Brief Thailand: SET50 Index Review – Delta to Sell and more

In this briefing:

  1. SET50 Index Review – Delta to Sell
  2. The Week that Was in [email protected] – Consumer Transformation, Indonesian Banks, and Semcorp
  3. Indonesian Consumers – This Transformation Is Forever – BUY Staples and Healthcare

1. SET50 Index Review – Delta to Sell

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Late last evening, the Stock Exchange of Thailand (SET) announced the results of the semi-annual review of the SET50 index. The changes will be effective from 1 July 2020 and passive funds and index arb desks will need to trade at (or by) the close on 30 June 2020.

There are 2 additions Banpu Power PCL (BPP TB) and TTW Pcl (TTW TB), and 2 deletions Banpu Public (BANPU TB) and Delta Electronics Thai (DELTA TB).

We estimate more than 4 days of ADV to buy on TTW Pcl (TTW TB) and more than 4 days of ADV to sell on Delta Electronics Thai (DELTA TB).

Banpu Power PCL (BPP TB) was deleted from the SET50 index in February to make way for Central Retail (CRC TB). The stock has notched up a huge gain since then and re-enters the index.

2. The Week that Was in [email protected] – Consumer Transformation, Indonesian Banks, and Semcorp

This past week’s offering of Insights across [email protected] is filled with another eclectic mix of differentiated, substantive and actionable insights from across South East Asia and includes macro, top-down and thematic pieces, as well as actionable equity bottom-up and credit insights.

Please find a brief summary below, with a fuller write up in the detailed section. We also include in the detailed section the past week’s relevant discussions in [email protected]

Macro Insights

In Labour Market Slack Remains but FOMC Will Need to Tighten by Mid-2021, CrossASEAN Cheif Economist Prasenjit K. Basu revisits the US Economy, where he sees inflationary risks ahead. 

In Post-COVID 19 – Economic Reality Bites,Sharmila Whelan suggests that we may be about to see a change in market sentiment as the realisation of the true impact of COVID-19 dawns on liquidity-driven markets. 

Equity Bottom-Up Insights

In Bank Mandiri Persero (BMRI IJ) – Biting the Bullet on Restructuring, CrossASEAN Insight Provider Angus Mackintosh revisits this leading Indonesian lender as it lays out its COVID-19 restructuring plans.

In SATS: Traffic -99.5% in April and May; How Much Worse Can It Get?, CrossASEAN Insight Provider Nicolas Van Broekhoven revisits Singapore’s leading aircraft maintenance player and asks whether we have hit the bottom.

In Malaysia – Carlsberg or Heineken?, CrossASEAN Insight Provider Henry Soediarko zeros in on the Malaysian brewery space. 

In BTPS – Exceptional Core, banking specialist Daniel Tabbush revisits Indonesia’s most interesting Sharia lender and finds an encouraging picture. 

In Keppel Corp – Stretched Vs Proxy Baskets And Now With New Risk, Travis Lundy revisits this long-in-the-tooth partial offer. 

In Sembcorp Marine Rights Offer – Cast Away,Travis Lundy comments on the recently announced Sembcorp Marine (SMM SP) S$2.1bn rights issue. 

In Sembcorp Industries/Sembcorp Marine Rights Issue and Demerger,Arun George also comments on this ongoing transaction.

In SMM Rights Issue & Demerger Is One Step Closer to Keppel O&M+SMM Merger,Ke Yan, CFA, FRM looks at this ongoing situation but sees a longer-term endgame ahead. 

In BTS: Solid Core Operation with Huge Potential Upside, our friends at Country Group revisit BTS Group Holdings (BTS TB) and expect some softening in the outlook. 

In SPA: Major Beneficiary of Return Chinese Tourist Arrivals in Thailand,Country Group upgrade Siam Wellness Group (SPA TB) to BUY as it will be a beneficiary of Chinese tourists returning to Thailand. 

Sector and Thematic Insights

In Indonesian Consumers – This Transformation Is Forever – BUY Staples and Healthcare, CrossASEAN Insight Provider Angus Mackintosh zeros in on the changing behaviour of the Indonesian consumer over COVID-19. 

In Indonesian Media – A Tale of Two Cities – BUY MNCN, CrossASEAN Insight Provider Angus Mackintosh revisits the sector in light of the ongoing COVID-19 impact.

In Indonesia Banks – Loan Forbearance, banking specialist Daniel Tabbush zooms in on the Indonesian banking sector, where he sees a relatively promising outlook.

In Sathorn Series O: Thai Banks Expand Abroad, our Thai guru Athaporn Arayasantiparb, CFA zeroes in on Thai Banks as they look overseas for future growth. 

In WhatsApp, PayPal Funding To Fortify Go-Jek’s Go-Pay Business,Aqila Ali takes a look at the reasoning behind Facebook Inc A (FB US) and Paypal Holdings (PYPL US)‘s recent investment into Gojek (1379371D IJ).

Credit Insights

In Chandra Asri – Earnings Flash – Q1 FY 2020 Results,Trung Nguyen zeros in on recent results from Chandra Asri Petrochemical (TPIA IJ),  which were weaker than expected. 

3. Indonesian Consumers – This Transformation Is Forever – BUY Staples and Healthcare

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The latest report from AC Niesen Indonesia is entitled “Meet the new consumer” and looks into the changing behaviour of Indonesia’s consumers in the face of the COVID-19 pandemic. 

These changes will have a pronounced impact on the retail landscape in Indonesia and the way that the population consumes, with a lot more already going online and much more focus on health with more financial restraint. 

A number of consumer behaviours developed during the pandemic will stick as we enter the new normal period, with 16% of those surveyed by AC Nielsen suggesting they will not visit the mall even under the new normal. 

We remain positive on consumer staples and healthcare stocks including Unilever Indonesia (UNVR IJ),Indofood CBP Sukses (ICBP IJ), Kalbe Farma (KLBF IJ),Mitra Keluarga Karyasehat Tbk (MIKA IJ) and consumer discretionary name Mitra Adiperkasa (MAPI IJ) for the recovery. 

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