Pan-Asia Equity Bottom-up, Wickhams Hill

Lloyd Moffatt

Pan-Asia Equity Bottom-up

Equity Bottom-Up

<ul>
<li>Comfort Delgro (CD SP) announced that they would be pursuing an ASX listing for their Australian subsidiary later this year.</li>
<li>We uncover the real reason underlying BAT Malaysia’s (ROTH MK) 60% fall since the beginning of last year and why it could double from here.</li>
<li>Recent IPO and Singapore newest market darling Nanofilm Technologies (NANO SP) fell almost 40% after paring their inaugural earnings miss with the COOs resignation.</li>
</ul>


Comfort Delgro (CD SP) announced that they would be pursuing an ASX listing for their Australian subsidiary later this year.
We uncover the real reason underlying BAT Malaysia’s (ROTH MK) 60% fall since the beginning of last year and why it could double from here.
Recent IPO and Singapore newest market darling Nanofilm Technologies (NANO SP) fell almost 40% after paring their inaugural earnings miss with the COOs resignation.


Wickhams Hill Research | Under-The-Radar Issue 5

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).

Equity Capital Markets

Supalai Real Estate Investment Trust / Equity Capital Markets

Supalai Real Estate Investment Trust (SPALIRT TB)

Supalai, the country's second most valuable property company traditionally focused on the residential niche, is launching an IPO of its office REIT on Rama 3.<ul>
<li>
The IPO. As a norm, Thai REITs are initially priced at Bt10/unit. The initial asset size of Bt3.2bn implies a market cap of US$106m and 320m units. Jay Capital is Financial Advisor, with SPM as Property Manager, Adelphi as REIT Manager, and KTAM as Trustee.</li>
<li>
Assets and business. The asset is the 34-storey Supalai Grand Tower on Rama 3. The office building has an 88.5% occupancy rate. Utilities and parking space account for 7% and 5% of revenue respectively, and the main growth driver should be the 3% rental increase across most space.</li>
<li>
Valuations. Our valuation range is very tight at Bt11.5-11.7/unit, implying a 15-17% upside from IPO price. As an existing Supalai shareholder, we are planning to participate. Supalai itself should also benefit marginally from value crystallization.</li>
<li>
Key risks and limits. Key risks to the investment case includes potential loss of tenants, fund execution risk, land repossession, and macroeconomic risks. Property fees and maintenance fees are capped at 2.7% and 2% respectively.</li>
</ul>

Supalai, the country's second most valuable property company traditionally focused on the residential niche, is launching an IPO of its office REIT on Rama 3.

The IPO. As a norm, Thai REITs are initially priced at Bt10/unit. The initial asset size of Bt3.2bn implies a market cap of US$106m and 320m units. Jay Capital is Financial Advisor, with SPM as Property Manager, Adelphi as REIT Manager, and KTAM as Trustee.

Assets and business. The asset is the 34-storey Supalai Grand Tower on Rama 3. The office building has an 88.5% occupancy rate. Utilities and parking space account for 7% and 5% of revenue respectively, and the main growth driver should be the 3% rental increase across most space.

Valuations. Our valuation range is very tight at Bt11.5-11.7/unit, implying a 15-17% upside from IPO price. As an existing Supalai shareholder, we are planning to participate. Supalai itself should also benefit marginally from value crystallization.

Key risks and limits. Key risks to the investment case includes potential loss of tenants, fund execution risk, land repossession, and macroeconomic risks. Property fees and maintenance fees are capped at 2.7% and 2% respectively.


IPO Radar: Supalai REIT, Office Tower Operator on Rama 3

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

We maintain BUY rating with a target price of Bt9.2 based on 7.5xPE’21E, the average of top 10 stocks in the Thai Real Estate sector.<ul>
<li>ORI has 3Q20 presales of Bt7.5bn (+14%QoQ), better than market expectation. We foresee presales momentum to speed up in 4Q20 through aggressive new projects launch in 4Q20.</li>
<li>We expect 3Q20 earnings to stay flat YoY as there is no transfer of high value projects. However, we expect earnings to grow strongly both YoY and QoQ in 4Q20 driven by (1) revenue recognition from secured backlog over Bt7bn and (2) aggressive launch of new four low-rise projects worth Bt4.9bn.</li>
</ul>We still like this stock on the backs of; (1) Secured backlog of Bt20bn to back 2021 earnings recovery; (2) Solid presales momentum; (3) Attractive dividend yield of 4%-6% in 2020E-21E.

We maintain BUY rating with a target price of Bt9.2 based on 7.5xPE’21E, the average of top 10 stocks in the Thai Real Estate sector.
ORI has 3Q20 presales of Bt7.5bn (+14%QoQ), better than market expectation. We foresee presales momentum to speed up in 4Q20 through aggressive new projects launch in 4Q20.
We expect 3Q20 earnings to stay flat YoY as there is no transfer of high value projects. However, we expect earnings to grow strongly both YoY and QoQ in 4Q20 driven by (1) revenue recognition from secured backlog over Bt7bn and (2) aggressive launch of new four low-rise projects worth Bt4.9bn.
We still like this stock on the backs of; (1) Secured backlog of Bt20bn to back 2021 earnings recovery; (2) Solid presales momentum; (3) Attractive dividend yield of 4%-6% in 2020E-21E.

ORI: Expect Flat 3Q20 Earnings but Strong Recovery in 4Q20

Five recent interesting trends/news that could influence Thai equities/markets include:<ul>
<li>
Wutthisak Clinic files for bankruptcy. Once one of Thailand's most famous clinics for cosmetic surgery, the filing also has a domino effect on parent company EFORL and the reputation of Vichai Thongtaeng, one of Thailand's most famous investors.</li>
<li>
Supalai diversifies into Australia. On the expertise front, it seems like a risky venture, but given the weak prospects of Thai property and presence of local partners, it may be the right thing to do at this point.</li>
<li>
Small deal updates. In the shadow of CP Group's mega-takeover of Tesco Asia, Ratchaburi, IIG, SKY, and ACAP are all hatching deals of their own. Ootoya, a CENTEL-run brand in Thailand, is also fending a hostile takeover in Japan.</li>
<li>
New alliances. BSR consortium looks set to win two motorway contracts after pulling Gulf into the new alliance. </li>
<li>
KBS delays its plant construction, but their infrastructure fund's IPO still went on in early August. </li>
</ul>

Five recent interesting trends/news that could influence Thai equities/markets include:

Wutthisak Clinic files for bankruptcy. Once one of Thailand's most famous clinics for cosmetic surgery, the filing also has a domino effect on parent company EFORL and the reputation of Vichai Thongtaeng, one of Thailand's most famous investors.

Supalai diversifies into Australia. On the expertise front, it seems like a risky venture, but given the weak prospects of Thai property and presence of local partners, it may be the right thing to do at this point.

Small deal updates. In the shadow of CP Group's mega-takeover of Tesco Asia, Ratchaburi, IIG, SKY, and ACAP are all hatching deals of their own. Ootoya, a CENTEL-run brand in Thailand, is also fending a hostile takeover in Japan.

New alliances. BSR consortium looks set to win two motorway contracts after pulling Gulf into the new alliance. 

KBS delays its plant construction, but their infrastructure fund's IPO still went on in early August. 


Snippets #43: Wutthisak Clinic Bankruptcy, Supalai Goes Down Under

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the SET50 index in June and the changes will be effective from 1 July 2020. Passive funds and index arb desks will need to trade at (or by) the close on 30 June 2020.We expect <a href="https://www.smartkarma.com/entities/ttw-pcl" target="_blank" rel="noopener" data-smartkarma-citation="entities:13100:1">TTW Pcl (TTW TB)</a> and <a href="https://www.smartkarma.com/entities/banpu-power-pcl" target="_blank" rel="noopener" data-smartkarma-citation="entities:23631:1">Banpu Power PCL (BPP TB)</a> will be included in the SET50 index replacing <a href="https://www.smartkarma.com/entities/banpu-public-co-ltd" target="_blank" rel="noopener" data-smartkarma-citation="entities:15363:1">Banpu Public (BANPU TB)</a> and <a href="https://www.smartkarma.com/entities/wha-corp-pcl" target="_blank" rel="noopener" data-smartkarma-citation="entities:104:1">WHA Corp Pcl (WHA TB)</a>.This Insight covers the SET50 index methodology, our expected changes and the impact, the recent stock performance, and suggested trades for this rebalance.

The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the SET50 index in June and the changes will be effective from 1 July 2020. Passive funds and index arb desks will need to trade at (or by) the close on 30 June 2020.We expect TTW Pcl (TTW TB) and Banpu Power PCL (BPP TB) will be included in the SET50 index replacing Banpu Public (BANPU TB) and WHA Corp Pcl (WHA TB).This Insight covers the SET50 index methodology, our expected changes and the impact, the recent stock performance, and suggested trades for this rebalance.

Thailand

Supalai Public Company Limited is a real estate development company in Thailand and Australia. It develops residential properties, including detached houses, duplex houses, townhouses, and condominiums under the Supalai brand, as well as office buildings, hotels, resorts, and shopping centers. The company was founded in 1989 and is headquartered in Bangkok, Thailand.

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Supalai (SPALI TB)

Wickhams Hill Research | Under-The-Radar Issue 5

Comfort Delgro (CD SP) announced that they would be pursuing an ASX listing for their Australian subsidiary later this year.

Lloyd Moffatt

IPO Radar: Supalai REIT, Office Tower Operator on Rama 3

Supalai REIT is another single asset REIT on Rama 3. Our valuation range is Bt11.5-11.7/unit, and we recommend participating in the IPO for the...

Athaporn Arayasantiparb, CFA

ORI: Expect Flat 3Q20 Earnings but Strong Recovery in 4Q20

3Q20 ORI presales better than market expectation. We foresee presales momentum to speed up in 4Q20 through aggressive new projects launch in 4Q20.

Pi Securities PCL, Thailand

Snippets #43: Wutthisak Clinic Bankruptcy, Supalai Goes Down Under

Five recent interesting trends/news that could influence Thai equities/markets include: Wutthisak Clinic files for bankruptcy. Once one of...

Athaporn Arayasantiparb, CFA

SET50 Rebalance Preview: The Final Cut

The Stock Exchange of Thailand (SET) will announce the results of the semi-annual review of the SET50 index in June and the changes will be...

Brian Freitas

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