Asian Equities Analyst, Logistics & Transport, Tracking Traffic

Daniel Hellberg

Asian Equities Analyst, Logistics & Transport

Tracking Traffic

Focusing on Asian logistics, transportation, and travel companies

Equity Capital Markets

<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/179/974/original/BANNER-TTOtherDec20_GreyOrange.png?1608781028" class="editor-image img-responsive" data-smartkarma-image-id="179974"></figure></section>In a previous note we argued <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a>, at its IPO price of 28 baht per share, was attractively priced relative to comps in the Chinese express sector.However, after shares jumped 83% to 51.25 baht in their trading debut on December 24, KEX's EV/Revenue and EV/EBITDA multiples increased substantially (even as its Chinese comps faded).A day after its public debut, KEX is still a unique Thai play on eCommerce and the company enjoys strong market position in a growing segment. However, at 50+ baht per share it is no longer cheap.By the way, Merry Christmas!

In a previous note we argued Kerry Express Thailand (KEX TB), at its IPO price of 28 baht per share, was attractively priced relative to comps in the Chinese express sector.However, after shares jumped 83% to 51.25 baht in their trading debut on December 24, KEX's EV/Revenue and EV/EBITDA multiples increased substantially (even as its Chinese comps faded).A day after its public debut, KEX is still a unique Thai play on eCommerce and the company enjoys strong market position in a growing segment. However, at 50+ baht per share it is no longer cheap.By the way, Merry Christmas!

Kerry Express Thailand: Just One Day Into Public Life, KEX Suddenly Looks Expensive

In an updated filing, <a href="https://www.smartkarma.com/entities/kerry-express-thailand" target="_blank" data-smartkarma-citation="entities:29253:1" rel="noopener">Kerry Express Thailand (KEX TB)</a> indicated it could sell as many as 300 mn new shares in its planned IPO. Many media reports have suggested the company hopes to raise about US$300 mn in the offering, suggesting KEX will come to market at around 30 baht per share.In this note, we try to answer the following questions regarding KEX's valuation:<ul>
<li>What are the most useful 'comps' for KEX? </li>
<li>What are some appropriate valuation multiples to use in comparing KEX to peers?</li>
<li>How does KEX's valuation at 30 baht per share compare to the peer group we've identified?</li>
<li>What factors could support either a premium or discount valuation for KEX versus peers?</li>
</ul>At 30 baht per share (which implies market capitalization of US$1.7 bn), KEX would not be overvalued relative to peers, in our view, and there are reasons KEX could eventually demand a premium valuation relative to other express companies.

In an updated filing, Kerry Express Thailand (KEX TB) indicated it could sell as many as 300 mn new shares in its planned IPO. Many media reports have suggested the company hopes to raise about US$300 mn in the offering, suggesting KEX will come to market at around 30 baht per share.In this note, we try to answer the following questions regarding KEX's valuation:
What are the most useful 'comps' for KEX? 
What are some appropriate valuation multiples to use in comparing KEX to peers?
How does KEX's valuation at 30 baht per share compare to the peer group we've identified?
What factors could support either a premium or discount valuation for KEX versus peers?
At 30 baht per share (which implies market capitalization of US$1.7 bn), KEX would not be overvalued relative to peers, in our view, and there are reasons KEX could eventually demand a premium valuation relative to other express companies.

Kerry Express Thailand (KEX) IPO: Approach to Valuation

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 Bottom-Up

Thai Airways International / Equity Bottom-Up

Five interesting news/developments that could impact Thai equities:<ul>
<li>
Updates on Thai Airways restructuring. The Planner gives out details about potential merger with Thai Smile and who will likely call the shots (bondholders, Boeing, Airbus) in the long run.</li>
<li>
Four New Airports. Bhumjaithai's Transport Minister pushes AOT to expand four more airports even as passenger throughput falls by more than half. Some locations such as Buriram seem politically oriented but make less business sense.</li>
<li>
Debt Exploding, as budget deficits lead Thai government to authorize Bt214bn of new loans. Public debt to GDP could rise to 57% by next year, prompting the State to raise its debt ceiling above 60%.</li>
<li>
Everyone wants power! From PTT to EA, everyone wants a piece of the action in the power sector. Increasing stakes in power companies, running electric ferries on the Chao Phrya, you name it.</li>
<li>
TTA's Ship Comes Home. The shipper is guiding for a strong revenue growth of 31% and expansion of both its fleet and restaurant outlets.</li>
</ul>

Five interesting news/developments that could impact Thai equities:

Updates on Thai Airways restructuring. The Planner gives out details about potential merger with Thai Smile and who will likely call the shots (bondholders, Boeing, Airbus) in the long run.

Four New Airports. Bhumjaithai's Transport Minister pushes AOT to expand four more airports even as passenger throughput falls by more than half. Some locations such as Buriram seem politically oriented but make less business sense.

Debt Exploding, as budget deficits lead Thai government to authorize Bt214bn of new loans. Public debt to GDP could rise to 57% by next year, prompting the State to raise its debt ceiling above 60%.

Everyone wants power! From PTT to EA, everyone wants a piece of the action in the power sector. Increasing stakes in power companies, running electric ferries on the Chao Phrya, you name it.

TTA's Ship Comes Home. The shipper is guiding for a strong revenue growth of 31% and expansion of both its fleet and restaurant outlets.


Snippets #44: More Turbulence at THAI, Four New Airports!

We met up with consumer products giant Osotspa and shipping company TTA, which we don't but used to many years ago. This is what they said:<ul>
<li>Osotspa delivered strong earnings of Bt838m (13.2% margin) on the back of 5.3% revenue growth. Much of its strength came from the liquid Vitamin C product, C-Vitt, which helped to drive consumer drinks sales up 22%.</li>
<li>Even once saturated energy drinks segment posted 6% growth as capacity continued to expand in Myanmar. Foreign sales grew 14-15% in the region, though it was partly blunted by the strong Baht on reported basis.</li>
<li>TTA's earnings more than tripled to Bt653m in Q3'19 on the back of a 26% growth in EBITDA. The offshore marine business stood out after signing new contracts with Saudi Aramco, roughly three times bigger than what they had in the past.</li>
<li>TTA also achieved freight rates of US$12,180/t, slightly above industry average but well above their US$5,500/vessel cash cost. The overall prospects for both companies look very bright indeed.</li>
</ul>

We met up with consumer products giant Osotspa and shipping company TTA, which we don't but used to many years ago. This is what they said:
Osotspa delivered strong earnings of Bt838m (13.2% margin) on the back of 5.3% revenue growth. Much of its strength came from the liquid Vitamin C product, C-Vitt, which helped to drive consumer drinks sales up 22%.
Even once saturated energy drinks segment posted 6% growth as capacity continued to expand in Myanmar. Foreign sales grew 14-15% in the region, though it was partly blunted by the strong Baht on reported basis.
TTA's earnings more than tripled to Bt653m in Q3'19 on the back of a 26% growth in EBITDA. The offshore marine business stood out after signing new contracts with Saudi Aramco, roughly three times bigger than what they had in the past.
TTA also achieved freight rates of US$12,180/t, slightly above industry average but well above their US$5,500/vessel cash cost. The overall prospects for both companies look very bright indeed.


First off, we have to admit that the companies (over 30 of them) we visited this quarter were far more interesting than the previous quarter.Note that despite the difficult conditions that all of these companies went through during the royal cremation period in Q4'17, most of them come out unscathed for the year. This indicates that they were either very resilient or simply quite unaffected by the weaker consumer sentiments. Some of them, such as Origin and Erawan, have had a stellar time, but…

First off, we have to admit that the companies (over 30 of them) we visited this quarter were far more interesting than the previous quarter.Note that despite the difficult conditions that all of these companies went through during the royal cremation period in Q4'17, most of them come out unscathed for the year. This indicates that they were either very resilient or simply quite unaffected by the weaker consumer sentiments. Some of them, such as Origin and Erawan, have had a stellar time, but…

Thailand

Thoresen Thai Agencies Public Company Limited is a strategic investment holding company with diversified interests across several core business groups including shipping, offshore services, agrochemicals, food and beverage, and investment. The company operates dry bulk vessels, provides subsea engineering and offshore oil and gas services, produces fertilizers, and manages food and beverage franchises. Thoresen Thai Agencies is headquartered in Bangkok, Thailand, and was established as Thoresen & Co., (Bangkok) Ltd. on October 31, 1974, evolving from a branch office established in 1937, with its roots in shipping services dating back to 1904 in Hong Kong.

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Thoresen Thai Agencies (TTA TB)

Kerry Express Thailand: Just One Day Into Public Life, KEX Suddenly Looks Expensive

After it jumped by 83% to 51.25 baht per share in its trading debut, it's suddenly much tougher to argue that KEX is attractively priced versus peers.

Tracking Traffic

Kerry Express Thailand (KEX) IPO: Approach to Valuation

What's the right valuation approach to Kerry Express (KEX), which hopes to complete its IPO in Thailand in the coming weeks?

Tracking Traffic

Snippets #44: More Turbulence at THAI, Four New Airports!

Five interesting

Athaporn Arayasantiparb, CFA

Company Visits: Osotspa, TTA

We met up with consumer products giant Osotspa and shipping company TTA, which we don't but used to many years ago. This is what they said: Osotspa...

Athaporn Arayasantiparb, CFA

Company Visits: The Best of March 2018

First off, we have to admit that the companies (over 30 of them) we visited this quarter were far more interesting than the previous quarter.Note...

Athaporn Arayasantiparb, CFA

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