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

<div><div><div><p><strong>Still struggling due to the pandemic</strong><br>AOT continued to report weak earnings results QoQ in 3QFY20/21 owing in part to the new round of the pandemic. Meanwhile, we believe the ongoing spread of COVID-19 in the country will pressure AOT’s share price. We thus maintain our Hold rating pending improvement in the situation and wider deployment of vaccines.</p></div></div></div>

Still struggling due to the pandemic AOT continued to report weak earnings results QoQ in 3QFY20/21 owing in part to the new round of the pandemic. Meanwhile, we believe the ongoing spread of COVID-19 in the country will pressure AOT’s share price. We thus maintain our Hold rating pending improvement in the situation and wider deployment of vaccines.

Company Update: Airports of Thailand Plc. (AOT)

External broker reports(aggregated public sources), Topline Securities

Topline Securities

External broker reports(aggregated public sources)

Topline Securities is one of the fastest growing brokerage houses in Pakistan. It has strong equity brokerage, economic / equity research, mutual fund distribution, commodity trading and corporate finance & advisory functions. Content available is external broker reports authored by a third party outside the Smartkarma network and has been aggregated by an online aggregator through publicly available sources and is displayed by Smartkarma in this format for user's convenience and general informational purposes only. Content does not constitute investment or financial advice and Smartkarma makes no representation or warranty regarding its accuracy or contents. Original third party author retains all copyright and other proprietary rights in the content. Access or use of third party links not controlled by Smartkarma are at the user's own risk.

Thematic (Sector/Industry)

<ul><li>Pakistan market is expected to continue its uptrend in 2017 given tangible gains from China Pakistan Economic Corridor (CPEC) projects and rising domestic demand leading to higher economic growth prospects. This coupled with liquidity with local investors will likely set the stage for further gains in 2017, we believe.</li><li>Pakistan market currently trades at 2017F PE of 9.6x, which is at 23% and 29% discount to Morgan Stanley Composite Index (MSCI) Frontier Markets (FM) forward PE of 12.4x and MSCI Emerging Markets (EM) forward PE of 13.6x, respectively. We are of the view that Pakistan Market PE can potentially re-rate to 10x in 2017. This would be in line with the PE witnessed during high growth period of 2005-08 when Pakistan was part of EM index.</li><li>We expect benchmark KSE-100 Index to rise to 56,000 points by Dec 2017 generating 21% returns (inclusive of dividend). Our sample companies’ profit (representing 70% of KSE-100 index) is expected to grow by 23% in 2017, compared to increase of 1% in 2016, due to 1) re-bound in oil prices and higher oil production, 2) bottoming out of interest rates, 3) higher sales of oil, fertilizer and autos and 4) increased investment in energy sector.</li><li>Resultantly, we expect market capitalization of Pakistan to cross US$100bn in 2017 (30% of GDP) vs. US$89bn now.</li><li>Among other events that can potentially impact market movement is transition to MSCI EM in May 2017, which will keep optimism high. Further, local political issues, global sell-off and delays in implementation of CPEC projects can affect local bourse in 2017, we believe.</li><li>During 2016 YTD, the KSE-100 Index is up 41% compared to relatively flat performance in 2015. This is despite foreign selling of US$267mn during the year, thanks to local liquidity where local mutual funds bought US$264mn and Non-Banking Financial Corporations (NBFC) bought US$215mn whereas Companies and Banks sold total of US$221mn. Pakistan market performance in 2016 remained exceptional compared to regional markets where MSCI FM is down 2% while MSCI EM increased 10% in 2016 YTD.</li><li>We maintain ‘overweight’ stance on Cements, Consumers/Autos, Oil &amp; Gas Marketing and Steel sectors. We expect these sectors to be prime beneficiaries of rising domestic demand and expansion activities led by CPEC. We are of the view that Banks/Insurance will continue to benefit from increased economic activity.</li><li>Our top picks for 2017, which are expected to generate above average returns, are: Habib Bank (HBL), Lucky Cement (LUCK), Pakistan State Oil (PSO), DG Khan Cement (DGKC), Sui North Gas Pipelines (SNGP), Pak Suzuki Motors (PSMC), Pak Elektron (PAEL) and Adamjee Insurance (AICL).</li></ul>

Pakistan market is expected to continue its uptrend in 2017 given tangible gains from China Pakistan Economic Corridor (CPEC) projects and rising domestic demand leading to higher economic growth prospects. This coupled with liquidity with local investors will likely set the stage for further gains in 2017, we believe.Pakistan market currently trades at 2017F PE of 9.6x, which is at 23% and 29% discount to Morgan Stanley Composite Index (MSCI) Frontier Markets (FM) forward PE of 12.4x and MSCI Emerging Markets (EM) forward PE of 13.6x, respectively. We are of the view that Pakistan Market PE can potentially re-rate to 10x in 2017. This would be in line with the PE witnessed during high growth period of 2005-08 when Pakistan was part of EM index.We expect benchmark KSE-100 Index to rise to 56,000 points by Dec 2017 generating 21% returns (inclusive of dividend). Our sample companies’ profit (representing 70% of KSE-100 index) is expected to grow by 23% in 2017, compared to increase of 1% in 2016, due to 1) re-bound in oil prices and higher oil production, 2) bottoming out of interest rates, 3) higher sales of oil, fertilizer and autos and 4) increased investment in energy sector.Resultantly, we expect market capitalization of Pakistan to cross US$100bn in 2017 (30% of GDP) vs. US$89bn now.Among other events that can potentially impact market movement is transition to MSCI EM in May 2017, which will keep optimism high. Further, local political issues, global sell-off and delays in implementation of CPEC projects can affect local bourse in 2017, we believe.During 2016 YTD, the KSE-100 Index is up 41% compared to relatively flat performance in 2015. This is despite foreign selling of US$267mn during the year, thanks to local liquidity where local mutual funds bought US$264mn and Non-Banking Financial Corporations (NBFC) bought US$215mn whereas Companies and Banks sold total of US$221mn. Pakistan market performance in 2016 remained exceptional compared to regional markets where MSCI FM is down 2% while MSCI EM increased 10% in 2016 YTD.We maintain ‘overweight’ stance on Cements, Consumers/Autos, Oil &amp; Gas Marketing and Steel sectors. We expect these sectors to be prime beneficiaries of rising domestic demand and expansion activities led by CPEC. We are of the view that Banks/Insurance will continue to benefit from increased economic activity.Our top picks for 2017, which are expected to generate above average returns, are: Habib Bank (HBL), Lucky Cement (LUCK), Pakistan State Oil (PSO), DG Khan Cement (DGKC), Sui North Gas Pipelines (SNGP), Pak Suzuki Motors (PSMC), Pak Elektron (PAEL) and Adamjee Insurance (AICL).

Thailand

Bangkok Expressway and Metro PCL is a transportation company. The Company combines toll and metro line networks. Bangkok Expressway and Metro is based in Thailand.

Bangkok Aviation Fuel Services Public Company Limited is provider of aviation fuel services including aviation depot and aircraft refueling services at the Bangkok International Airport (Donmuang) and the New Bangkok International Airport at Suvarnabhumi.

Namyong Terminal PCL is a roll on roll off terminal operator. The Company offers terminal services, car storage areas and warehousing services in Thailand.

Bangkok Airways Company Limited offers air transportation services. The Company operates flights and airports to various resort destinations in Thailand, Myanmar, Laos, Cambodia, Vietnam, Malaysia, Singapore, China, and Japan.

BTS Group Holdings PCL is primarily in the business of Mass Transit.  The Company operates Bangkok's BTS SkyTrain system and the Bus Rapid Transit (BRT) System. BTS Group Holdings PCL is also involved in Media & Advertising, Property Development, and Services business.

Asia Aviation PCL owns a budget airline.  The airline offers low fare flights, online booking, hospitality packages, and courier and cargo services. Asia Aviation serves travelers throughout Asia, the Middle East, and Europe.

Regional Container Lines Public Company Limited provides ocean freight transportation services. The Company owns and operates a fleet of container vessels covering more than 70 destinations in Asia, Australia, and the Middle East.

BTS Rail Mass Transit Growth Infrastructure Fund is a closed-end fund incorporated in Thailand. The Fund's objective is to achieve income. The Fund invests in the Core BTS Sky Train System from BTSC, which includes the Core Sukhumvit Line & the Core Silom Line.

BTS Rail Mass Transit Growth I (BTSGIF TB)

JWD Infologistics PCL is an information technology company. The Company focuses on maximizing the benefits of managing supply chains and fully integrated logistics solutions. JWD Infologistics operates in Southeast Asia

Transurban Group owns and operates urban toll road networks. The Company has core capabilities in network planning and forecasting, operations and customer management, project development and delivery, technology application, and community engagement. Transurban operates in Australia and North America.

Shanghai International Airport Co., Ltd. operates Pudong Airport and Hongquiao airport in Shanghai.   The Company provides a full range of services including air traffic control, terminal management, cargo handling, advertising, space rental, and other related services.

Shanghai International Airport (600009 CH)

Ningbo Port Company Limited primarily provides container, iron ore, crude oil and other cargo handling and related services. The Company also provides integrated logistics and other businesses.

Shanghai International Port (Group) Co., Ltd is a holding company that owns interests in container and port service companies.

Shanghai International Port Group (600018 CH)

International Container Terminal Services, Inc. provides containerized cargo handling services. The Company also manages and operates the Manila International Container Terminal and port.

Atlantia SpA manages transport infrastructures. The Company provides electronic tolling systems, airport automation, and traffic information services. Atlantia manages toll road networks in Italy, Brazil, Chile, India and Poland as well as airports in Rome.

Aena S.A. manages general interest airports and heliports in Spain. The Company, through its subsidiaries, also participates in the management of airports abroad.

Aeroports de Paris (ADP) manages all the civil airports in the Paris area.  The Company also develops and operates light aircraft aerodromes.  ADP offers air transport related services, and business services such as office rental.

Getlink S.E. provides transport support services. The Company operates mobility infrastructures such as cross-channel transport networks, rail freight, and tunnels. Getlink serves customers in France and the United Kingdom.

Grupo Aeroportuario del Sureste S.A.B. de C.V. operates airports in Mexico.  The Company holds 50 year concessions, beginning in 1998, to manage airports in Cancun, Cozumel, Merida, Oaxaca, Veracruz, Huatulco, Tapachula, Minatitlan, and Villahermosa.

Airports of Thailand Public Company Ltd. operates the Bangkok International Airport (Don Muang) and the New Bangkok International Airport (Suvarnabhumi).. The Company also operates provincial airports in Chiang Mai, Chiang Rai, Hat Yai, and Phuket.

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Airports of Thailand (AOT TB)

Company Update: Airports of Thailand Plc. (AOT)

Still struggling due to the pandemic, AOT continued to report weak earnings results QoQ in 3QFY20/21 owing in part to the new round of the pandemic.

Krungthai XSpring

Pakistan Market Outlook 2017

Pakistan market is expected to continue its uptrend in 2017 given tangible gains from China Pakistan Economic Corridor (CPEC) projects and rising...

Topline Securities

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