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

<p><strong>We expect PTTEP to post a solid 2Q21 net profit of Bt9.6bn (+121% YoY, -17% QoQ) on the back of improved sales and average selling price, after hit by pandemic in  2Q20.</strong></p><p>• The YoY surge is mainly attributed to 33% growth in sales volume and  115% spike in reference Dubai crude oil price. While QoQ slump is due to absence of Bt10.7bn booked in 1Q21 from bargain purchase of Oman block 61 project.</p><p>• Bright 2021 earnings outlook  with a 98% EPS growth on the back of improved volume sales (+14% YoY) and recovering crude oil price (+60% YoY).</p><div>• Revise up our 2021-23 earnings forecast on the back of 8-to-22% growth in crude oil sales price assumption.</div><div></div><div><strong>We maintain the BUY  recommendation, while upgrade our target price by 11% to Bt146, on the back of +32-to-41% earnings revision for 2021-23 period considering better crude oil price outlook. Our valuation is derived using DCF methodology (WACC 9.4%, TG 2%), implying 11x PE’22.</strong></div>

We expect PTTEP to post a solid 2Q21 net profit of Bt9.6bn (+121% YoY, -17% QoQ) on the back of improved sales and average selling price, after hit by pandemic in  2Q20.• The YoY surge is mainly attributed to 33% growth in sales volume and  115% spike in reference Dubai crude oil price. While QoQ slump is due to absence of Bt10.7bn booked in 1Q21 from bargain purchase of Oman block 61 project.• Bright 2021 earnings outlook  with a 98% EPS growth on the back of improved volume sales (+14% YoY) and recovering crude oil price (+60% YoY).• Revise up our 2021-23 earnings forecast on the back of 8-to-22% growth in crude oil sales price assumption.We maintain the BUY  recommendation, while upgrade our target price by 11% to Bt146, on the back of +32-to-41% earnings revision for 2021-23 period considering better crude oil price outlook. Our valuation is derived using DCF methodology (WACC 9.4%, TG 2%), implying 11x PE’22.

PTTEP: Record Sales to Drive 2Q21 Earnings

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

<p>We highlight 14 stocks in Thailand that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Thai market to try to find interesting ideas base upon Fundamentals or Valuation or Momentum or Risk or some combination thereof.</p>

We highlight 14 stocks in Thailand that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Thai market to try to find interesting ideas base upon Fundamentals or Valuation or Momentum or Risk or some combination thereof.

The Stocks to Own in Thailand – Vol. 33

<p><strong>Yesterday analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt131.0 derived using DCF methodology (WACC 9.4%, TG 2%), implying 13.4x PE’22.</strong></p><div>• PTTEP reported 1Q21 net profit of Bt11.5bn (+34% YoY, +3565 QoQ). The strong earnings growth was supported by improved sales revenue and Bt10,7bn gain from bargain purchase of Oman block 61 project.</div><div></div><div>• Excluding non-recurring items (FX, oil hedging etc) the core profit was at Bt8.8bn (-3% YoY, +66% QoQ).</div><div></div><div>• Bright 2Q21 earnings outlook as the sales volume is expected to improve to 416 kBOED (+27% YoY, +9% QoQ), while average sales price should stabilize at US$41/bbl (+17% YoY, +2% QoQ).</div><div></div><div>• No impact on PTTEP operations from Myanmar political situation, force majeure declared for Mozambique Area 1 project.</div>

Yesterday analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt131.0 derived using DCF methodology (WACC 9.4%, TG 2%), implying 13.4x PE’22.• PTTEP reported 1Q21 net profit of Bt11.5bn (+34% YoY, +3565 QoQ). The strong earnings growth was supported by improved sales revenue and Bt10,7bn gain from bargain purchase of Oman block 61 project.• Excluding non-recurring items (FX, oil hedging etc) the core profit was at Bt8.8bn (-3% YoY, +66% QoQ).• Bright 2Q21 earnings outlook as the sales volume is expected to improve to 416 kBOED (+27% YoY, +9% QoQ), while average sales price should stabilize at US$41/bbl (+17% YoY, +2% QoQ).• No impact on PTTEP operations from Myanmar political situation, force majeure declared for Mozambique Area 1 project.

PTTEP: Strong Operations to Support 2Q21 Earnings and Ahead

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The Stock Exchange of Thailand (SET) has commenced a market consultation on changing the <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-50-index" target="_blank" data-smartkarma-citation="entities:31493:1" rel="noopener">Stock Exchange of Thailand SET 50 Index (SET50 INDEX)</a>, SET100 and SETHD indices to free float market cap weighted indices from the upcoming rebalance in June.</p><p>The market consultation document is short on detail, but the main points are the change in index calculation from full market cap weighted to free float market cap weighted, implementation of the changes in two tranches at the June and December reviews, and implementation of quarterly changes in free float for moves of +/-5%.</p><p>The biggest uncertainty for us is whether the selection of the stocks for inclusion/exclusion will use the full market cap or the free float market cap.</p><p>Using the full market cap for stock selection could see 3 changes at the upcoming June review, while using free float market cap for stock selection could result in up to 6 changes at the review. The two step implementation of the free float changes will dampen the index turnover but it will still be relatively high, ranging from a one-way turnover of 7.8% for changes in free float only to 9.52% if the stock selection methodology uses free float market cap.</p><p>In this Insight, we look at the proposed changes and enumerate three scenarios, the changes they will entail, the impact on the stocks and the turnover for each scenario.</p>

The Stock Exchange of Thailand (SET) has commenced a market consultation on changing the Stock Exchange of Thailand SET 50 Index (SET50 INDEX), SET100 and SETHD indices to free float market cap weighted indices from the upcoming rebalance in June.The market consultation document is short on detail, but the main points are the change in index calculation from full market cap weighted to free float market cap weighted, implementation of the changes in two tranches at the June and December reviews, and implementation of quarterly changes in free float for moves of +/-5%.The biggest uncertainty for us is whether the selection of the stocks for inclusion/exclusion will use the full market cap or the free float market cap.Using the full market cap for stock selection could see 3 changes at the upcoming June review, while using free float market cap for stock selection could result in up to 6 changes at the review. The two step implementation of the free float changes will dampen the index turnover but it will still be relatively high, ranging from a one-way turnover of 7.8% for changes in free float only to 9.52% if the stock selection methodology uses free float market cap.In this Insight, we look at the proposed changes and enumerate three scenarios, the changes they will entail, the impact on the stocks and the turnover for each scenario.

SET50 Index - Proposed Methodology Changes: Scenarios, Names Affected & Impact

<p><strong>Yesterday analyst meeting came out in positive tone. We see the acquisition of 20% stake in Oman block 61 gas project will aid PTTEP’s sales volume growth and improve GPM  beginning 2021.</strong></p><div>• Expect 1Q21 earnings to soften YoY mainly due to decline in average selling price. While improve Q0Q as there will be no significant losses from financial instrument and asset impairment compared to 4Q20.</div><div></div><div>• The Oman Block 61 gas project is anticipated to be the new growth driver for PTTEP given 1) Increase in volume sales by 10% 2)  higher EBITDA margin, and 3)substantial reserve addition (0.5 to 1 year).</div><div></div><div>• Bright 2021 earnings outlook as the new investment in Oman will increase the volume sales to 398 kBOED (+12% YoY, and 6% higher than previous guidance of 375 kBOED) and improving GPM from lower unit cost (-6% YoY)</div><p></p><p><strong>We maintain our BUY  recommendation, while revise up the target price to Bt131 (from previous Bt125) on the back of the earnings revision incorporating Oman Block 61 project. Our valuation is derived using DCF methodology (WACC 9.4%, TG 2%), implying 16x PE’21.</strong></p>

Yesterday analyst meeting came out in positive tone. We see the acquisition of 20% stake in Oman block 61 gas project will aid PTTEP’s sales volume growth and improve GPM  beginning 2021.• Expect 1Q21 earnings to soften YoY mainly due to decline in average selling price. While improve Q0Q as there will be no significant losses from financial instrument and asset impairment compared to 4Q20.• The Oman Block 61 gas project is anticipated to be the new growth driver for PTTEP given 1) Increase in volume sales by 10% 2)  higher EBITDA margin, and 3)substantial reserve addition (0.5 to 1 year).• Bright 2021 earnings outlook as the new investment in Oman will increase the volume sales to 398 kBOED (+12% YoY, and 6% higher than previous guidance of 375 kBOED) and improving GPM from lower unit cost (-6% YoY)We maintain our BUY  recommendation, while revise up the target price to Bt131 (from previous Bt125) on the back of the earnings revision incorporating Oman Block 61 project. Our valuation is derived using DCF methodology (WACC 9.4%, TG 2%), implying 16x PE’21.

PTTEP: Oman Block 61 Gas Project to Be New Growth Driver

Thailand

PTT Exploration and Production Public Company Limited explores for crude oil and natural gas, develops fields for production, and produces oil and natural gas. The Company is a subsidiary of the Petroleum Authority of Thailand.

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PTT E&P (PTTEP TB)

PTTEP: Record Sales to Drive 2Q21 Earnings

We expect PTTEP to post a solid 2Q21 net profit of Bt9.6bn (+121% YoY, -17% QoQ) on the back of improved sales and average selling price, after hit...

Pi Securities PCL, Thailand

The Stocks to Own in Thailand – Vol. 33

Our Thai portfolio has gained 85% versus the SET 100 Index’s return of 30%. Since the last rebalancing, it has had 10 major outperformers: RCL,...

A. Stotz Investment Research

PTTEP: Strong Operations to Support 2Q21 Earnings and Ahead

Yesterday analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt131.0 derived using DCF...

Pi Securities PCL, Thailand

SET50 Index - Proposed Methodology Changes: Scenarios, Names Affected & Impact

The SET has commenced a market consultation on the proposed changes to make its indices free float market cap weighted. We look at the impact on...

Brian Freitas

PTTEP: Oman Block 61 Gas Project to Be New Growth Driver

Yesterday analyst meeting came out in positive tone. We see the acquisition of 20% stake in Oman block 61 gas project will aid PTTEP’s sales volume...

Pi Securities PCL, Thailand

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