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

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

<ul>
<li>We expect 4Q21 earnings to recover from 3Q bottom quarter, driven by higher petrochemical spreads, gradual rise in CBM demand volume, and consolidation in packaging business.   </li>
<li>Expect 4Q21 revenue to grow both YoY and QoQ, through higher chemical prices, and cement demand from resumption of construction projects.</li>
<li>Maintain positive on 2022 outlook, following reopening economic activities should see demand recovery for both CBM and packaging units. Likewise, chemical spreads are cushion by higher prices, despite feedstock hike. </li>
</ul>


We expect 4Q21 earnings to recover from 3Q bottom quarter, driven by higher petrochemical spreads, gradual rise in CBM demand volume, and consolidation in packaging business.   
Expect 4Q21 revenue to grow both YoY and QoQ, through higher chemical prices, and cement demand from resumption of construction projects.
Maintain positive on 2022 outlook, following reopening economic activities should see demand recovery for both CBM and packaging units. Likewise, chemical spreads are cushion by higher prices, despite feedstock hike. 


SCC: CBM & Packaging Are White Knights to Drive 2022 Earnings

ASEAN Insight Provider, CrossASEAN Research

Angus Mackintosh

ASEAN Insight Provider

CrossASEAN Research

At CrossASEAN Research we strive to produce unbiased and differentiated on the ground insights on companies across South East Asia. Our Research is produced for the most part after face to face meetings and conversations with company management to dig deep into the long term vision and strategy of the companies we cover. We seek to deliver investable and actionable themes on sectors and markets across SE Asia, often in collaboration with other Insight Providers across the region, pooling the vast experience of the analysts within the Smartkarma Ecosystem. We also offer bespoke work and tailor made trips for our clients. 

Insights across South East Asia

Indocement Tunggal Prakarsa / Equity Bottom-Up

<div class="content-highlight">
<p><span data-preserver-spaces="true">Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market </span></p>
</div>
<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"><span data-preserver-spaces="true">Indocement Tunggal Prakarsa (INTP IJ)</span></a><span data-preserver-spaces="true"> released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  </span><span data-preserver-spaces="true">EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn. <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" rel="noopener"></a></span><span data-preserver-spaces="true"> </span></p>
<section class="figure">One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.</section>
<section class="figure">
<figure class="editor-figure mceNonEditable"></figure>
</section>
<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.</p>
<p>The fact that around 78% of cement sales at <a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.</p>
<section class="figure">The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.</section>
<section class="figure"></section>
<section class="figure"></section>
<section class="figure"></section>
<section class="figure"></section>
<section class="figure"></section>
<p><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.</p>
<p>The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. </p>
<p><span data-preserver-spaces="true"><a href="https://www.smartkarma.com/entities/indocement-tunggal-prakarsa" target="_blank" data-smartkarma-citation="entities:4040:1" rel="noopener">Indocement Tunggal Prakarsa (INTP IJ)</a> trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. </span></p>


Given we are now coming out of Indonesia's latest wave of COVID-19 and mobility and economic activity is resuming , we see Indocement Tunggal Prakarsa (INTP IJ) as an interesting proxy for the recovery, given its exposure to West Java, infrastructure spending, and the recovering residential property market 

Indocement Tunggal Prakarsa (INTP IJ) released a solid set of 1H2021 results, with an increase in revenue of +8.0% YoY on the back of an increase in cement volume.  EBITDA margins improved from 15.5% to 19.2% due to savings in operating expenses and gains in other operating income, leading to an EBITDA increase of +33.6% YoY to IDR1,280.6bn.  
One major cost pressure comes from rising coal prices, which have increased significantly over the past year and the company has been continually both increasing its usage of low calorific coal and alternative fuels over the past 5-years to offset this.



Indocement Tunggal Prakarsa (INTP IJ) has a strong focus on improving its emissions, with assistance from the Heidelberg Cement Technology Centre, with a road map in place for energy efficiency and CO2 reductions.
The fact that around 78% of cement sales at Indocement Tunggal Prakarsa (INTP IJ) is in bags makes branding all the more important and as a result the company is quite focused on promoting the brand through TV and social media channels.
The company continues with its digitalisation and has developed a fully digitalised ordering system with real time data which helps the company's sales to achieve better results both on ordering as well as on pricing.





Indocement Tunggal Prakarsa (INTP IJ) estimates that national cement domestic growth will increase by +5% for FY2021 with the resumption of more infrastructure projects and private projects in 2H2021 plus more activity in residential property.
The company's expansion will be focused on expanding its distribution channels through possible new terminals and barge or vessel ownership, as well as potentially exploring M&amp;A opportunities. 
Indocement Tunggal Prakarsa (INTP IJ) trades on 11.1x FY21E EV/EBITDA and 9.9x FY22E EV/EBITDA versus its 5-year average forward EV/EBITDA of 15x, making the company look attractive from a valuation perspective. 

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

<p><strong>We maintain HOLD rating with 2022E target price of Bt445.00, derived from 12.5xPE’22E,  which is its 3-year trading average. Given the earnings outlook we view neutral for the stock.</strong></p><div>• SCC delivered impressive performance in 2Q21, mainly driven by petrochemical business.</div><div></div><div>• Earnings should retreat HoH in 2H21E, given the contraction of petrochemical business.</div><div></div><div>• We revised up 2021E earnings forecast by 5% to reflect better than expect 2Q21 result. However, we trimmed 2022E earnings by 5%, given the declining in petrochemical spread.</div><div></div><div>• SCC subscribed Chandra Asri’s equity rights issue, its associated company in Indonesia, to maintain its stake in the company. The budget is about 2% of SCC total asset.</div><div></div><div>• For LSP project in Vietnam, the progress is on planned at 83%. The commercialization is expected in 1H23.</div>

We maintain HOLD rating with 2022E target price of Bt445.00, derived from 12.5xPE’22E,  which is its 3-year trading average. Given the earnings outlook we view neutral for the stock.• SCC delivered impressive performance in 2Q21, mainly driven by petrochemical business.• Earnings should retreat HoH in 2H21E, given the contraction of petrochemical business.• We revised up 2021E earnings forecast by 5% to reflect better than expect 2Q21 result. However, we trimmed 2022E earnings by 5%, given the declining in petrochemical spread.• SCC subscribed Chandra Asri’s equity rights issue, its associated company in Indonesia, to maintain its stake in the company. The budget is about 2% of SCC total asset.• For LSP project in Vietnam, the progress is on planned at 83%. The commercialization is expected in 1H23.

<p><strong>We downgrade our recommendation to HOLD rating, from BUY, with new target price of Bt445.00, -19% from Bt553.00 previously, valued from Sum of the Parts valuation, divided to i) Petrochemical and CBM businesses at Bt334/share, derived from 10.6x PE, which is -1 SD of SCC’s 5 years trading average, and, ii) Packaging business at Bt111/share, derived from 15% conglomerate discounted to 21.3xPE valuation. We maintained valuation in Packaging part but de-rated valuation in Petrochemical and CBM part given the soften petrochemical outlook.</strong></p><div>• We expect SCC to report 2Q21E net profit of Bt14bn (+51%YoY, -5%QoQ). While, the YoY increase came from Packaging business expansion and better petrochemical price, the QoQ decrease was mainly due to lower margin in petrochemical business.</div><div></div><div>• We expect soften outlook for 2H21E, weighted down by petrochemical business, which selling price and spread of key products have contracted since the late of 2Q21. Currently, HDPE spread is about US$466/ton, down from US$585-588/ton in 1Q21-2Q21. PP spread is about US$579/ton, down from US$730-808/ton in 1Q21-2Q21. The squeeze came from both lower selling price due to more supply in the market, and higher cost, following the oil price spike.</div>

We downgrade our recommendation to HOLD rating, from BUY, with new target price of Bt445.00, -19% from Bt553.00 previously, valued from Sum of the Parts valuation, divided to i) Petrochemical and CBM businesses at Bt334/share, derived from 10.6x PE, which is -1 SD of SCC’s 5 years trading average, and, ii) Packaging business at Bt111/share, derived from 15% conglomerate discounted to 21.3xPE valuation. We maintained valuation in Packaging part but de-rated valuation in Petrochemical and CBM part given the soften petrochemical outlook.• We expect SCC to report 2Q21E net profit of Bt14bn (+51%YoY, -5%QoQ). While, the YoY increase came from Packaging business expansion and better petrochemical price, the QoQ decrease was mainly due to lower margin in petrochemical business.• We expect soften outlook for 2H21E, weighted down by petrochemical business, which selling price and spread of key products have contracted since the late of 2Q21. Currently, HDPE spread is about US$466/ton, down from US$585-588/ton in 1Q21-2Q21. PP spread is about US$579/ton, down from US$730-808/ton in 1Q21-2Q21. The squeeze came from both lower selling price due to more supply in the market, and higher cost, following the oil price spike.

SCC : Expected Strong 2Q21E but Would Lose Momentum in 3Q21E

<p><strong>We maintain BUY rating with new 2022E target price of Bt553.00, from Bt462.00, valued from Sum of the Parts valuation, divided to i) Petrochemical and CBM businesses at Bt442/share, derived from 14.0x PE, which is +0.5 SD of SCC’s 7 years trading average, and, ii) Packaging business at Bt111/share, derived from 15% conglomerate discounted to 21.3xPE valuation.</strong></p><div>• SCC delivered impressive performance in 1Q21, driven by all business units.</div><div></div><div>• The solid earnings should be intact in 2Q21.</div><div></div><div>• Management disclosed that SCC is in the process of exploring the feasibility of Chemicals business restructuring, which includes the possibility of SCG Chemicals’ IPO.</div><div>
<br>
</div><p><strong>The chemical business IPO should be a re-rating catalyst for SCC, given it is the largest business in the group. Meanwhile, SCC has proven track record in SCGP spin off.</strong></p>

We maintain BUY rating with new 2022E target price of Bt553.00, from Bt462.00, valued from Sum of the Parts valuation, divided to i) Petrochemical and CBM businesses at Bt442/share, derived from 14.0x PE, which is +0.5 SD of SCC’s 7 years trading average, and, ii) Packaging business at Bt111/share, derived from 15% conglomerate discounted to 21.3xPE valuation.• SCC delivered impressive performance in 1Q21, driven by all business units.• The solid earnings should be intact in 2Q21.• Management disclosed that SCC is in the process of exploring the feasibility of Chemicals business restructuring, which includes the possibility of SCG Chemicals’ IPO.
 
The chemical business IPO should be a re-rating catalyst for SCC, given it is the largest business in the group. Meanwhile, SCC has proven track record in SCGP spin off.

SCC : On the Way to Unlock Chemical Business’s Value

Thailand

The Siam Cement Public Company Limited is a diversified industrial company. The Company's operations include cement manufacturing, petrochemicals manufacturing, paper manufacturing, building product manufacturing, and distribution.

Price Gauge
52-week Range	0.00 - 0.00
Market Cap (USDm)	0.00
P/E	0.00
Dividend (Yield)	0.00

Siam Cement (SCC TB)

SCC: CBM & Packaging Are White Knights to Drive 2022 Earnings

We expect 4Q21 earnings to recover from 3Q bottom quarter, driven by higher petrochemical spreads, gradual rise in CBM demand volume, and...

Pi Securities PCL, Thailand

Indocement Tunggal Prakasa (INTP IJ) - Bulky Recovery in Place

We see Indocement as an interesting and high-quality proxy to the recovery in the Indonesian economy, given its exposure to infrastructure through...

Angus Mackintosh

SCC : Earnings Should Retreat in 2H21E

We maintain HOLD rating with 2022E target price of Bt445.00, derived from 12.5xPE’22E, which is its 3-year trading average. Given the earnings...

Pi Securities PCL, Thailand

SCC : Expected Strong 2Q21E but Would Lose Momentum in 3Q21E

We downgrade our recommendation to HOLD rating, from BUY, with new target price of Bt445.00, -19% from Bt553.00 previously, valued from Sum of the...

Pi Securities PCL, Thailand

SCC : On the Way to Unlock Chemical Business’s Value

We maintain BUY rating with new 2022E target price of Bt553.00, from Bt462.00, valued from Sum of the Parts valuation, divided to i) Petrochemical...

Pi Securities PCL, Thailand

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)