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

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

SiS Distribution (Thailand) PCL / Equity Bottom-Up

<ul>
<li>We maintain our BUY rating and roll-over our TP to Bt31.75(-3% from previous TP) based on 12.9xPE’23E (+0.5S.D. of 5-year trading history). 3Q22 earnings was disappointing and below our expectation</li>
<li>3Q22 earnings was impacted by inflation 3Q22 net profit was at Bt186m (-14% YoY, -4% QoQ). Stripping FX gains, core profit stood at Bt 144m (-19%YoY, -17%QoQ) a nine-quarter low.</li>
<li>Revenue in 3Q22 registered at Bt6.7bn (-21% YoY, -11% QoQ). YoY and QoQ decline was caused by lower Phone and Consumer sales. We believe that SIS’s retail-serving clients</li>
</ul>


We maintain our BUY rating and roll-over our TP to Bt31.75(-3% from previous TP) based on 12.9xPE’23E (+0.5S.D. of 5-year trading history). 3Q22 earnings was disappointing and below our expectation
3Q22 earnings was impacted by inflation 3Q22 net profit was at Bt186m (-14% YoY, -4% QoQ). Stripping FX gains, core profit stood at Bt 144m (-19%YoY, -17%QoQ) a nine-quarter low.
Revenue in 3Q22 registered at Bt6.7bn (-21% YoY, -11% QoQ). YoY and QoQ decline was caused by lower Phone and Consumer sales. We believe that SIS’s retail-serving clients


<ul>
<li>We maintain our BUY rating but cut TP by 44% to Bt32.75  based on 11.8xPE’1H23E (down from 19.7xPE’22E previously) to reflect our more conservative valuation on its outlook.Despite weak 1H22</li>
<li>1H22 earnings was flat YoY 2Q22 net profit was at Bt194mn (flat YoY, flat QoQ). Both YoY and QoQ remained flat as revenue decline was offset by gross margin expansion.</li>
<li>Revenue in 2Q22 stood at Bt7.5bn (-5%YoY,-7%QoQ). Phone segment was the largest contributor to the YoY and QoQ drop. Meanwhile, gross margin was at 6.5% (+0.8ppts YoY, +0.6ppts QoQ). </li>
</ul>


We maintain our BUY rating but cut TP by 44% to Bt32.75  based on 11.8xPE’1H23E (down from 19.7xPE’22E previously) to reflect our more conservative valuation on its outlook.Despite weak 1H22
1H22 earnings was flat YoY 2Q22 net profit was at Bt194mn (flat YoY, flat QoQ). Both YoY and QoQ remained flat as revenue decline was offset by gross margin expansion.
Revenue in 2Q22 stood at Bt7.5bn (-5%YoY,-7%QoQ). Phone segment was the largest contributor to the YoY and QoQ drop. Meanwhile, gross margin was at 6.5% (+0.8ppts YoY, +0.6ppts QoQ). 


<ul>
<li>Analyst meeting came out with positive tone. Cloud and cybersecurity businesses should grow rapidly over the next few years.Current inventory stock provides 4 to 6 months buffer from Chinese lockdown </li>
<li>We believe that cloud and cybersecurity will drive earnings at a CAGR of 18.5% between 2021-24E, led sales growth at 8.6% CAGR and slightly improved margins. Management maintains strong outlook </li>
<li>We expect 1Q22E earnings at Bt201m(+6%QoQ, +6%YoY)driven QoQ by GPM expansion. We recommend accumulating shares now as earnings in 1H22 should be the lowest of the year due to seasonality.</li>
</ul>


Analyst meeting came out with positive tone. Cloud and cybersecurity businesses should grow rapidly over the next few years.Current inventory stock provides 4 to 6 months buffer from Chinese lockdown 
We believe that cloud and cybersecurity will drive earnings at a CAGR of 18.5% between 2021-24E, led sales growth at 8.6% CAGR and slightly improved margins. Management maintains strong outlook 
We expect 1Q22E earnings at Bt201m(+6%QoQ, +6%YoY)driven QoQ by GPM expansion. We recommend accumulating shares now as earnings in 1H22 should be the lowest of the year due to seasonality.


SIS: Cloud and Cybersecurity Will Be the New Main Focus for Growth

<ul>
<li>Maintain BUY rating with a new TP of Bt50 (+10% from last TP) based on 19.7xPE’22 (+2.5SD historical 5-Year PE) due to positive prospects from new cloud and cybersecurity segments</li>
<li>We rerate PE target to 19.7xPE’22 from 18.1xPE’22 to factor in upside from change in market valuations. While SIS trades at 16.2xPE’22,SYNEX and COM7 trade at an average of 35.5xPE’22</li>
<li>•Expect earnings to grow 28% YoY in 22E, off the backs of new high-margin and high-demand cloud and cybersecurity segments.</li>
</ul>


Maintain BUY rating with a new TP of Bt50 (+10% from last TP) based on 19.7xPE’22 (+2.5SD historical 5-Year PE) due to positive prospects from new cloud and cybersecurity segments
We rerate PE target to 19.7xPE’22 from 18.1xPE’22 to factor in upside from change in market valuations. While SIS trades at 16.2xPE’22,SYNEX and COM7 trade at an average of 35.5xPE’22
•Expect earnings to grow 28% YoY in 22E, off the backs of new high-margin and high-demand cloud and cybersecurity segments.


SIS: New Business Segments Will Drive Growth In Earnings and Price

<ul>
<li>Yesterday’s analyst meeting came with positive tone regarding growth in the Enterprise (Value added) and cloud segments.</li>
<li>The company’s inventory growth (+13% QoQ) should be enough to offset any severe shortage issues. Global microchip shortage is improving slowly, but will remain an issue until 2Q22. </li>
<li>Cloud and enterprise segment will lead earnings growth in 2022E and beyond.</li>
</ul>


Yesterday’s analyst meeting came with positive tone regarding growth in the Enterprise (Value added) and cloud segments.
The company’s inventory growth (+13% QoQ) should be enough to offset any severe shortage issues. Global microchip shortage is improving slowly, but will remain an issue until 2Q22. 
Cloud and enterprise segment will lead earnings growth in 2022E and beyond.


SIS: Cloud and Enterprise Segment to Drive 2022-2023 Growth

Thailand

SiS Distribution (Thailand) Public Company Ltd. distributes computers and peripherals.  The Company distributes the products to resellers, retailers, system integrators, software houses, value added resellers, and original equipment manufacturers.

SiS Distribution (Thailand) PCL (SIS TB)

SIS : 2023 Outlook Remains Bright

We maintain our BUY rating and roll-over our TP to Bt31.75 (-3% from previous TP) based on 12.9xPE’23E (+0.5S.D. of 5-year trading history). 3Q22...

Pi Securities PCL, Thailand

SIS : 2H22 Earnings Should Improve HoH

We maintain our BUY rating but cut TP by 44% to Bt32.75 based on 11.8xPE’1H23E (down from 19.7xPE’22E previously) to reflect our more conservative...

Pi Securities PCL, Thailand

SIS: Cloud and Cybersecurity Will Be the New Main Focus for Growth

Analyst meeting came out with positive tone. Cloud and cybersecurity businesses should grow rapidly over the next few years. Current inventory...

Pi Securities PCL, Thailand

SIS: New Business Segments Will Drive Growth In Earnings and Price

Maintain BUY rating with a new TP of Bt50 (+10% from last TP) based on 19.7xPE’22 (+2.5 SD historical 5-Year PE) due to positive prospects from new...

Pi Securities PCL, Thailand

SIS: Cloud and Enterprise Segment to Drive 2022-2023 Growth

Yesterday’s analyst meeting came with positive tone regarding growth in the Enterprise (Value added) and cloud segments.

Pi Securities PCL, Thailand