon Stories N: Humanica and RS Tout Their Online Credentials

These stocks trade over 30x PE, but they didn't stop growing when the pandemic hit. RS pushes products with celebrity endorsement, while Humanica...

Athaporn Arayasantiparb, CFA

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