IPOs and Catalysts/Events, Global Equity Research Ltd

Arun George

IPOs and Catalysts/Events

Uncompromised, Independent, Conflict-Free Research

Global Equity Research Ltd

Global Equity Research was started in 2017 by a group of experienced research professionals. It was founded on a passionate belief in the importance and the need for uncompromised, independent, conflict-free research. We aim to provide differentiated and actionable primary and bottom up fundamental research.

Event-Driven

<p><a href="https://www.smartkarma.com/entities/cp-pokphand-co-ltd" target="_blank" data-smartkarma-citation="entities:10135:1" rel="noopener">Cp Pokphand (43 HK)</a> (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from <a href="https://www.smartkarma.com/entities/charoen-pokphand-foods-public-company-limited" target="_blank" data-smartkarma-citation="entities:16131:1" rel="noopener">CP FOODS (CPF TB)</a>, the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). </p><p>For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. </p><div class="content-highlight"><p>The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. </p></div>

Cp Pokphand (43 HK) (CPP) is a leading agri-food conglomerate in China and Vietnam. After market close on Thursday, it announced a privatisation offer by way of a scheme of arrangement from CP FOODS (CPF TB), the largest shareholder (49.74% of the outstanding shares). The offeror will offer HK$1.15 in cash for each scheme share. The bid represents a premium of 19.79% over the closing price of HK$0.96 per share on the last trading date (24 September prior to the trading halt). For good measure, CPP also released a statement outlining a profit warning. CPP noted that the net profit would decline -75% YoY in 8M21, which marks a deterioration to the net profit decline of -50% YoY in 1H21. The profit warning was attributed mainly to a poor performance in China caused by lower poultry and swine prices. CPP notes that poultry and swine prices in China and swine prices in Vietnam will have fallen further in September. The key condition precedents are the headcount test along with the scheme approved by at least 75% disinterested shareholders and &lt;10% rejection by all disinterested shareholders. As disinterested scheme shareholders represent 5,958.8 million shares or 24.75% of shares outstanding, the 10% blocking stake is 595.9 million shares or 2.48% of shares outstanding. No shareholder holds a blocking stake. Overall, we think the offer price is attractive and that the privatisation bid will be successful. 

C.P. Pokphand’s Privatisation Bid from CPF

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.

Equity Bottom-Up

<div><div><div><p><strong>2Q21 core profit down YoY, QoQ; 2021E earnings revised down</strong><br>TFG’s 2Q21 core profit fell YoY and QoQ due to a narrower margin and an increase in the effective tax rate, leading us to revise down our 2021E core profit projection by 21%. Following the revision, we have a new target price of Bt4.90/share (14x PER). The 3Q21E earnings are expected to recover QoQ (but drop YoY due to the high base). There may also be upside from the possible recovery in swine prices following the potential upswing in economic activities after the COVID-19 situation improves. As the current share price implies upside of 10%, we maintain our Buy call.</p></div></div><div><div><p></p></div></div><div></div></div>

2Q21 core profit down YoY, QoQ; 2021E earnings revised down TFG’s 2Q21 core profit fell YoY and QoQ due to a narrower margin and an increase in the effective tax rate, leading us to revise down our 2021E core profit projection by 21%. Following the revision, we have a new target price of Bt4.90/share (14x PER). The 3Q21E earnings are expected to recover QoQ (but drop YoY due to the high base). There may also be upside from the possible recovery in swine prices following the potential upswing in economic activities after the COVID-19 situation improves. As the current share price implies upside of 10%, we maintain our Buy call.

Company Update Thaifoods Group Plc. (TFG)

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

<p><strong>We maintain BUY rating on TFG with a new 2021E target price at Bt6.10, from Bt5.95, derived from 14.9xPE’21E, which is +1SD of its 3-years trading average of forward PE. We attended analyst meeting yesterday and came up with key information as followed;</strong></p><div>• While the quarterly earnings should retreat from the peak in 3Q20, the ongoing performance should remain robust, given the favorable swine spread and continuously expansion in swine and feed business.</div><div></div><div>• In 2021E, TFG planned to grow its selling volume in broiler, swine, and feed business by 5%, 20%, and 10-15%, respectively. Meanwhile, broiler and feed selling price should maintain YoY, and, swine price should retreat by 9%YoY to about Bt68/kg, given the more balancing supply.</div><div></div><div>• The company expected to breakeven its chicken further business in 2021E, from the losses in prior years.</div><div></div><div>• It initiated Fresh Market, farm and food products distributor, in 2020. This unit could contribute Bt1.0bn revenue in 2021E, with net profit margin of 8-10%.</div><p></p><p><strong>We think if the stock price retreat on the concern of QoQ slowdown, it should be an investment opportunity.</strong></p>

We maintain BUY rating on TFG with a new 2021E target price at Bt6.10, from Bt5.95, derived from 14.9xPE’21E, which is +1SD of its 3-years trading average of forward PE. We attended analyst meeting yesterday and came up with key information as followed;• While the quarterly earnings should retreat from the peak in 3Q20, the ongoing performance should remain robust, given the favorable swine spread and continuously expansion in swine and feed business.• In 2021E, TFG planned to grow its selling volume in broiler, swine, and feed business by 5%, 20%, and 10-15%, respectively. Meanwhile, broiler and feed selling price should maintain YoY, and, swine price should retreat by 9%YoY to about Bt68/kg, given the more balancing supply.• The company expected to breakeven its chicken further business in 2021E, from the losses in prior years.• It initiated Fresh Market, farm and food products distributor, in 2020. This unit could contribute Bt1.0bn revenue in 2021E, with net profit margin of 8-10%.We think if the stock price retreat on the concern of QoQ slowdown, it should be an investment opportunity.

TFG: Solid Outlook, Though It Should Retreat from 3Q20 Peak

<p>We maintain BUY rating on TFG with a new 2021E target price at Bt5.95, from Bt4.70, derived from 17.2xPE’21E, which is -0.5SD of its 3-years trading average. We attended analyst meeting yesterday and came up with key information as followed;</p><div>• TFG performance in 2Q20E was affected by Covid-19.</div><div>• We estimate TFG net profit in 2Q20E at Bt236m (-55%YoY, -64%QoQ). While, excluding FX losses, the recurring profit should be Bt386m (-21%YoY, -5%QoQ).</div><div>• The adversity in 2Q20E will fully recover from 3Q20E onwards.</div><div>• The company’s selling volume and price in 2H20E-2021 will be supported by promising export outlook</div><div>• The capacity expansion plan is intact with CAPEX budget of Bt2.5-3.0bn/year.</div><div></div><p>We think the stock price retreat on the concern over 2Q20E performance will be an investment opportunity for the livestock industry up-cycle.</p>

We maintain BUY rating on TFG with a new 2021E target price at Bt5.95, from Bt4.70, derived from 17.2xPE’21E, which is -0.5SD of its 3-years trading average. We attended analyst meeting yesterday and came up with key information as followed;• TFG performance in 2Q20E was affected by Covid-19.• We estimate TFG net profit in 2Q20E at Bt236m (-55%YoY, -64%QoQ). While, excluding FX losses, the recurring profit should be Bt386m (-21%YoY, -5%QoQ).• The adversity in 2Q20E will fully recover from 3Q20E onwards.• The company’s selling volume and price in 2H20E-2021 will be supported by promising export outlook• The capacity expansion plan is intact with CAPEX budget of Bt2.5-3.0bn/year.We think the stock price retreat on the concern over 2Q20E performance will be an investment opportunity for the livestock industry up-cycle.

TFG: Weak 2Q20E but Strong Outlook in Medium to Long Term

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

<p>Since the beginning of February, a lot of companies in Thailand have announced stock buybacks ranging from a maximum spend of THB 10m to THB 16bn. With one exception, these buybacks will be executed on the Stock Exchange of Thailand (SET).</p><p>In this Insight, we look at the SET's repurchase rules, the companies that have announced buybacks and their ability to complete the buyback, the impact of the buyback if completed, and formulate trades on some of the stocks where we see a high probability of the buyback being completed.</p>

Since the beginning of February, a lot of companies in Thailand have announced stock buybacks ranging from a maximum spend of THB 10m to THB 16bn. With one exception, these buybacks will be executed on the Stock Exchange of Thailand (SET).In this Insight, we look at the SET's repurchase rules, the companies that have announced buybacks and their ability to complete the buyback, the impact of the buyback if completed, and formulate trades on some of the stocks where we see a high probability of the buyback being completed.

Thailand Buybacks - Show of Strength or Leap of Faith?

Thailand

Thaifoods Group is a vertically integrated food producer specializing in the production of chicken and swine, operating in Thailand and Vietnam. The company's core activities include chicken breeding, meat production, processed chicken products, pig breeding, and live pig sales. It also operates feed mills and a retail business. Thaifoods Group was founded in 1987 and is headquartered in Bangkok, Thailand.

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Thaifoods Group (TFG TB)

C.P. Pokphand’s Privatisation Bid from CPF

CPP announced a privatisation offer from CPF at HK$1.15 cash for each scheme share. Overall, we think the offer price is attractive and that the...

Arun George

Company Update Thaifoods Group Plc. (TFG)

TFG’s 2Q21 core profit fell YoY and QoQ due to a narrower margin and an increase in the effective tax rate, leading us to revise down our 2021E...

Krungthai XSpring

TFG: Solid Outlook, Though It Should Retreat from 3Q20 Peak

We maintain BUY rating on TFG with a new 2021E target price at Bt6.10, from Bt5.95, derived from 14.9xPE’21E, which is +1SD of its 3-years trading...

Pi Securities PCL, Thailand

TFG: Weak 2Q20E but Strong Outlook in Medium to Long Term

We maintain BUY rating on TFG with a new 2021E target price at Bt5.95, from Bt4.70, derived from 17.2xPE’21E, which is -0.5SD of its 3-years...

Pi Securities PCL, Thailand

Thailand Buybacks - Show of Strength or Leap of Faith?

Since the beginning of February, a lot of companies in Thailand have announced stock buybacks ranging from a maximum spend of THB 10m to THB 16bn....

Brian Freitas

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