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

<ul><li>The 3Q24 results turned to a loss as expected (due to sustained low refining margins and stock losses). We maintain our earnings forecast.</li><li>We expect the 2024E core profit to decline YoY, though to a lesser extent than peers (owing to the full-year consolidation of BSRC and OKEA's new petroleum acquisitions).</li><li>We anticipate an upward trend in 2025-26E (15% CAGR), supported by the new contribution from the SAF project.</li></ul>

The 3Q24 results turned to a loss as expected (due to sustained low refining margins and stock losses). We maintain our earnings forecast.We expect the 2024E core profit to decline YoY, though to a lesser extent than peers (owing to the full-year consolidation of BSRC and OKEA's new petroleum acquisitions).We anticipate an upward trend in 2025-26E (15% CAGR), supported by the new contribution from the SAF project.

Bangchak Corporation -In-Line 3Q24 Net Loss Due to Stock Losses

<ul><li>Given the anticipated reversal to a loss in 3Q24E (due to sustained low refining margins and stock losses), we have revised down our refining margin and earnings estimates for 2024-26E.</li><li>Core profit in 2024E is forecast to decline YoY before seeing an upward trend in 2025-26E (at 15% CAGR).</li><li>Our new fair value estimate is Bt41.35 (down from Bt43.67) with a required return of 14.8%. </li></ul>

Given the anticipated reversal to a loss in 3Q24E (due to sustained low refining margins and stock losses), we have revised down our refining margin and earnings estimates for 2024-26E.Core profit in 2024E is forecast to decline YoY before seeing an upward trend in 2025-26E (at 15% CAGR).Our new fair value estimate is Bt41.35 (down from Bt43.67) with a required return of 14.8%. 

Bangchak Corporation - Expect Net Loss in 3Q24E; Revised Down GRM/Earnings Forecasts

<ul><li>The 2Q24 earnings were in line with the expectation.</li><li>The company’s share price has already priced in the negatives, including the weaker market GRM and core earnings in 2Q24, as well as the upcoming implementation of the new Petroleum Act later this year.</li><li>This could pose risk to downstream operators if oil prices are regulated rather than liberalized as they are currently.</li></ul>

The 2Q24 earnings were in line with the expectation.The company’s share price has already priced in the negatives, including the weaker market GRM and core earnings in 2Q24, as well as the upcoming implementation of the new Petroleum Act later this year.This could pose risk to downstream operators if oil prices are regulated rather than liberalized as they are currently.

Bangchak Corporation - In-Line 2Q24 NP; Weak Core Earnings, Offset by Extra Gains

<ul><li>We revise down the 2024-26E earnings forecasts to reflect a weak market GRM in 2Q24E and to be conservative.</li><li>We estimate the 12M FV at Bt43.0 (vs. Bt44.32 previously), based on a required return of 16.9%.</li><li>We upgrade our rating to Buy from Outperform. Our valuation metrics show positive short-term and long-term signals, with potential upside of 28% and strong earnings momentum over the next two years, amid limited tactical downside risk. </li></ul>

We revise down the 2024-26E earnings forecasts to reflect a weak market GRM in 2Q24E and to be conservative.We estimate the 12M FV at Bt43.0 (vs. Bt44.32 previously), based on a required return of 16.9%.We upgrade our rating to Buy from Outperform. Our valuation metrics show positive short-term and long-term signals, with potential upside of 28% and strong earnings momentum over the next two years, amid limited tactical downside risk. 

Bangchak Corporation - Weak Core Earnings to Be Offset by Extra Gain in 2Q24E

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

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Periscope Analytics

Periscope Analytics focuses on event-driven trades across Asia Pacific and provides comprehensive, timely and systematic coverage of index changes to major Asia Pacific indices in a structured manner.

The analysis includes forecasted inclusions and exclusions to all major Asian indices that have significant amount of tracking assets, including estimates of passive buy/sell flow on the stocks. The service also provides commentary and impact of market consultations, ground rule changes, and other events (IPOs, spin-offs, M&A) that could lead to index changes and passive flow.

Periscope Analytics works with multi-strategy hedge funds, proprietary trading firms, stat arb trading groups and long-only investors that invest and trade in the Asia Pacific region with the data being used to trade index rebalances, avoid pre-positioning and passive flow, and to time entry into and exit from stocks.

Event-Driven Trades Across Asia Pacific

Event-Driven

<ul>
<li>Nearing the halfway mark in the review period, we see 3 potential changes for 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> at the June rebalance.</li>
<li>Passive trackers will need to buy between 1.2-4.5 days of ADV on the inclusions and sell 0.9-1.3 days of ADV on the deletions.</li>
<li>
<a href="https://www.smartkarma.com/entities/berli-jucker-public-co-ltd" target="_blank" data-smartkarma-citation="entities:3685:1" rel="noopener">Berli Jucker (BJC TB)</a> continues to be a close add on liquidity while <a href="https://www.smartkarma.com/entities/gulf-energy-development-pcl" target="_blank" data-smartkarma-citation="entities:26038:1" rel="noopener">Gulf Energy Development (GULF TB)</a> and <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> continue to be close deletes.</li>
</ul>


Nearing the halfway mark in the review period, we see 3 potential changes for the Stock Exchange of Thailand SET 50 Index (SET50 INDEX) at the June rebalance.
Passive trackers will need to buy between 1.2-4.5 days of ADV on the inclusions and sell 0.9-1.3 days of ADV on the deletions.

Berli Jucker (BJC TB) continues to be a close add on liquidity while Gulf Energy Development (GULF TB) and Intouch Holdings (INTUCH TB) continue to be close deletes.


SET50 Index Rebalance Preview: Three Potential Changes in June

Thailand

Bangchak Corporation Public Company Limited operates as an energy company. The Company offers petroleum exploration and production, biomass, crude oil, and solar energy. Bangchak markets its products in Thailand.

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Bangchak Corporation (BCP TB)

Bangchak Corporation -In-Line 3Q24 Net Loss Due to Stock Losses

The 3Q24 results turned to a loss as expected (due to sustained low refining margins and stock losses). We maintain our earnings forecast.

Krungthai XSpring

Bangchak Corporation - Expect Net Loss in 3Q24E; Revised Down GRM/Earnings Forecasts

Given the anticipated reversal to a loss in 3Q24E (due to sustained low refining margins and stock losses), we have revised down our refining...

Krungthai XSpring

Bangchak Corporation - In-Line 2Q24 NP; Weak Core Earnings, Offset by Extra Gains

The 2Q24 earnings were in line with the expectation. The company’s share price has already priced in the negatives, including the weaker market GRM...

Krungthai XSpring

Bangchak Corporation - Weak Core Earnings to Be Offset by Extra Gain in 2Q24E

We revise down the 2024-26E earnings forecasts to reflect a weak market GRM in 2Q24E and to be conservative. We estimate the 12M FV at Bt43.0 (vs....

Krungthai XSpring

SET50 Index Rebalance Preview: Three Potential Changes in June

There could be 3 changes for the SET50 Index in June. There are a few stocks that are close adds/deletes on liquidity and that will need to be...

Brian Freitas

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