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

Equity Bottom-Up

<p><strong>The company announce to acquire newly issued ordinary shares in JMART (15% stake) with investment cost of Bt6.3bn. We are positive toward the deal given a number of upcoming potential synergy with accretive value created as a purchased price of JMART is at 21.6xPE’22, a substantial discount to VGI current trading at 62.4x’FY23.</strong></p><div>• We estimate approximately Bt80m earnings upside or accounts for 9% of our net profit forecast in FY2023.</div><div></div><div>• Medium term synergy including; ability to increase Out-of-Home media revenue from advertisement of JMART’s group products, expanding product line for Fanslink (51% stake), and, 3.) Kerry Express Thailand (18% stake) could offer delivery services for JMART’s mobile devices and electric appliances from SINGER. Benefit from technology and market data sharing will be a long-term synergy.</div><div></div><div><strong>We maintain BUY rating for VGI with a target price of Bt6.90 derived from SOTP method.</strong></div>

The company announce to acquire newly issued ordinary shares in JMART (15% stake) with investment cost of Bt6.3bn. We are positive toward the deal given a number of upcoming potential synergy with accretive value created as a purchased price of JMART is at 21.6xPE’22, a substantial discount to VGI current trading at 62.4x’FY23.• We estimate approximately Bt80m earnings upside or accounts for 9% of our net profit forecast in FY2023.• Medium term synergy including; ability to increase Out-of-Home media revenue from advertisement of JMART’s group products, expanding product line for Fanslink (51% stake), and, 3.) Kerry Express Thailand (18% stake) could offer delivery services for JMART’s mobile devices and electric appliances from SINGER. Benefit from technology and market data sharing will be a long-term synergy.We maintain BUY rating for VGI with a target price of Bt6.90 derived from SOTP method.

VGI: Plenty of Business Synergy with JMART

<p><strong>We came out from VGI’s analyst meeting with neutral tone as we expect revenue from Out-of-home media to slightly drop QoQ in FY2Q22 (July’21-Sep’21) amid overall weak industry Ads spending impacted by city lockdown. This supported by revenue recognition from backlog from early-booking campaign for long-term commitment client.</strong></p><p>• Expect the company core earnings to remain flat QoQ and YoY in FY2Q22 as  Ads revenue is anticipated to remain at similar level to FY1Q22.</p><div>• VGI 1QFY22 (April’21-June’21) core profit was at Bt10m, (vs. loss of Bt122m in FY4Q21 and Bt104m loss in FY1Q21).</div><div></div><div>• Trim down earnings forecast in FY2022 and FY2023 by 65% and 23% to factor in further impact from city lockdown.</div><div></div><div><strong>We maintain BUY rating for VGI with the new target price of Bt6.90 (Previous TP: Bt8.0) derived from SOTP method. A target price reduction was due to earnings downgrade, and KEX’s target price cut (18.06% stake).</strong></div>

We came out from VGI’s analyst meeting with neutral tone as we expect revenue from Out-of-home media to slightly drop QoQ in FY2Q22 (July’21-Sep’21) amid overall weak industry Ads spending impacted by city lockdown. This supported by revenue recognition from backlog from early-booking campaign for long-term commitment client.• Expect the company core earnings to remain flat QoQ and YoY in FY2Q22 as  Ads revenue is anticipated to remain at similar level to FY1Q22.• VGI 1QFY22 (April’21-June’21) core profit was at Bt10m, (vs. loss of Bt122m in FY4Q21 and Bt104m loss in FY1Q21).• Trim down earnings forecast in FY2022 and FY2023 by 65% and 23% to factor in further impact from city lockdown.We maintain BUY rating for VGI with the new target price of Bt6.90 (Previous TP: Bt8.0) derived from SOTP method. A target price reduction was due to earnings downgrade, and KEX’s target price cut (18.06% stake).

VGI: Expect Media Business to Recover in Early 2022

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.

<div><div><div><p><strong>Negative impact from pandemic should be short term</strong><br>We lower VGI’s earnings in FY21/22E and FY22/23E to reflect the potential negative impact from the ongoing pandemic. This, along with our TP cut for PLANB, causes us to lower VGI’s SOTP-based TP to Bt6.70 (vs. Bt7.40 previously). However, VGI’s share price decline of 12% since the new lockdown was imposed in Bangkok likely factors in the negatives to a certain degree. As the share price now offers attractive upside gain, we lift VGI’s rating to Buy (from Hold previously).</p><div></div></div></div></div>

Negative impact from pandemic should be short term We lower VGI’s earnings in FY21/22E and FY22/23E to reflect the potential negative impact from the ongoing pandemic. This, along with our TP cut for PLANB, causes us to lower VGI’s SOTP-based TP to Bt6.70 (vs. Bt7.40 previously). However, VGI’s share price decline of 12% since the new lockdown was imposed in Bangkok likely factors in the negatives to a certain degree. As the share price now offers attractive upside gain, we lift VGI’s rating to Buy (from Hold previously).

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> with the changes taking effect after the close of trading on 30 June.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a>, <a href="https://www.smartkarma.com/entities/kce-electronics-pcl" target="_blank" data-smartkarma-citation="entities:1892:1" rel="noopener">KCE Electronics PCL (KCE TB)</a>, <a href="https://www.smartkarma.com/entities/sri-trang-agro-industry-pcl" target="_blank" data-smartkarma-citation="entities:2759:1" rel="noopener">Sri Trang Agro Industry (STA TB)</a> and <a href="https://www.smartkarma.com/entities/sri-trang-gloves-thailand-public-company-limited" target="_blank" data-smartkarma-citation="entities:29141:1" rel="noopener">Sri Trang Gloves (Thailand) Public Company Limited (STGT TB)</a> have been added to the index, replacing <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a>, <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a>, <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> and <a href="https://www.smartkarma.com/entities/vgi-pcl" target="_blank" data-smartkarma-citation="entities:12409:1" rel="noopener">VGI PCL (VGI TB)</a>.</p><p><a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> and <a href="https://www.smartkarma.com/entities/toa-paint-thailand-pcl" target="_blank" data-smartkarma-citation="entities:24235:1" rel="noopener">TOA Paint (Thailand) (TOA TB)</a> are deletes on liquidity. We had <a href="https://www.smartkarma.com/entities/asset-world-corp-pcl" target="_blank" data-smartkarma-citation="entities:28136:1" rel="noopener">Asset World Corporation (AWC TB)</a> just about passing the liquidity test, while the SET sees it as failing the test.</p><p><a href="https://www.smartkarma.com/entities/irpc-pcl" target="_blank" data-smartkarma-citation="entities:19051:1" rel="noopener">IRPC PCL (IRPC TB)</a> was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while <a href="https://www.smartkarma.com/entities/bangkok-commercial-asset-management-public-company-limited" target="_blank" data-smartkarma-citation="entities:28442:1" rel="noopener">Bangkok Commercial Asset Management (BAM TB)</a> was included in the index at the same review and has lost 11.4% since then.</p><p>One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.</p><p>With <a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a> shareholders meeting for their EGM on 25 June, the tender offer for <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> should be approved. <a href="https://www.smartkarma.com/entities/banpu-public-co-ltd" target="_blank" data-smartkarma-citation="entities:15363:1" rel="noopener">Banpu Public (BANPU TB)</a> is the frontrunner to join the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a> once the <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> tender offer is complete and the free float drops below 20%.</p>

Last evening post market close, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) with the changes taking effect after the close of trading on 30 June.IRPC PCL (IRPC TB), KCE Electronics PCL (KCE TB), Sri Trang Agro Industry (STA TB) and Sri Trang Gloves (Thailand) Public Company Limited (STGT TB) have been added to the index, replacing Asset World Corporation (AWC TB), Bangkok Commercial Asset Management (BAM TB), TOA Paint (Thailand) (TOA TB) and VGI PCL (VGI TB).Asset World Corporation (AWC TB) and TOA Paint (Thailand) (TOA TB) are deletes on liquidity. We had Asset World Corporation (AWC TB) just about passing the liquidity test, while the SET sees it as failing the test.IRPC PCL (IRPC TB) was deleted from the index at the December 2020 rebalance and has gained 8.6% since then, while Bangkok Commercial Asset Management (BAM TB) was included in the index at the same review and has lost 11.4% since then.One-way turnover for the rebalance is 2.86%. The impact of passive fund trading on the deletions is expected to be a lot higher than that on the inclusions.With Gulf Energy Development Public Company (GULF TB) shareholders meeting for their EGM on 25 June, the tender offer for Intouch Holdings (INTUCH TB) should be approved. Banpu Public (BANPU TB) is the frontrunner to join the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) once the Intouch Holdings (INTUCH TB) tender offer is complete and the free float drops below 20%.

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

<p><strong>We came out from VGI’s analyst meeting with positive tone as we anticipate a solid recovery in the company’s transit media revenue from September 2021 onwards supported by improvement in BTS ridership number after vaccine rollout nationwide together with recovery in overall OOH industry, which still lagging media industry in terms of spending value. (the overall media figure has already normalized to the pre-pandemic level in 4Q20 before taking a hit by 3rd wave COVID).</strong></p><div>• Expect the company core earnings to worsen QoQ in 1QFY22 due to impact from 3rd wave of COVID-19, but improving YoY due to low base in 1QFY21.</div><div></div><div>• We anticipate 2HFY22 to gradually recover from the doldrum backed by resuming corporate's marketing activities along with BTS’s ridership number after anti-COVID19 vaccinations nationwide.</div><div></div><div>• Revise FY2022 and FY2023E core earnings forecast down by 35% and 25%</div><div></div><div><strong>We maintain BUY rating for VGI with the new target price of Bt8.0 (Previous TP: Bt8.10) derived from SOTP method. A slight target price cut was due to earnings downgrade, which offset by upward target price revision for PLANB to Bt7.70 (18.6% stake).</strong></div>

We came out from VGI’s analyst meeting with positive tone as we anticipate a solid recovery in the company’s transit media revenue from September 2021 onwards supported by improvement in BTS ridership number after vaccine rollout nationwide together with recovery in overall OOH industry, which still lagging media industry in terms of spending value. (the overall media figure has already normalized to the pre-pandemic level in 4Q20 before taking a hit by 3rd wave COVID).• Expect the company core earnings to worsen QoQ in 1QFY22 due to impact from 3rd wave of COVID-19, but improving YoY due to low base in 1QFY21.• We anticipate 2HFY22 to gradually recover from the doldrum backed by resuming corporate's marketing activities along with BTS’s ridership number after anti-COVID19 vaccinations nationwide.• Revise FY2022 and FY2023E core earnings forecast down by 35% and 25%We maintain BUY rating for VGI with the new target price of Bt8.0 (Previous TP: Bt8.10) derived from SOTP method. A slight target price cut was due to earnings downgrade, which offset by upward target price revision for PLANB to Bt7.70 (18.6% stake).

VGI: Expect Solid Recovery for Media Revenue in September Onwards

Thailand

VGI Public Company Limited operates as an advertising media company. The Company offers out of home advertising, campaign measurement, target advertising campaign, and offline-to-online solutions. VGI serves customers globally.

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VGI PCL (VGI TB)

VGI: Plenty of Business Synergy with JMART

The company announce to acquire newly issued ordinary shares in JMART (15% stake) with investment cost of Bt6.3bn. We are positive toward the deal...

Pi Securities PCL, Thailand

VGI: Expect Media Business to Recover in Early 2022

We came out from VGI’s analyst meeting with neutral tone as we expect revenue from Out-of-home media to slightly drop QoQ in FY2Q22 (July’21...

Pi Securities PCL, Thailand

Company Update: VGI Plc. (VGI)

Negative impact from pandemic should be short term, We lower VGI’s earnings in FY21/22E and FY22/23E to reflect the potential negative impact from...

Krungthai XSpring

SET50 June Index Rebalance: Four Changes Announced; One More Coming Up Soon

There are 4 changes to the SET50 index with IRPC, KCE, STA & STGT replacing AWC, BAM, TOA & VGI. BANPU could be included in the next couple of...

Brian Freitas

VGI: Expect Solid Recovery for Media Revenue in September Onwards

We came out from VGI’s analyst meeting with positive tone as we anticipate a solid recovery in the company’s transit media revenue from September...

Pi Securities PCL, Thailand

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