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.

Equity Bottom-Up

<p><strong>We maintain our SELL recommendation on CHAYO but raise our target price to Bt13.70 (previously Bt8.70), implying a downside of 20% from the current price. We derive our target price from a 30% premium to the 2022E PB of Thai Diversified Financials, giving a 2022E 4x target PB.</strong></p>
<p><strong>Investment thesis:</strong></p>
<ul>
<li>Rising level of bad loans in Thailand can boost core business</li>
<li>Economic uncertainty helps to expand the customer base for debt collection</li>
<li>Capital injection for new subsidiary helps to boost business</li>
<li>Debt collection to further benefit from increasing mobile usage</li>
<li>Joining the hemp hype supposed to bring additional income</li>
</ul>
<p><strong>Interim:</strong> The 1Q21 results were strong, and we revise our loan growth and loan yield slightly upward. However, we still think that the stock trades too expensive.</p>
<p><strong>Risks:</strong> Increased competition in acquiring non-performing loans, loss from unsecured debt management, adverse regulatory changes, and potential litigation issues arising from debt collection service.</p>

We maintain our SELL recommendation on CHAYO but raise our target price to Bt13.70 (previously Bt8.70), implying a downside of 20% from the current price. We derive our target price from a 30% premium to the 2022E PB of Thai Diversified Financials, giving a 2022E 4x target PB.
Investment thesis:

Rising level of bad loans in Thailand can boost core business
Economic uncertainty helps to expand the customer base for debt collection
Capital injection for new subsidiary helps to boost business
Debt collection to further benefit from increasing mobile usage
Joining the hemp hype supposed to bring additional income

Interim: The 1Q21 results were strong, and we revise our loan growth and loan yield slightly upward. However, we still think that the stock trades too expensive.
Risks: Increased competition in acquiring non-performing loans, loss from unsecured debt management, adverse regulatory changes, and potential litigation issues arising from debt collection service.

CHAYO: No Cheap Opportunity to Participate in High Growth

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

Telekomunikasi Indonesia / Equity Bottom-Up

<p><a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a> reported FY2020 results recently, which continued to reflect the company's ongoing digital transformation and increasing importance as a proxy for Indonesia's booming digital economy, with Telkomsel's digital business increasing its contribution to 71.6% of sales in FY2020 versus 63.9% in FY2019. </p>
<p>The company's broadband service Indihome also continues to show strong performance, with revenue up by +21.2% driven by strong growth in subscribers and improving ARPU.</p>
<p>The enterprise segment also showed surprisingly strong growth during the year but especially in 4Q2020, where it saw revenue growth of +67.9% YoY driven by data centres.</p>
<p>Telkomsel deployed a further 27,700 new towers in FY2020, bringing the total to 231,200 BTS towers and it continues to transfer towers to Mitratel.</p>
<p><a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a> recently further increased its investment into <a href="https://www.smartkarma.com/entities/gojek" target="_blank" data-smartkarma-citation="entities:25976:1" rel="noopener">Gojek</a> to US$450m signifying its commitment to the digital economy.</p>
<p><a href="https://www.smartkarma.com/entities/telekomunikasi-indonesia" target="_blank" data-smartkarma-citation="entities:1051:1" rel="noopener">Telekomunikasi Indonesia (TLKM IJ)</a> remains an increasingly interesting play on Indonesia's growing appetite for data and broadband services, as these areas take over as growth drivers for the company and the legacy voice and SMS businesses fade. The increasing exposure to digital services outside providing the network and data make it a potential candidate for a digital re-rating. The company trades on 5.6x FY2021E EV/EBITDA and 4.8x FY22E EV/EBITDA versus the 5-year average of 6.2x forward EV/EBITDA, making it attractive even without any re-rating.</p>
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Telekomunikasi Indonesia (TLKM IJ) reported FY2020 results recently, which continued to reflect the company's ongoing digital transformation and increasing importance as a proxy for Indonesia's booming digital economy, with Telkomsel's digital business increasing its contribution to 71.6% of sales in FY2020 versus 63.9% in FY2019. 
The company's broadband service Indihome also continues to show strong performance, with revenue up by +21.2% driven by strong growth in subscribers and improving ARPU.
The enterprise segment also showed surprisingly strong growth during the year but especially in 4Q2020, where it saw revenue growth of +67.9% YoY driven by data centres.
Telkomsel deployed a further 27,700 new towers in FY2020, bringing the total to 231,200 BTS towers and it continues to transfer towers to Mitratel.
Telekomunikasi Indonesia (TLKM IJ) recently further increased its investment into Gojek to US$450m signifying its commitment to the digital economy.
Telekomunikasi Indonesia (TLKM IJ) remains an increasingly interesting play on Indonesia's growing appetite for data and broadband services, as these areas take over as growth drivers for the company and the legacy voice and SMS businesses fade. The increasing exposure to digital services outside providing the network and data make it a potential candidate for a digital re-rating. The company trades on 5.6x FY2021E EV/EBITDA and 4.8x FY22E EV/EBITDA versus the 5-year average of 6.2x forward EV/EBITDA, making it attractive even without any re-rating.




Telkom Indonesia (TLKM IJ) - Digital Catalysts Abound?

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

Advanced Info Service  / Equity Bottom-Up

<p><strong>ADVANC reported 1Q21 net profit of Bt6.6bn (-2%YoY, -7%QoQ). The 3M20 result was 24% of our full-year forecast.</strong></p><div>• Excluding FX gain/loss items, 1Q21 earnings from continuing operations was at Bt6.9bn (-4%YoY, +3%QoQ).</div><div></div><div>• A decrease in earnings performance YoY was due to higher amortization cost from 5G spectrum license.</div><div></div><div>• ARPU continuously decreased to Bt232 (-4%YoY,-1%QoQ), an all-time low level. Meanwhile, mobile subscriber was at 42.8 million subscribers (+4%YoY,+3%QoQ), an all-time high level.</div><div></div><div>• Maintain its leadership position and growth momentum.</div><div>
<br>
</div><p><strong>We maintain BUY rating and target price of Bt233.0, derived from a DCF, implying 24.8xPE’21E, 7% premium to the World telecoms sector. Our rating are also backed by robust earnings with 4% dividend yield and its largest total spectrum of bandwidth compared to peers.</strong></p>

ADVANC reported 1Q21 net profit of Bt6.6bn (-2%YoY, -7%QoQ). The 3M20 result was 24% of our full-year forecast.• Excluding FX gain/loss items, 1Q21 earnings from continuing operations was at Bt6.9bn (-4%YoY, +3%QoQ).• A decrease in earnings performance YoY was due to higher amortization cost from 5G spectrum license.• ARPU continuously decreased to Bt232 (-4%YoY,-1%QoQ), an all-time low level. Meanwhile, mobile subscriber was at 42.8 million subscribers (+4%YoY,+3%QoQ), an all-time high level.• Maintain its leadership position and growth momentum.
 
We maintain BUY rating and target price of Bt233.0, derived from a DCF, implying 24.8xPE’21E, 7% premium to the World telecoms sector. Our rating are also backed by robust earnings with 4% dividend yield and its largest total spectrum of bandwidth compared to peers.

ADVANC: 1Q21 Normalized Earnings Slightly Recovered QoQ

Pan-Asia Catalysts/Events, Quiddity Advisors

David Blennerhassett

Pan-Asia Catalysts/Events

Quiddity Advisors

Event-Driven

Last Week in Event SPACE:  Intouch, Toshiba, Orocobre/Galaxy, Tilt, Primewest/Centuria, Huarong

<div>
<p>This week in StubWorld ...</p>
</div>
<div>
<div class="content-highlight">
<p>The spread to terms on <a href="https://www.smartkarma.com/entities/gulf-energy-development-public-company-limited" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development Public Company (GULF TB)</a>'s Offer for <a href="https://www.smartkarma.com/entities/intouch-holdings-pcl" target="_blank" data-smartkarma-citation="entities:17638:1" rel="noopener">Intouch Holdings (INTUCH TB)</a> narrows as completion appears a formality.</p>
</div>
</div>
<div>
<p>Preceding my comments on Intouch and other stubs are the weekly setup/unwind tables for Asia-Pacific Holdcos.</p>
</div>
<div>
<p>These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.</p>
</div>


This week in StubWorld ...



The spread to terms on Gulf Energy Development Public Company (GULF TB)'s Offer for Intouch Holdings (INTUCH TB) narrows as completion appears a formality.



Preceding my comments on Intouch and other stubs are the weekly setup/unwind tables for Asia-Pacific Holdcos.


These relationships trade with a minimum liquidity threshold of US$1mn on a 90-day moving average, and a % market capitalisation threshold - the $ value of the holding/opco held, over the parent’s market capitalisation, expressed in percent - of at least 20%.


StubWorld: Intouch/Gulf, Yodogawa/Sheng Yu Steel, Pan Asia Chemical/Taichung Commercial

Thailand

Advanced Info Service Public Company Limited is granted a 25-year concession expiring the year 2015 by the Telephone Organization of Thailand to provide cellular phone services.  The Company provides analog mobile phone services through the Nordic Mobile Telephone (NMT900) network, and digital phone services through the Global Systems for Mobile Communication (GSM) network.

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Advanced Info Service (ADVANC TB)

CHAYO: No Cheap Opportunity to Participate in High Growth

We maintain our SELL recommendation on CHAYO but raise our target price to Bt13.70 (previously Bt8.70), implying a downside of 20% from the current...

A. Stotz Investment Research

Telkom Indonesia (TLKM IJ) - Digital Catalysts Abound?

Telkom Indonesia is increasingly exposed to the digital economy, not just through data and network but through digital mobile services, fixed...

Angus Mackintosh

ADVANC: 1Q21 Normalized Earnings Slightly Recovered QoQ

We maintain BUY rating and target price of Bt233.0, derived from a DCF, implying 24.8xPE’21E, 7% premium to the World telecoms sector. Our rating...

Pi Securities PCL, Thailand

Last Week in Event SPACE: Intouch, Toshiba, Orocobre/Galaxy, Tilt, Primewest/Centuria, Huarong

The weekend is here! Pour yourself a coffee, grab a comfortable seat, and sift through a brief summary of insights on various events discussed...

David Blennerhassett

StubWorld: Intouch/Gulf, Yodogawa/Sheng Yu Steel, Pan Asia Chemical/Taichung Commercial

Trading at a 1.6%/4.0% gross/annualised spread. I'd wait for any weakness before entering (if playing the arb) at ~4% gross spread to terms, where...

David Blennerhassett

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