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>BCP reported 1Q22 net profit of Bt4.4bn (+91% YoY, +148% QoQ), an all time high. The result came out better than our expectation.</li>
<li>The earnings spike was mainly supported by improved performance of 1) refinery operations along with a huge stock gain of Bt4.1bn, 2) natural resources business from rise in crude oil </li>
<li>We expect 2Q22 recurring profit continue to grow from better refinery performance backed by rising GRM. The oil retail business should also improve as marketing margin picks up after easing </li>
</ul>


BCP reported 1Q22 net profit of Bt4.4bn (+91% YoY, +148% QoQ), an all time high. The result came out better than our expectation.
The earnings spike was mainly supported by improved performance of 1) refinery operations along with a huge stock gain of Bt4.1bn, 2) natural resources business from rise in crude oil 
We expect 2Q22 recurring profit continue to grow from better refinery performance backed by rising GRM. The oil retail business should also improve as marketing margin picks up after easing 


BCP: Solid Refinery Performance Drove 1Q22 Profit to All Time High

<ul>
<li>Analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method, implying 1.1x PBV’22E. Our valuation reflects positive </li>
<li>Expect 4Q21 recurring profit to improve both YoY and QoQ on the back of solid refinery operations.</li>
<li>We see bright refinery outlook 4Q21 onwards driven by rising GRM (better gasoline, jet and diesel spreads) and higher refinery run rate. While earnings from power,marketing and bio-based business segments</li>
</ul>


Analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method, implying 1.1x PBV’22E. Our valuation reflects positive 
Expect 4Q21 recurring profit to improve both YoY and QoQ on the back of solid refinery operations.
We see bright refinery outlook 4Q21 onwards driven by rising GRM (better gasoline, jet and diesel spreads) and higher refinery run rate. While earnings from power,marketing and bio-based business segments


BCP: Bright Refinery Outlook 4Q21 Onwards

<p><strong>Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method, implying 1.1x PBV’22E. </strong></p>
<div>• Expect 3Q21 net profit to soften QoQ due to lower stock gain, while the recurring net profit should remain healthy (flat QoQ).</div>
<div></div>
<div>• The improving base refinery and power plant business performance is expected to be dragged by weak marketing and bio-based business contribution due to domestic lockdown.</div>
<div></div>
<div>• We are more positive on 1H22 outlook as the base refinery operations (run rate &amp; GRM) should ramp up pre COVID-19 level, and steady contribution from marketing, power and bio-based business segments underpins the earnings momentum.</div>

Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method, implying 1.1x PBV’22E. 
• Expect 3Q21 net profit to soften QoQ due to lower stock gain, while the recurring net profit should remain healthy (flat QoQ).

• The improving base refinery and power plant business performance is expected to be dragged by weak marketing and bio-based business contribution due to domestic lockdown.

• We are more positive on 1H22 outlook as the base refinery operations (run rate &amp; GRM) should ramp up pre COVID-19 level, and steady contribution from marketing, power and bio-based business segments underpins the earnings momentum.

BCP: Expect Weak Net Profit in 3Q21 Due to Lower Stock Gain

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.

<p><span style="font-size: var(--content-font-size);">We believe the slowdown in the recovery of the refinery and marketing business following the spread of the Delta variant has been largely priced into BCP’s share price. Meanwhile, the company’s diversified earnings along with the solid contribution from power will remain the cushion, particularly amid the peak season for the contribution from Nam San 3A and Nam San 3B in 3Q. We maintain a Buy (with the newly revised TP of Bt28), expecting the resumption of core earnings momentum upon the easing of the COVID-19 impact.</span></p>

We believe the slowdown in the recovery of the refinery and marketing business following the spread of the Delta variant has been largely priced into BCP’s share price. Meanwhile, the company’s diversified earnings along with the solid contribution from power will remain the cushion, particularly amid the peak season for the contribution from Nam San 3A and Nam San 3B in 3Q. We maintain a Buy (with the newly revised TP of Bt28), expecting the resumption of core earnings momentum upon the easing of the COVID-19 impact.

Company Update: Bangchak Corporation Plc. (BCP)

Thematic (Sector/Industry)

<h2>Energy Sector: Overweight E&amp;P, Neutral on Refinery and Petrochemical</h2>
<h3>Crude: Solid OPEC+ supply curbs to push crude price up</h3>
<div>• Brent crude oil price spiked to US$75.0/bbl in early July, a two-year high. We see the crude price to maintain at high levels supported by OPEC+ controlled production measures and rising demand from strong global economic recovery after vaccine rollout. We maintain our bullish outlook for 3Q21 and expect the Brent crude rise and maintain at US$80/bbl level. PTTEP is our top pick,</div>
<p></p>
<h3>Refinery: Low pace GRM recovery due to dragged economic growth</h3>
<p>• We expect the gasoline and diesel demand to rise gradually supported by US and EU economic recovery. While jet fuel demand will continue to be under pressure from pandemic-led air travel restrictions. Thus, we expect the GRM to remain flat during 3Q21 and gradually recover by 4Q21. Maintain short-term neutral view on TOP, SPRC, BCP.</p>
<h3>Petrochemicals: Back to pre-Covid oversupply</h3>
<div>• We expect olefin spread to weaken in 2H21 as PE capacity at 7 MTA (6% global capacity) and PP capacity at 6.4 MTA (6% global capacity) will be commercialized in 2H21. we expect polyester and PET demand to fall in 2H21 due to seasonality. Meanwhile, we expect the aromatic spread to remain healthy. PX spread will be supported by new capacity in downstream PTA products from China while BZ demand remains strong from electronics appliance production and downstream (SM) new capacity. Thus, due to the weak 2H21 earnings outlook, we have a neutral view on PTTGC.</div>
<div></div>
<div>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/177/original/ENERGY1.JPG?1626146258" class="editor-image img-responsive" data-smartkarma-image-id="218177"></figure>
</section>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/178/original/ENERGY2.JPG?1626146269" class="editor-image img-responsive" data-smartkarma-image-id="218178"></figure>
</section>
<section class="figure">
<figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/218/179/original/ENERGY3.JPG?1626146302" class="editor-image img-responsive" data-smartkarma-image-id="218179"></figure>
<div class="content-caption">Sources: CGS Research, company data. Notes: Valuation summary of stocks under CGS coverage, as of 9 July 2021 ,</div>
</section>
<p></p>
</div>

Energy Sector: Overweight E&amp;P, Neutral on Refinery and Petrochemical
Crude: Solid OPEC+ supply curbs to push crude price up
• Brent crude oil price spiked to US$75.0/bbl in early July, a two-year high. We see the crude price to maintain at high levels supported by OPEC+ controlled production measures and rising demand from strong global economic recovery after vaccine rollout. We maintain our bullish outlook for 3Q21 and expect the Brent crude rise and maintain at US$80/bbl level. PTTEP is our top pick,

Refinery: Low pace GRM recovery due to dragged economic growth
• We expect the gasoline and diesel demand to rise gradually supported by US and EU economic recovery. While jet fuel demand will continue to be under pressure from pandemic-led air travel restrictions. Thus, we expect the GRM to remain flat during 3Q21 and gradually recover by 4Q21. Maintain short-term neutral view on TOP, SPRC, BCP.
Petrochemicals: Back to pre-Covid oversupply
• We expect olefin spread to weaken in 2H21 as PE capacity at 7 MTA (6% global capacity) and PP capacity at 6.4 MTA (6% global capacity) will be commercialized in 2H21. we expect polyester and PET demand to fall in 2H21 due to seasonality. Meanwhile, we expect the aromatic spread to remain healthy. PX spread will be supported by new capacity in downstream PTA products from China while BZ demand remains strong from electronics appliance production and downstream (SM) new capacity. Thus, due to the weak 2H21 earnings outlook, we have a neutral view on PTTGC.










Sources: CGS Research, company data. Notes: Valuation summary of stocks under CGS coverage, as of 9 July 2021 ,




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.

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

Bangchak Corporation (BCP TB)

BCP: Solid Refinery Performance Drove 1Q22 Profit to All Time High

BCP reported 1Q22 net profit of Bt4.4bn (+91% YoY, +148% QoQ), an all time high. The result came out better than our expectation.

Pi Securities PCL, Thailand

BCP: Bright Refinery Outlook 4Q21 Onwards

Analyst meeting came out in a positive tone. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method, implying...

Pi Securities PCL, Thailand

BCP: Expect Weak Net Profit in 3Q21 Due to Lower Stock Gain

Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation with a target price of Bt35.0, derived using SOTP method,...

Pi Securities PCL, Thailand

Company Update: Bangchak Corporation Plc. (BCP)

We believe the slowdown in the recovery of the refinery and marketing business following the spread of the Delta variant has been largely priced...

Krungthai XSpring

Energy Sector Outlook 3Q21

We maintain the BUY recommendation based on a target price of Bt146, derived using DCF methodology (WACC 9.4%, TG 2%). Our valuation implies 11x...

Pi Securities PCL, Thailand

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)