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

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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

Global Power Synergy Company Ltd / Equity Bottom-Up

<ul>
<li>Last week analyst meeting came out in a neutral tone. we see the overhang from rise in fuel cost (in 2021) to remain till 2H22, and later recover </li>
<li>Expect the 1Q22 earnings to improve QoQ,from 1)Slightly improved SPP margin from upward Ft (tariff) adjustment and  2) Increasing IU sales. However, spike in fuel cost would drag SPP margins</li>
<li>We are more positive on 2H22,2023 outlook,as we expect a 15% EPS growth in 2023 from recovering SPP margins, Increased IU sales volume, and higher share of profit from Avaada</li>
</ul>


Last week analyst meeting came out in a neutral tone. we see the overhang from rise in fuel cost (in 2021) to remain till 2H22, and later recover 
Expect the 1Q22 earnings to improve QoQ,from 1)Slightly improved SPP margin from upward Ft (tariff) adjustment and  2) Increasing IU sales. However, spike in fuel cost would drag SPP margins
We are more positive on 2H22,2023 outlook,as we expect a 15% EPS growth in 2023 from recovering SPP margins, Increased IU sales volume, and higher share of profit from Avaada


GPSC: High Fuel Cost to Pressure SPP Margin in 1H22

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

<ul>
<li>Due to delays in securing regulatory approvals, the delisting Offer for <strong><a href="https://www.smartkarma.com/entities/vinythai-public-co-limited" target="_blank" data-smartkarma-citation="entities:14107:1" rel="noopener">Vinythai Public Co (VNT TB)</a></strong> took a while, but it is now open.</li>
<li>The Tender offer will close on the 25 February 2022 with expected payment on the 1 March 2022.</li>
<li>The Offer Price of Bt39/share is the highest price since 1995. This is done.</li>
</ul>


Due to delays in securing regulatory approvals, the delisting Offer for Vinythai Public Co (VNT TB) took a while, but it is now open.
The Tender offer will close on the 25 February 2022 with expected payment on the 1 March 2022.
The Offer Price of Bt39/share is the highest price since 1995. This is done.


Vinythai (VNT TB)'s Delisting Offer (Finally) Commences

Total Access Communication / Event-Driven

<ul>
<li>Thai telcos <a href="https://www.smartkarma.com/entities/true-corp-pcl" target="_blank" data-smartkarma-citation="entities:8:1" rel="noopener">True Corp Pcl (TRUE TB)</a> and <a href="https://www.smartkarma.com/entities/total-access-communication" target="_blank" data-smartkarma-citation="entities:948:1" rel="noopener">Total Access Communication (DTAC TB)</a> have agreed to an amalgamation.</li>
<li>Telenor Asia, DTAC's parent, and Charoen Pokphand Holding, the parent firm of True, will make conditional voluntary tender offers for all shares in DTAC and True respectively.</li>
<li>A key condition to the merger is approval from the telco regulator, the National Broadcasting and Telecommunications Commission.</li>
</ul>


Thai telcos True Corp Pcl (TRUE TB) and Total Access Communication (DTAC TB) have agreed to an amalgamation.
Telenor Asia, DTAC's parent, and Charoen Pokphand Holding, the parent firm of True, will make conditional voluntary tender offers for all shares in DTAC and True respectively.
A key condition to the merger is approval from the telco regulator, the National Broadcasting and Telecommunications Commission.


<ul>
<li>Last week analyst meeting came out in a neutral tone. The natural gas cost is expected to continue the rally and peak in 2Q22, which will continue to pressure </li>
<li>Expect 4Q21 earnings to drop both YoY and QoQ on the back of 1) seasonal weak IPP and SPP operation, 2) decline in SPP gross margin due to rising </li>
<li>We anticipate the earnings to gain momentum 2022 onwards. This will be mainly driven by the new acquisitions in 3Q21 viz., Avaada projects (1.9GWe in 2021-23 period), and CFXD offshore </li>
</ul>


Last week analyst meeting came out in a neutral tone. The natural gas cost is expected to continue the rally and peak in 2Q22, which will continue to pressure 
Expect 4Q21 earnings to drop both YoY and QoQ on the back of 1) seasonal weak IPP and SPP operation, 2) decline in SPP gross margin due to rising 
We anticipate the earnings to gain momentum 2022 onwards. This will be mainly driven by the new acquisitions in 3Q21 viz., Avaada projects (1.9GWe in 2021-23 period), and CFXD offshore 


GPSC: Weak 4Q21 Outlook from Rising Gas Cost

<div>
<p>On the 5 July 2021, <a href="https://www.smartkarma.com/entities/major-cineplex-group-pcl" target="_blank" data-smartkarma-citation="entities:16662:1" rel="noopener">Major Cineplex Group (MAJOR TB)</a>'s board <a href="https://major.listedcompany.com/newsroom/050720211745440725E.pdf" target="_blank" rel="noopener">approved</a> the entering of a MOU with <a href="https://www.smartkarma.com/entities/central-pattana-pcl-0b7fb113-16e1-4535-be8b-02dce5bbcd92" target="_blank" data-smartkarma-citation="entities:17188:1" rel="noopener">Central Pattana Pub (CPN TB)</a> in relation to its shares in shopping mall operator <a href="https://www.smartkarma.com/entities/siam-future-development-pcl" target="_blank" data-smartkarma-citation="entities:4373:1" rel="noopener">Siam Future Development (SF TB)</a>, at a price of Bt12/share. An IFA was appointed to assess the sale and its opinion on the <a href="https://major.listedcompany.com/newsroom/060820211832280109E.pdf" target="_blank" rel="noopener">19 July</a>, concluded the "<em>Transaction is reasonable with price and conditions that are fair</em>". A SPA was <a href="https://major.listedcompany.com/newsroom/250820211847500685E.pdf" target="_blank" rel="noopener">entered into</a> on the 25 August with an expected completion on the 30 August. </p>
</div>
<div>
<p>CPN <a href="https://www.set.or.th/set/newsdetails.do?newsId=16302807319920&amp;language=en&amp;country=US" target="_blank" rel="noopener">completed</a> the purchase of shares in Siam Future on 30 August 2021. After the completion of shares purchase, the number of shares held by CPN was 56.26%. In Thailand, the obligation to make a mandatory offer is triggered when an acquirer obtains shares of the target company of more than 25%, 50%, or 75% of the total voting rights of the target company.  Therefore, CPN was required to make a Tender Offer for the remaining shares in Siam Future, also at Bt12/share. A mandatory Tender Offer is always unconditional. </p>
</div>
<div>
<p>The Tender Offer doc (247-4) for Siam Future was <a href="https://www.set.or.th/set/pdfnews.do?newsId=16311444618740&amp;sequence=2021100646" target="_blank" rel="noopener">tabled</a> on the 9 September. The Offer period was for 25 business days - and closed on the 18 October. The payment date was the 20 October. The IFA reckoned the Offer was <a href="https://www.set.or.th/set/pdfnews.do?newsId=16326998697600&amp;sequence=2021104947" target="_blank" rel="noopener">fair</a>. At the close of the Offer, CPN held <a href="https://www.set.or.th/set/pdfnews.do?newsId=16346869712030&amp;sequence=2021112797" target="_blank" rel="noopener">96.24%</a>. </p>
</div>
<p>There are no provisions regarding minority squeeze-out mechanisms under Thai law. However, if the board of directors approves a proposed de-listing,  an independent financial adviser provides its opinion to shareholders on the merits of the proposal, <em>and</em> the company gains approval (≥ 75% for, ≤10% against) from its shareholders to voluntarily delist, then a company can be delisted. The company is permitted to purchase shares tendered in accordance with SEC and Capital Market Supervisory Board rules. </p>
<p>On page 57 (of Siam Future's Tender Offer doc's <a href="https://www.set.or.th/set/pdfnews.do?newsId=16311444618740&amp;sequence=2021100646" target="_blank" rel="noopener">PDF</a>), it states:</p>
<blockquote>
<p>After the Tender Offer,<strong> the Offeror has an intention to delist the Business from being a listed company on the SET during the period of 12 months after the end of the Offer Period</strong>. Currently, the Offeror is under the possibility study of proceeding such transaction under relevant rules and regulations, including but not limited to, assessment of possibility of obtaining the approval from the shareholders meeting of the Business, of which has not reached a conclusion on delisting of the Business from being a listed company on the SET.</p>
</blockquote>
<p>With 96.24% held, a Delisting Offer from CPN is likely imminent. Such an Offer at the prior Tender Offer price provides 20% upside to the current price. </p>


On the 5 July 2021, Major Cineplex Group (MAJOR TB)'s board approved the entering of a MOU with Central Pattana Pub (CPN TB) in relation to its shares in shopping mall operator Siam Future Development (SF TB), at a price of Bt12/share. An IFA was appointed to assess the sale and its opinion on the 19 July, concluded the "Transaction is reasonable with price and conditions that are fair". A SPA was entered into on the 25 August with an expected completion on the 30 August. 


CPN completed the purchase of shares in Siam Future on 30 August 2021. After the completion of shares purchase, the number of shares held by CPN was 56.26%. In Thailand, the obligation to make a mandatory offer is triggered when an acquirer obtains shares of the target company of more than 25%, 50%, or 75% of the total voting rights of the target company.  Therefore, CPN was required to make a Tender Offer for the remaining shares in Siam Future, also at Bt12/share. A mandatory Tender Offer is always unconditional. 


The Tender Offer doc (247-4) for Siam Future was tabled on the 9 September. The Offer period was for 25 business days - and closed on the 18 October. The payment date was the 20 October. The IFA reckoned the Offer was fair. At the close of the Offer, CPN held 96.24%. 

There are no provisions regarding minority squeeze-out mechanisms under Thai law. However, if the board of directors approves a proposed de-listing,  an independent financial adviser provides its opinion to shareholders on the merits of the proposal, and the company gains approval (≥ 75% for, ≤10% against) from its shareholders to voluntarily delist, then a company can be delisted. The company is permitted to purchase shares tendered in accordance with SEC and Capital Market Supervisory Board rules. 
On page 57 (of Siam Future's Tender Offer doc's PDF), it states:

After the Tender Offer, the Offeror has an intention to delist the Business from being a listed company on the SET during the period of 12 months after the end of the Offer Period. Currently, the Offeror is under the possibility study of proceeding such transaction under relevant rules and regulations, including but not limited to, assessment of possibility of obtaining the approval from the shareholders meeting of the Business, of which has not reached a conclusion on delisting of the Business from being a listed company on the SET.

With 96.24% held, a Delisting Offer from CPN is likely imminent. Such an Offer at the prior Tender Offer price provides 20% upside to the current price. 

Buy Siam Future Development (SF TB). Then Buy Some More

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)

GPSC: High Fuel Cost to Pressure SPP Margin in 1H22

Last week analyst meeting came out in a neutral tone. we see the overhang from rise in fuel cost (in 2021) to remain till 2H22, and later recover...

Pi Securities PCL, Thailand

Vinythai (VNT TB)'s Delisting Offer (Finally) Commences

This is done and trading accordingly, with a gross/annualised return of 1.0%/5.6%. Unless terms happen to widen from here, this is largely an avoid...

David Blennerhassett

True/DTAC Merger. Optional VTOs

I would not chase this here. With the top two players potentially controlling ~96% of the market, even the Thai regulator might be reticent to...

David Blennerhassett

GPSC: Weak 4Q21 Outlook from Rising Gas Cost

Last week analyst meeting came out in a neutral tone. The natural gas cost is expected to continue the rally and peak in 2Q22, which will continue...

Pi Securities PCL, Thailand

Buy Siam Future Development (SF TB). Then Buy Some More

Buy Siam Future. Then buy some more. I think you're looking at a minimum 10% upside from here - if using Big C Supercenter's delisting example -...

David Blennerhassett

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