KEX: Price War Still Go on for the at Least Until 2nd Half of 2022

KEX : Net Loss in 2Q22 Should Be Bottom of 2022

KEX : Net Loss in 3Q22 Has Slightly Improved

KEX: Demanding Valuation with No Short-Term Catalyst

KEX: Maximizing Parcel Volume as the Priority

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

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Note: Effective on 1 March 2022, Country Group Securities PCL changed its name to Pi Securities

Equity Bottom-Up

Kerry Express Thailand / Equity Bottom-Up

<p><strong>We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters.</strong></p><div>• The growth will be supported by an increase in revenue to Bt5.2bn (+15%YoY +12%QoQ), the five quarter high. This will be driven by an increase in number of delivered parcels at roughly 25%YoY amid implementation of price-cutting strategy in order to secure 1st place market share.</div><div></div><div>• However, gross margin is assumed to drop QoQ and YoY due to continuous fall in revenue per parcel, a rise in fuel cost, and, increasing outsourced staffs hiring.</div><div></div><div>• We expect KEX’s profit to hit the highest level in 4Q21 following a recovery in people’s purchasing power, seasonal promotion campaign from online-shopping platforms, and, benefit from extending promotion for S-sized parcel delivery at lowest price of Bt26/parcel. This will help offset the impact from rising fuel cost.</div><div></div><div><strong>We maintain KEX with a BUY rating and a target price of Bt51.0, derived from DCF or equivalent to 52.0xPE’22E, 50% discount to Thai transportation peers. We still like KEX as it will continue to be the price setter in the market given its leading position in terms of its scale and being the industry cost leader.</strong></div>

We expect KEX to post 3Q21 net profit of Bt337m (+16%YoY +1%QoQ), the highest level in the past three quarters.• The growth will be supported by an increase in revenue to Bt5.2bn (+15%YoY +12%QoQ), the five quarter high. This will be driven by an increase in number of delivered parcels at roughly 25%YoY amid implementation of price-cutting strategy in order to secure 1st place market share.• However, gross margin is assumed to drop QoQ and YoY due to continuous fall in revenue per parcel, a rise in fuel cost, and, increasing outsourced staffs hiring.• We expect KEX’s profit to hit the highest level in 4Q21 following a recovery in people’s purchasing power, seasonal promotion campaign from online-shopping platforms, and, benefit from extending promotion for S-sized parcel delivery at lowest price of Bt26/parcel. This will help offset the impact from rising fuel cost.We maintain KEX with a BUY rating and a target price of Bt51.0, derived from DCF or equivalent to 52.0xPE’22E, 50% discount to Thai transportation peers. We still like KEX as it will continue to be the price setter in the market given its leading position in terms of its scale and being the industry cost leader.

KEX：2021年後半の収益は大幅に増加すると予想