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.

Thematic (Sector/Industry)

<ul><li>Weak domestic demand pressured 1H24 auto production downward by 17% YoY to 760k units.</li><li>Accordingly, we have reduced our 2024E auto production forecast to 1.60mn units, down 13% YoY.</li><li>We view that sector share prices have largely priced in this negative factor, while auto production may have bottomed out in 2Q24. </li></ul>

Weak domestic demand pressured 1H24 auto production downward by 17% YoY to 760k units.Accordingly, we have reduced our 2024E auto production forecast to 1.60mn units, down 13% YoY.We view that sector share prices have largely priced in this negative factor, while auto production may have bottomed out in 2Q24. 

Automotive - 2024E Auto Production Forecast Cut to 1.60mn Units

<ul><li>Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.</li><li>This will act as a negative catalyst for the 1Q24E earnings outlooks of auto parts makers.</li><li>The sluggish near-term outlook has caused the auto sector to underperform the market YTD, resulting in limited downside risks in terms of the tactical view.</li></ul>

Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.This will act as a negative catalyst for the 1Q24E earnings outlooks of auto parts makers.The sluggish near-term outlook has caused the auto sector to underperform the market YTD, resulting in limited downside risks in terms of the tactical view.

Automotive - Auto Production Fell 18% YoY in 1Q24

<ul><li>Thai auto production continued to weaken in February 2024, with 2M24 auto output contracting by 15.9% YoY.</li><li>This implies a negative catalyst for the 1Q24E earnings outlooks of auto parts manufacturers.</li><li>We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand. </li></ul>

Thai auto production continued to weaken in February 2024, with 2M24 auto output contracting by 15.9% YoY.This implies a negative catalyst for the 1Q24E earnings outlooks of auto parts manufacturers.We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand. 

Automotive. - Auto Output Remained Weak in February 2024

<ul><li>The domestic auto market has sustained its decline, primarily driven by a sharp contraction in the pickup truck segment owing to stringent lending procedures at financial institutions.</li><li>Consequently, auto production in January 2024 witnessed a YoY decrease of 12.5%. We anticipate that as economic conditions recover, particularly with the acceleration of government expenditures, domestic demand will gradually rebound.</li><li>However, we maintain our Neutral rating on the auto sector as the earnings growth prospects have remained moderate. </li></ul>

The domestic auto market has sustained its decline, primarily driven by a sharp contraction in the pickup truck segment owing to stringent lending procedures at financial institutions.Consequently, auto production in January 2024 witnessed a YoY decrease of 12.5%. We anticipate that as economic conditions recover, particularly with the acceleration of government expenditures, domestic demand will gradually rebound.However, we maintain our Neutral rating on the auto sector as the earnings growth prospects have remained moderate. 

<ul><li>We recommend selling to take profit on AMANAH and TOG (with the returns since they were added at +7.88% and +13.60%, respectively), as they have fallen out of our top rankings.</li><li>We add AJ to the portfolio thanks to the positive momentum for demand for commodity goods, which has continued to grow alongside the demand growth in sanitary products amid the spread of infectious diseases. This should drive the growth of demand for AJ’s packaging film.</li><li>We project the 2022E earnings at Bt625mn (+46.02% YoY).</li></ul>

We recommend selling to take profit on AMANAH and TOG (with the returns since they were added at +7.88% and +13.60%, respectively), as they have fallen out of our top rankings.We add AJ to the portfolio thanks to the positive momentum for demand for commodity goods, which has continued to grow alongside the demand growth in sanitary products amid the spread of infectious diseases. This should drive the growth of demand for AJ’s packaging film.We project the 2022E earnings at Bt625mn (+46.02% YoY).

Thailand

Somboon Advance Technology is a holding company with subsidiaries that manufacture automotive and agricultural machinery parts. The company's products include axle shafts, disc brakes, drum brakes, and hub wheels for passenger cars, pickup trucks, and agricultural machinery. It was founded on September 14, 1995, and is headquartered in Samut Prakan, Thailand.

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Somboon Advance Technology (SAT TB)

Automotive - 2024E Auto Production Forecast Cut to 1.60mn Units

Weak domestic demand pressured 1H24 auto production downward by 17% YoY to 760k units. Accordingly, we have reduced our 2024E auto production...

Krungthai XSpring

Automotive - Auto Production Fell 18% YoY in 1Q24

Auto production in March 2024 continued to slow down YoY for the eighth consecutive month, dragging overall production in 1Q24 down by 18% YoY.

Krungthai XSpring

Automotive. - Auto Output Remained Weak in February 2024

We have revised down our 2024E auto output target by 2.0% to 1.85mn units (+0.7% YoY) to reflect weaker-than-expected domestic demand.

Krungthai XSpring

Automotive - A Weak Start in 2024

We choose AH (Buy; FV at Bt43.2) as our top pick because the firm will potentially benefit further from the transition to electric vehicle (EV)...

Krungthai XSpring

Small Cap Top Picks - August 5, 2022

We recommend selling to take profit on AMANAH and TOG (with the returns since they were added at +7.88% and +13.60%, respectively), as they have...

Krungthai XSpring

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