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.

Equity Bottom-Up

WHA Corp PCL is a built-to-suit distribution center and factory developer in Thailand.

<ul><li>We maintain our Outperform rating, with a new 12M fair value of Bt5.80 (vs. Bt5.60 previously), derived from the earnings yield method and a required rate of return at 6.1% following the adjustments to the beta in accordance with our revised macroeconomic assumptions based on our house view.</li><li>The valuation metrics suggest a strong fundamental outlook, favorable long-term earnings prospects, and a neutral tactical perspective.</li><li>The stock price dropped in June 2024 by 11% before rebounding by 4% MTD.</li></ul>

We maintain our Outperform rating, with a new 12M fair value of Bt5.80 (vs. Bt5.60 previously), derived from the earnings yield method and a required rate of return at 6.1% following the adjustments to the beta in accordance with our revised macroeconomic assumptions based on our house view.The valuation metrics suggest a strong fundamental outlook, favorable long-term earnings prospects, and a neutral tactical perspective.The stock price dropped in June 2024 by 11% before rebounding by 4% MTD.

Wha Corporation - 2Q24E Profit Growth YoY; Better 2H24E Earnings HoH on Higher Transfers

i-Tail Corporation Public Company Limited manufactures and exports pet food products. The Company offers sea food, meat chunks, and loaf products for pets. i-Tail serves customers worldwide.

<ul><li>We initiate our coverage on ITC with an Outperform rating and a 12M FV of Bt23.90, based on a required return of 5.19%.</li><li>We like ITC for its advanced manufacturing capabilities, continuous innovation, expertise in raw material sourcing, and strong relationships with key partners and customers.</li><li>Although ITC’s valuation is not cheap compared to its Thai and global peers, we believe it deserves the premium thank to its strong positioning in the global market.</li></ul>

We initiate our coverage on ITC with an Outperform rating and a 12M FV of Bt23.90, based on a required return of 5.19%.We like ITC for its advanced manufacturing capabilities, continuous innovation, expertise in raw material sourcing, and strong relationships with key partners and customers.Although ITC’s valuation is not cheap compared to its Thai and global peers, we believe it deserves the premium thank to its strong positioning in the global market.

I-Tail Corporation - Leader in Global Pet Food Manufacturing

Asian Alliance International / Equity Bottom-Up

Asian Alliance International Public Company Limited produces pet food products. The Company offers ready-to-eat food packed in sealed containers for dogs and cats. Asian Alliance International also sells by-products from tuna processing such as fishmeal and oil products.

<ul><li>We initiate our coverage on AAI with a Neutral rating and a 12M FV of Bt5.50, based on a required return of 7.40%.</li><li>Our valuation metrics suggest that the current valuation is neutral, with strong long-term growth prospects, while the tactical parameters are also at a neutral level.</li><li>AAI’s valuation is cheap compared to its Thai and global peers. </li></ul>

We initiate our coverage on AAI with a Neutral rating and a 12M FV of Bt5.50, based on a required return of 7.40%.Our valuation metrics suggest that the current valuation is neutral, with strong long-term growth prospects, while the tactical parameters are also at a neutral level.AAI’s valuation is cheap compared to its Thai and global peers. 

Asian Alliance International - Solid Pet Food Player with Scalability in Global Market

PTG Energy PCL provides ready-made gasoline at retail stations. The Company operates gasoline tank farms and gasoline retail stations throughout Thailand.

<ul><li>The stock price has not factored in the strong 2Q24E earnings momentum as the marketing margin remains a challenging factor in 2H24E (amid the management of the Oil Fuel Fund Office and the likelihood of oil price hikes during the winter).</li><li>However, we view that the robust growth of oil sales volume and the non-oil businesses, supported by repeat service usage by PT Max Card cardholders across all systems (with approximately 21mn), will enable the company to withstand the challenging year in 2024E.</li><li>Hence, we have maintained our 2024-26E earnings forecasts (2Y EPS growth expected at a 10% CAGR).</li></ul>

The stock price has not factored in the strong 2Q24E earnings momentum as the marketing margin remains a challenging factor in 2H24E (amid the management of the Oil Fuel Fund Office and the likelihood of oil price hikes during the winter).However, we view that the robust growth of oil sales volume and the non-oil businesses, supported by repeat service usage by PT Max Card cardholders across all systems (with approximately 21mn), will enable the company to withstand the challenging year in 2024E.Hence, we have maintained our 2024-26E earnings forecasts (2Y EPS growth expected at a 10% CAGR).

Ptg Energy - Strong 2Q24E Earnings; Marketing Margin Remains a Challenge

Thematic (Sector/Industry)

<ul><li>We hold a neutral view toward Thai pet food stocks. While the sector has solid fundamentals, the growth trend appears to be diminishing compared to the past.</li><li>We initiate coverage of i-Tail Corporation (ITC) with an Outperform rating and a target price (TP) of Bt23.90, and Asian Alliance International (AAI) with a Neutral rating and a TP of Bt5.50.</li><li>We estimate a 52% YoY increase in the 2024E earnings for ITC and a 113% YoY jump for AAI, driven by a recovery in export markets. </li></ul>

We hold a neutral view toward Thai pet food stocks. While the sector has solid fundamentals, the growth trend appears to be diminishing compared to the past.We initiate coverage of i-Tail Corporation (ITC) with an Outperform rating and a target price (TP) of Bt23.90, and Asian Alliance International (AAI) with a Neutral rating and a TP of Bt5.50.We estimate a 52% YoY increase in the 2024E earnings for ITC and a 113% YoY jump for AAI, driven by a recovery in export markets. 

Industry Update: Pet Food - Solid Fundamentals but Growth Projected to Be Slower (JULY 25, 2024)