Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

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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

Thematic (Sector/Industry)

<p><strong>BCPG, GUNKUL, GULF top pick growth stocks</strong></p><ul>
<li>
<strong>Earnings upcycle in 2021:</strong> We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.</li>
<li>
<strong>Declining gas price to support SPP performance:</strong> The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.</li>
</ul><p><strong>EGCO, RATCH top pick value stocks</strong></p><ul>
<li>
<strong>Cheap valuation:</strong> The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.</li>
<li>
<strong>Decent dividend yield:</strong> We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.</li>
</ul><p><strong>Maintain HOLD rating on BGRIM, EA and GPSC</strong></p><ul><li>We have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.</li></ul>

BCPG, GUNKUL, GULF top pick growth stocks

Earnings upcycle in 2021: We expect BCPG, GULF and GUNKUL to achieve 15 to 30% net profit growth during 2021 on the back 12 to 30% power generation capacity expansion in 2020-21 period.

Declining gas price to support SPP performance: The industrial user power sales of SPP players BGRIM, GPSC and GULF (accounting 10 to 20% of the revenue) has rebound to pre – COVID 19 levels as of 4Q20.  We expect the declining gas cost (-10% YoY) will help in revamping the GPM and support the sector performance.
EGCO, RATCH top pick value stocks

Cheap valuation: The stock price of EGCO and RATCH faced 70% and 30% fall in 2020 respectively. The stocks are trading very cheap at 9 to 13x PE’21E and having the companies already overcome the COVID-19 impact we believe the price correction has created an investment opportunity.

Decent dividend yield: We expect RATCH and EGCO to pay a decent dividend yield of 3.3 to 4.4% in 2021.
Maintain HOLD rating on BGRIM, EA and GPSCWe have a positive view on BGRIM and GPSC as the SPP players will benefit from declining gas price. However, due to limit upside from current share price we maintain the HOLD rating. We recommend to HOLD EA, as the stock performance will depend on new EV-ESS business success and valuation demands.

Thailand Power Sector: Overweight-Bright 2021 Performance

Equity Bottom-Up

Global Power Synergy Company Ltd / Equity Bottom-Up

<p><strong>Last week analyst meeting came out in a neutral tone. We maintain the BUY rating with 2020E target price of Bt89, derived using DCF methodology (WACC of 4.5% and TG 1%). Our valuation implies 37x PE’20.</strong></p><ul>
<li>3Q20 earnings is expected to grow YoY backed by improved earnings recognition from XPCL, better GPM of SPP’s from reducing gas cost and reduced finance cost. While, stay flat QoQ due to  lower IPP contribution.</li>
<li>SPP operation and sales to IU clients are expected to resume to pre-COVID-19 levels by 3Q20.</li>
<li>GPSC announced interim dividend payment of Bt0.5 per share from (Implying a yield of 0.8% based on current share price). XD is on 1st Sept 2020.  </li>
</ul>

Last week analyst meeting came out in a neutral tone. We maintain the BUY rating with 2020E target price of Bt89, derived using DCF methodology (WACC of 4.5% and TG 1%). Our valuation implies 37x PE’20.
3Q20 earnings is expected to grow YoY backed by improved earnings recognition from XPCL, better GPM of SPP’s from reducing gas cost and reduced finance cost. While, stay flat QoQ due to  lower IPP contribution.
SPP operation and sales to IU clients are expected to resume to pre-COVID-19 levels by 3Q20.
GPSC announced interim dividend payment of Bt0.5 per share from (Implying a yield of 0.8% based on current share price). XD is on 1st Sept 2020.  


GPSC: 3Q20 Earnings to Grow YoY While Remain Flat QoQ

<p><strong>Yesterday analyst meeting came out in a positive tone. 2Q20 earnings outlook looks bright from IPP seasonality overcoming weak SPP operation from lower IU sales and drought conditions in eastern Thailand. 2020E earnings outlook remain healthy given full year profit recognition from GLOW assets.</strong></p><p><strong>Key takeaway:</strong></p><ul>
<li>Positive 2020 earnings outlook backed by full year earnings recognition from GLOW assets (2.7GW)  and additional 391 MW projects COD in 2019.</li>
<li>2Q20 earnings will improve both YoY and QoQ from 1) Full year operational results from Glow Assets 2) Seasonal peak IPP operation compensating the weak SPP performance impacted by drought and 3% reduction in electricity tariff. 3) Gradual earnings recognition from Xayaburi power plant (321MWe) as monsoon begins by May 2020.</li>
<li>30MWh Energy storage system (ESS) pilot plant to COD in 4Q20</li>
</ul><p><strong>We maintain the BUY rating with 2020E target price of Bt89, derived using DCF methodology (WACC of 4.5% and TG 1%). Our valuation implies 37x PE’20.</strong></p>

Yesterday analyst meeting came out in a positive tone. 2Q20 earnings outlook looks bright from IPP seasonality overcoming weak SPP operation from lower IU sales and drought conditions in eastern Thailand. 2020E earnings outlook remain healthy given full year profit recognition from GLOW assets.Key takeaway:
Positive 2020 earnings outlook backed by full year earnings recognition from GLOW assets (2.7GW)  and additional 391 MW projects COD in 2019.
2Q20 earnings will improve both YoY and QoQ from 1) Full year operational results from Glow Assets 2) Seasonal peak IPP operation compensating the weak SPP performance impacted by drought and 3% reduction in electricity tariff. 3) Gradual earnings recognition from Xayaburi power plant (321MWe) as monsoon begins by May 2020.
30MWh Energy storage system (ESS) pilot plant to COD in 4Q20
We maintain the BUY rating with 2020E target price of Bt89, derived using DCF methodology (WACC of 4.5% and TG 1%). Our valuation implies 37x PE’20.

GPSC: 2Q20 Earnings to Grow from IPP Seasonality

<p><strong>Last Wednesday analyst meeting came out in a neutral tome. Expect earnings from SPP operation to slightly retard in short term due to drought conditions in eastern Thailand. 2020E earnings outlook remain healthy given full year profit recognition from GLOW assets.</strong></p><p><strong>Key takeaway</strong></p><ul>
<li>Positive 2020 earnings outlook backed by full year earnings recognition from GLOW assets (2.7GW)  and additional 391 MW projects COD in 2019.</li>
<li>1H20 earnings will be pressured by prevailing drought conditions in eastern  Thailand and slow economic growth.</li>
<li>Upside form new Bt1.1bn investment in Energy Storage System (ESS) plant in Thailand.. </li>
</ul><p><strong>We revise down our 2020-22 earnings forecast by 5%-11% to reflect lower than expected earnings growth from economic show down &amp; drought condition. Thus roll out the new target price to Bt89, derived using DCF methodology (WACC 4.5%,  TG 1%). We believe the correction in share price is a chance to accumulate in 12 months period.</strong></p>

Last Wednesday analyst meeting came out in a neutral tome. Expect earnings from SPP operation to slightly retard in short term due to drought conditions in eastern Thailand. 2020E earnings outlook remain healthy given full year profit recognition from GLOW assets.Key takeaway
Positive 2020 earnings outlook backed by full year earnings recognition from GLOW assets (2.7GW)  and additional 391 MW projects COD in 2019.
1H20 earnings will be pressured by prevailing drought conditions in eastern  Thailand and slow economic growth.
Upside form new Bt1.1bn investment in Energy Storage System (ESS) plant in Thailand.. 
We revise down our 2020-22 earnings forecast by 5%-11% to reflect lower than expected earnings growth from economic show down &amp; drought condition. Thus roll out the new target price to Bt89, derived using DCF methodology (WACC 4.5%,  TG 1%). We believe the correction in share price is a chance to accumulate in 12 months period.

<p><strong>We initiate coverage of GPSC with a BUY rating, based on a 2020E target price of Bt98, derived from a discounted cash flow valuation (WACC 4.5% and TG 1.0%). Our valuation implies 37xPE’20, which is equivalent to 0.9x PEG for 2020-21E, lower than its peers’ 2.0x PEG.</strong></p><p><strong>The story:</strong></p><p>•Expect 22% EPS CAGR during 2020-22E.</p><div>•Leadership position in the Thai SPP sector and secured earnings following the acquisition of GLOW.</div><div></div><div>•Promising domestic growth outlook supported by its close links to the PTT group as well as GLOW synergy benefits.</div><div></div><p><strong>Risks:</strong></p><div>•Delays in new projects</div><div>•Fuel price fluctuation</div><div>•Exchange rate fluctuation</div>

We initiate coverage of GPSC with a BUY rating, based on a 2020E target price of Bt98, derived from a discounted cash flow valuation (WACC 4.5% and TG 1.0%). Our valuation implies 37xPE’20, which is equivalent to 0.9x PEG for 2020-21E, lower than its peers’ 2.0x PEG.The story:•Expect 22% EPS CAGR during 2020-22E.•Leadership position in the Thai SPP sector and secured earnings following the acquisition of GLOW.•Promising domestic growth outlook supported by its close links to the PTT group as well as GLOW synergy benefits.Risks:•Delays in new projects•Fuel price fluctuation•Exchange rate fluctuation

GPSC: The Glowing Power Flagship of PTT Group

Thailand

Global Power Synergy Company Ltd. (GPSC) provides utilities services. The Company generates and distributes electricity, steam, and processed water. GPSC serves customers in Thailand.

Global Power Synergy Company Ltd (GPSC TB)

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Global Power Synergy Company Ltd (GPSC TB)

Thailand Power Sector: Overweight-Bright 2021 Performance

Power Sector: Overweight-Bright 2021 sector performance. BCPG, GUNKUL, GULF top pick growth stocks. EGCO, RATCH top pick value stocks

Pi Securities PCL, Thailand

GPSC: 3Q20 Earnings to Grow YoY While Remain Flat QoQ

Last week analyst meeting came out in a neutral tone. We maintain the BUY rating with 2020E target price of Bt89, derived using DCF methodology...

Pi Securities PCL, Thailand

GPSC: 2Q20 Earnings to Grow from IPP Seasonality

Yesterday analyst meeting came out in a positive tone. 2Q20 earnings outlook looks bright from IPP seasonality overcoming weak SPP operation from...

Pi Securities PCL, Thailand

GPSC: Positive 2020 Earnings Outlook

Last Wednesday analyst meeting came out in a neutral tome. Expect earnings from SPP operation to slightly retard in short term due to drought...

Pi Securities PCL, Thailand

GPSC: The Glowing Power Flagship of PTT Group

We initiate coverage of GPSC with a BUY rating, based on a 2020E target price of Bt98, derived from a discounted cash flow valuation (WACC 4.5% and...

Pi Securities PCL, Thailand

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