Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

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Thai Equity - Bottom-up - Equities

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Pi Securities PCL, Thailand

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Equity Bottom-Up

<ul>
<li>Merger transaction between JWD and SCG Logistics Management Co., Ltd,(SCGL) which is the logistics arm under Siam Cement Group (HOLD: Bt341) will yield positive future synergies in terms of service </li>
<li>The company’s 2H22 earnings is expected to remain stable vs.1H22 The company 3Q22 net profit came out below our and market estimates at Bt112m. (-20%YoY -28%QoQ) QoQ contraction in profit </li>
<li>Revenue hit an all-time high level at Bt1.6bn (17%YoY +15%QoQ) driven by an increase in occupancy rate for automotive yard, general goods and cold storages. Meanwhile, transportation and overseas businesses</li>
</ul>


Merger transaction between JWD and SCG Logistics Management Co., Ltd,(SCGL) which is the logistics arm under Siam Cement Group (HOLD: Bt341) will yield positive future synergies in terms of service 
The company’s 2H22 earnings is expected to remain stable vs.1H22 The company 3Q22 net profit came out below our and market estimates at Bt112m. (-20%YoY -28%QoQ) QoQ contraction in profit 
Revenue hit an all-time high level at Bt1.6bn (17%YoY +15%QoQ) driven by an increase in occupancy rate for automotive yard, general goods and cold storages. Meanwhile, transportation and overseas businesses


JWD : Expect Merger with SCC’s Logistics Arm to Obtain Synergy in 2023

<ul>
<li>We are positive toward the merger transaction between JWD and SCG Logistics Management Co., Ltd, (SCGL) which is the logistics arm under Siam Cement Group (BUY: Bt445). The combined entity </li>
<li>We are positive toward the merger between the party JWD will allocate no more than 791.02 million newly issued ordinary shares,with a par value of Bt0.50 each, to SCC’s subsidiaries</li>
<li>Post-Merger, SCC Group will hold 42.9% stake of SCGJWD while the rest will belong to JWD existing shareholders and Yamato Holdings.</li>
</ul>


We are positive toward the merger transaction between JWD and SCG Logistics Management Co., Ltd, (SCGL) which is the logistics arm under Siam Cement Group (BUY: Bt445). The combined entity 
We are positive toward the merger between the party JWD will allocate no more than 791.02 million newly issued ordinary shares,with a par value of Bt0.50 each, to SCC’s subsidiaries
Post-Merger, SCC Group will hold 42.9% stake of SCGJWD while the rest will belong to JWD existing shareholders and Yamato Holdings.


JWD : Merger with SCC’s Logistics Arm Should Yield Positive Synergy

<ul>
<li>The company report 2Q22 net profit at Bt154m. Stripping out, extra item worth around Bt60m under equity income,core earnings would hit five-quarter low at Bt105m,in-line with market and our expectation</li>
<li>Profit hit bottom in 2Q22 before recovering in 2H22 The company to post 2Q22 core profit at Bt105m. (-8%YoY,-7%QoQ),the lowest level in past five quarter. YoY and QoQ drop pressured </li>
<li>However, solid performance for transportation and distribution (30% of total revenue) and equity income from Vietnam operation (TMS) should be insufficient to absorb the impact from weak warehouse businesses.</li>
</ul>


The company report 2Q22 net profit at Bt154m. Stripping out, extra item worth around Bt60m under equity income,core earnings would hit five-quarter low at Bt105m,in-line with market and our expectation
Profit hit bottom in 2Q22 before recovering in 2H22 The company to post 2Q22 core profit at Bt105m. (-8%YoY,-7%QoQ),the lowest level in past five quarter. YoY and QoQ drop pressured 
However, solid performance for transportation and distribution (30% of total revenue) and equity income from Vietnam operation (TMS) should be insufficient to absorb the impact from weak warehouse businesses.


JWD : 2Q22 Earnings Result Should Be Bottom of This Year

<ul>
<li>Maintain BUY recommendation for JWD but cut target price to Bt17.5 (Previous TP: Bt20.0) due to industry valuation derating. We believe 40%YTD correction in JWD’s stock price has priced </li>
<li>Expect profit to hit bottom in 2Q22 before recovery in 2H22 We expect the company to post 2Q22 core profit at Bt105m.(-8%YoY -7%QoQ),the lowest level in the past five quarter.</li>
<li>This drop is likely to be pressured by weak margins for logistics infra. and warehouse businesses (50% of total revenue) following a drop in serviced capacity for barge terminal</li>
</ul>


Maintain BUY recommendation for JWD but cut target price to Bt17.5 (Previous TP: Bt20.0) due to industry valuation derating. We believe 40%YTD correction in JWD’s stock price has priced 
Expect profit to hit bottom in 2Q22 before recovery in 2H22 We expect the company to post 2Q22 core profit at Bt105m.(-8%YoY -7%QoQ),the lowest level in the past five quarter.
This drop is likely to be pressured by weak margins for logistics infra. and warehouse businesses (50% of total revenue) following a drop in serviced capacity for barge terminal


<ul>
<li>We reiterate a BUY rating but trim down target price to Bt20.0 (Previous TP: Bt22.20) after revised down earnings in 2022E by 10%.The target derived from 37xPE’22E, its +1.0 S.D. </li>
<li>Expect solid performance for logistics and warehouse businesses from 2Q22 onward to 2H22</li>
<li>Anticipate shared profit from Transimex(Vietnam)to gradually drop from high base in 4Q21which will be pressured by decreasing global freight rate but the impact is likely to be offset with profit </li>
</ul>


We reiterate a BUY rating but trim down target price to Bt20.0 (Previous TP: Bt22.20) after revised down earnings in 2022E by 10%.The target derived from 37xPE’22E, its +1.0 S.D. 
Expect solid performance for logistics and warehouse businesses from 2Q22 onward to 2H22
Anticipate shared profit from Transimex(Vietnam)to gradually drop from high base in 4Q21which will be pressured by decreasing global freight rate but the impact is likely to be offset with profit 


JWD: Expect Solid Earnings Growth from 2Q22 and Onwards to 2H22

Thailand

SCGJWD Logistics Public Company Limited is a Thailand-based integrated logistics and supply chain solutions provider, operating across Thailand, ASEAN countries, and Southern China. The company offers a wide range of services, including warehouse and automotive yard management, domestic and overseas transportation (B2B, D2C, cross-border, multimodal), and other logistics services such as cold chain, fine art logistics, and e-commerce fulfillment. SCGJWD Logistics was founded in 1993 and is headquartered in Bangkok, Thailand.

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SCGJWD Logistics (SJWD TB)

JWD : Expect Merger with SCC’s Logistics Arm to Obtain Synergy in 2023

Merger transaction between JWD and SCG Logistics Management Co., Ltd, (SCGL) which is the logistics arm under Siam Cement Group (HOLD: Bt341) will...

Pi Securities PCL, Thailand

JWD : Merger with SCC’s Logistics Arm Should Yield Positive Synergy

We are positive toward the merger transaction between JWD and SCG Logistics Management Co., Ltd, (SCGL) which is the logistics arm under Siam...

Pi Securities PCL, Thailand

JWD : 2Q22 Earnings Result Should Be Bottom of This Year

The company report 2Q22 net profit at Bt154m. Stripping out,extra item worth around Bt60m under equity income,core earnings would hit five-quarter...

Pi Securities PCL, Thailand

JWD : Accumulate on Weakening Earnings

Maintain BUY recommendation for JWD but cut target price to Bt17.5 (Previous TP: Bt20.0) due to industry valuation derating.We believe 40%YTD...

Pi Securities PCL, Thailand

JWD: Expect Solid Earnings Growth from 2Q22 and Onwards to 2H22

We reiterate a BUY rating but trim down target price to Bt20.0 (Previous TP: Bt22.20) after revised down earnings in 2022E by 10%.The target...

Pi Securities PCL, Thailand

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