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

<p>Five interesting recent news/trends that could impact Thai equities include:</p><ul>
<li>
<strong>Lobster Alliance. </strong>Thai Union buys out Golden Gate and invites Seafood Alliance (MINT and MK executives) to invest in Red Lobster.</li>
<li>
<strong>CP All reveals its expansion plans in Laos</strong> shortly after it gained exclusive rights to expand into Cambodia. Thailand's largest retailer is fast becoming a regional player.</li>
<li>
<strong>Property SOS. </strong>Thailand's struggling property sector take measures to survive. Raimon gets Singapore group Mesa Thai as new investors, while Sansiri cuts prices to draw cash flows.</li>
<li>
<strong>The Venezuela connection.</strong> America slaps a sanction on TASCO for using crude from Venezuela, prompting TASCO to close down its KBM refinery which accounts for half of its output.</li>
<li>
<strong>CPF acquires CP Group's Chinese swine business, </strong>valued at Bt131bn, through a share swap with its non-listed Chia Tai business. The share price jumped 7%, but this is a rather weak response, considering that CP Foods could be getting a 50% premium for its swaps.</li>
</ul>

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

Lobster Alliance. Thai Union buys out Golden Gate and invites Seafood Alliance (MINT and MK executives) to invest in Red Lobster.

CP All reveals its expansion plans in Laos shortly after it gained exclusive rights to expand into Cambodia. Thailand's largest retailer is fast becoming a regional player.

Property SOS. Thailand's struggling property sector take measures to survive. Raimon gets Singapore group Mesa Thai as new investors, while Sansiri cuts prices to draw cash flows.

The Venezuela connection. America slaps a sanction on TASCO for using crude from Venezuela, prompting TASCO to close down its KBM refinery which accounts for half of its output.

CPF acquires CP Group's Chinese swine business, valued at Bt131bn, through a share swap with its non-listed Chia Tai business. The share price jumped 7%, but this is a rather weak response, considering that CP Foods could be getting a 50% premium for its swaps.


Snippets #45: Lobster Alliance, CP All Goes to Laos

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>Analyst meeting held yesterday came out with a negative tone. We expect crude switching to other alternative sources to significantly drag its 2021E earnings by 40%.</strong></p><ul>
<li>TASCO reported on Friday that the company will stop crude procurement from Venezuela to comply with US request.</li>
<li>As a result, the company has to cut run its refinery and intensively seek alternative crudes.</li>
<li>During switching, the company expects to become a ‘trading company’ and focus more on retail sales and premium products.</li>
<li>We expect its earnings to fall by 40% in 2021-22E as sale volume and margin decline in medium term.</li>
</ul><div>
<br>
</div><p><strong>We downgrade our rating to ‘SELL’ from ‘HOLD’ with a revised down target price to Bt15.0 (from Bt28.0), derived from 14xPE’21E which is equal to Asia ex Japan material peer.</strong></p>

Analyst meeting held yesterday came out with a negative tone. We expect crude switching to other alternative sources to significantly drag its 2021E earnings by 40%.
TASCO reported on Friday that the company will stop crude procurement from Venezuela to comply with US request.
As a result, the company has to cut run its refinery and intensively seek alternative crudes.
During switching, the company expects to become a ‘trading company’ and focus more on retail sales and premium products.
We expect its earnings to fall by 40% in 2021-22E as sale volume and margin decline in medium term.

 
We downgrade our rating to ‘SELL’ from ‘HOLD’ with a revised down target price to Bt15.0 (from Bt28.0), derived from 14xPE’21E which is equal to Asia ex Japan material peer.

TASCO: Medium-Term Disruption from Crude Switching

<p><strong>Analyst meeting on August 11th came out with a positive tone for asphalt market in 2H20, driven by recovered demand and tight supply. However, we downgrade our rating to ‘HOLD’ given a limited upside, with a target price of Bt28.0, derived from 15.3xPE’21E.</strong></p><ul>
<li>Core EBITDA was Bt546bn in 2Q20 (-39%YoY, 300%QoQ), improved from previous quarter. QoQ recovery was driven by an increase in asphalt margin, sales volume. Meanwhile, YoY drop was due to a decrease in sale volume.</li>
<li>1H20 result accounts for 36% of our 2020E earning forecast, which is still in-line.</li>
<li>We still have a positive toward asphalt market, led by pent up demand in regional market, high domestic consumption following budget disbursement in 3Q20 and tight asphalt supply.</li>
</ul>

Analyst meeting on August 11th came out with a positive tone for asphalt market in 2H20, driven by recovered demand and tight supply. However, we downgrade our rating to ‘HOLD’ given a limited upside, with a target price of Bt28.0, derived from 15.3xPE’21E.
Core EBITDA was Bt546bn in 2Q20 (-39%YoY, 300%QoQ), improved from previous quarter. QoQ recovery was driven by an increase in asphalt margin, sales volume. Meanwhile, YoY drop was due to a decrease in sale volume.
1H20 result accounts for 36% of our 2020E earning forecast, which is still in-line.
We still have a positive toward asphalt market, led by pent up demand in regional market, high domestic consumption following budget disbursement in 3Q20 and tight asphalt supply.


TASCO: Asphalt Demand Remains Healthy in 2H20

<p><strong>Analyst meeting held yesterday came out with a positive tone for the remaining quarters. We foresee a healthy asphalt demand from May 2020E onwards, especially in domestic market. Also, an increase in asphalt spread to drive earnings in 2Q-3Q20E.</strong></p><ul>
<li>We foresee an improvement in 2Q20E earnings, supported by i) a sales recovery especially in domestic market ii) an increase in asphalt margin as supply shorts and iii) a NRV and stock reversion from a loss in 1Q20.</li>
<li>Meanwhile, we expect 3Q-4Q20 earnings to continue growing thanks to the stimulus package under the Bt400bn budget.</li>
<li>The company’s supply remains secured and its crude is enough for the production in the remaining quarters.</li>
</ul><p><strong>We maintain our BUY rating with a rolled over target price of Bt28.0 (from Bt21.0), derived from 15.3xPE’21E which is its 5-year trading average.</strong></p>

Analyst meeting held yesterday came out with a positive tone for the remaining quarters. We foresee a healthy asphalt demand from May 2020E onwards, especially in domestic market. Also, an increase in asphalt spread to drive earnings in 2Q-3Q20E.
We foresee an improvement in 2Q20E earnings, supported by i) a sales recovery especially in domestic market ii) an increase in asphalt margin as supply shorts and iii) a NRV and stock reversion from a loss in 1Q20.
Meanwhile, we expect 3Q-4Q20 earnings to continue growing thanks to the stimulus package under the Bt400bn budget.
The company’s supply remains secured and its crude is enough for the production in the remaining quarters.
We maintain our BUY rating with a rolled over target price of Bt28.0 (from Bt21.0), derived from 15.3xPE’21E which is its 5-year trading average.

TASCO: Healthy Demand from Domestic Projects

<p><strong>Analyst meeting held yesterday came out with a positive tone for the remaining quarters. We expect both sales volume and margin to improve from 2Q20E onwards from resumption in economic activity.</strong></p>
<p><strong>Key takeaway:</strong></p>
<div>•We foresee a recovery in sales volume both in international and domestic market from 2Q20E onward.</div>
<div></div>
<div>•Gross margin is likely to benefit from low crude oil price and increasing asphalt spread.</div>
<div></div>
<div>•Earnings in 1Q20E have bottomed out, pressured by stock loss, sales drop and weak margin.</div>
<div>
<br>
</div>
<p><strong>We maintain our BUY rating with a 2020E target price of Bt21.0, derived from 12.8xPE’20E.</strong></p>

Analyst meeting held yesterday came out with a positive tone for the remaining quarters. We expect both sales volume and margin to improve from 2Q20E onwards from resumption in economic activity.
Key takeaway:
•We foresee a recovery in sales volume both in international and domestic market from 2Q20E onward.

•Gross margin is likely to benefit from low crude oil price and increasing asphalt spread.

•Earnings in 1Q20E have bottomed out, pressured by stock loss, sales drop and weak margin.

 

We maintain our BUY rating with a 2020E target price of Bt21.0, derived from 12.8xPE’20E.

Back to Normal Operation from 2Q20E Onwards

Thailand

Tipco Asphalt Public Company Limited manufactures and distributes asphalt and petroleum products for road construction, maintenance, and paving industries. The company offers a wide range of asphalt products including asphalt cement, emulsion, cutback asphalt, and polymer modified asphalt. Tipco Asphalt also engages in marine logistics and construction services. It was founded in 1979 and is headquartered in Bangkok, Thailand.

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Tipco Asphalt (TASCO TB)

Snippets #45: Lobster Alliance, CP All Goes to Laos

Thai Union forms an alliance with restaurant honchos MK and Minor. While CP All expands into Laos, its parent company CP Foods consolidates its...

Athaporn Arayasantiparb, CFA

TASCO: Medium-Term Disruption from Crude Switching

Analyst meeting held yesterday came out with a negative tone. We expect crude switching to other alternative sources to significantly drag its...

Pi Securities PCL, Thailand

TASCO: Asphalt Demand Remains Healthy in 2H20

Analyst meeting on August 11th came out with a positive tone for asphalt market in 2H20, driven by recovered demand and tight supply. However, we...

Pi Securities PCL, Thailand

TASCO: Healthy Demand from Domestic Projects

Analyst meeting held yesterday came out with a positive tone for the remaining quarters. We foresee a healthy asphalt demand from May 2020E...

Pi Securities PCL, Thailand

Back to Normal Operation from 2Q20E Onwards

Analyst meeting held yesterday came out with a positive tone for the remaining quarters. We expect both sales volume and margin to improve from...

Pi Securities PCL, Thailand

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