Thai Equity - Bottom-up - Equities, Pi Securities PCL, Thailand

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Thai Equity - Bottom-up - Equities

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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

Thematic (Sector/Industry)

<p><strong>Crude: Bright E&amp;P business performance from recovering crude price</strong></p><ul><li>We expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021. <strong> PTTEP is our top pick</strong>, the E&amp;P business will most benefit from recovering crude price.</li></ul><p><strong>Refinery: Improving product demand to drive GRM</strong></p><ul><li>Thai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). <strong>TOP is our top pick </strong>among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).</li></ul><p><strong>Petrochemicals: Benefit from global recovery</strong></p><ul><li>We foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). <strong>PTTGC is our top pick</strong> as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.</li></ul><section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/642/original/SMK1.png?1611645077" class="editor-image img-responsive" data-smartkarma-image-id="184642"></figure><p style="text-align: center;"><strong>Valuation Summary*</strong></p>
<section class="figure"><figure class="editor-figure mceNonEditable"><img src="https://static-prod.smartkarma.com/images/media/000/184/643/original/Picture1.jpg?1611645252" class="editor-image img-responsive" data-smartkarma-image-id="184643"></figure></section><p style="text-align: center;"><em>Source: CGS Research, Company data, SET</em></p></section>

Crude: Bright E&amp;P business performance from recovering crude priceWe expect the widespread deployment of COVID-19 vaccines, continued support from OPEC+ on regulating the crude supply, and post COVID-19 demand spike in crude products (Jet fuel, gasoline, diesel etc.) will support the Brent crude to continue the upward rally in 2021.  PTTEP is our top pick, the E&amp;P business will most benefit from recovering crude price.Refinery: Improving product demand to drive GRMThai refiners’ share prices are trading at 10-to-20% discount to their historical PBV multiples mainly due to the COVID-19 impact, which dragged the GRM to negative territory along with huge inventory loss. We have a positive view on 2021 refinery performance and expect the GRM to gradually pick up each quarter on the back of recovering products spreads (especially Jet fuel). TOP is our top pick among refineries considering the cheap valuation (0.9x PBV’21, 20% below its 5 year trading average), and upside from current share price (+18%).Petrochemicals: Benefit from global recoveryWe foresee a strong recovery in petrochemicals to continue in 1H21. Olefins (HDPE, PP) has already recovered back to its 5-year average ahead of Chinese New Year. Meanwhile, aromatics (PX, BZ) to be supported by growth in textile and automotive industry and new capacity in downstream products (PTA). PTTGC is our top pick as overall businesses benefit from petrochemical upswing. The company will also realize 10% more capacity in PO/Polyols unit by 1Q21.Valuation Summary*
Source: CGS Research, Company data, SET

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

Equity Bottom-Up

<p><strong>The stock outperformed the SET index by +40% in last two months and surpassed our previous target price of Bt21.6. We expect BCP to continue the rally as the refinery GRM is on recovery path and the earnings are anticipated to turn from loss 4Q20 onwards. </strong></p><div>• Expect BCP to report a net profit in 4Q20 turning from a loss in past three quarters, on the back of improving contribution from refinery and bio based business segment.</div><div></div><div>• Bright 2021 earnings outlook driven by integrated refinery and marketing business segments.</div><div></div><div>• The refinery maintenance shutdown (TAM) in 1Q21 could pressure the earnings performance in 1Q21, However, the recovering GRM and improving contribution from power and bio based businesses will support the net profit growth in 2021.</div><p></p><p><strong>We maintain the BUY rating and raise our target price by 39% to Bt30.0 to factor in better refinery outlook. Our valuation is based on sum-of-the-parts (SOTP), implying 1.1xPBV’21E (its 5 year trading average).</strong></p>

The stock outperformed the SET index by +40% in last two months and surpassed our previous target price of Bt21.6. We expect BCP to continue the rally as the refinery GRM is on recovery path and the earnings are anticipated to turn from loss 4Q20 onwards. • Expect BCP to report a net profit in 4Q20 turning from a loss in past three quarters, on the back of improving contribution from refinery and bio based business segment.• Bright 2021 earnings outlook driven by integrated refinery and marketing business segments.• The refinery maintenance shutdown (TAM) in 1Q21 could pressure the earnings performance in 1Q21, However, the recovering GRM and improving contribution from power and bio based businesses will support the net profit growth in 2021.We maintain the BUY rating and raise our target price by 39% to Bt30.0 to factor in better refinery outlook. Our valuation is based on sum-of-the-parts (SOTP), implying 1.1xPBV’21E (its 5 year trading average).

BCP: Expect 4Q20 Earnings to Recover from Loss

<p><strong>Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation, while revise down the target price to Bt21.6 (from previous Bt25) to incorporate the earnings revision. Our valuation is based on sum-of-the-parts (SOTP) methodology, implying 0.8xPBV’21E.</strong></p><div>• Expect BCP to report a net profit in 4Q20 turning from a loss in past three quarters, on the back of 1) gradual recovery of gross refinery margin 2) no major asset impairment loss and 3) stable contribution from marketing, power generation and biodiesel business lines.</div><div></div><div>• 1Q21 earnings to be dampened by refinery shutdown for turnaround maintenance (TAM, 39 days). However, 2021 earnings is expected to recover from loss (YoY) on the back of improving GRM and overall better refinery utilization rate.</div><div></div><div>• Revise down the 2020-22 earnings forecast by 41 to 52%.</div><div></div><div>• The weak earnings outlook for 1Q21 should pressure the stock performance in short term. Thus recommend trading and gradually accumulate by 2Q21.</div>

Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation, while revise down the target price to Bt21.6 (from previous Bt25) to incorporate the earnings revision. Our valuation is based on sum-of-the-parts (SOTP) methodology, implying 0.8xPBV’21E.• Expect BCP to report a net profit in 4Q20 turning from a loss in past three quarters, on the back of 1) gradual recovery of gross refinery margin 2) no major asset impairment loss and 3) stable contribution from marketing, power generation and biodiesel business lines.• 1Q21 earnings to be dampened by refinery shutdown for turnaround maintenance (TAM, 39 days). However, 2021 earnings is expected to recover from loss (YoY) on the back of improving GRM and overall better refinery utilization rate.• Revise down the 2020-22 earnings forecast by 41 to 52%.• The weak earnings outlook for 1Q21 should pressure the stock performance in short term. Thus recommend trading and gradually accumulate by 2Q21.

<p><strong>Yesterday analyst meeting came out in a slight positive tone. We maintain the BUY recommendation with a target price of Bt25 derived from a sum-of-the-parts (SOTP) methodology. Our valuation implies 0.8xPBV’21E, a 20% discount to the Thai energy sector.</strong></p><ul>
<li>We expect BCP’s earnings to bottom out in 1H20 and gradually recover by 2H20, on the back of improving refinery, marketing and power generation business performance.</li>
<li>The operating GRM is expected to remain flat in 3Q20 and pick up by 4Q20 on the back on improving Jet fuel spreads.</li>
<li>Earnings from power generation business is expected to grow both YoY and QoQ in 3Q20 on the back of seasonal high earnings recognition from Nam San 3A and 3B (114MW)</li>
</ul>

Yesterday analyst meeting came out in a slight positive tone. We maintain the BUY recommendation with a target price of Bt25 derived from a sum-of-the-parts (SOTP) methodology. Our valuation implies 0.8xPBV’21E, a 20% discount to the Thai energy sector.
We expect BCP’s earnings to bottom out in 1H20 and gradually recover by 2H20, on the back of improving refinery, marketing and power generation business performance.
The operating GRM is expected to remain flat in 3Q20 and pick up by 4Q20 on the back on improving Jet fuel spreads.
Earnings from power generation business is expected to grow both YoY and QoQ in 3Q20 on the back of seasonal high earnings recognition from Nam San 3A and 3B (114MW)


<p><strong>We reinitiate coverage of BCP with a BUY rating, based on a 2021E target price of Bt25, which is derived from a sum-of-the-parts (SOTP) methodology. Our valuation implies 0.8xPBV’21E, a 20% discount to the Thai energy sector.</strong></p><p><strong>The story:</strong></p><ul>
<li>Full-swing earnings recovery by 2H20</li>
<li>Refinery segment on recovery path</li>
<li>Secured stable income from power-generation arm</li>
<li>Added stability &amp; growth from marketing business</li>
<li>Unlocking value of biofuel business with BBGI spinoff</li>
<li>Cheap valuation and attractive dividend yield</li>
</ul><p>Risks:</p><ul>
<li>Raw material price fluctuation</li>
<li>Possibility of impairment losses from investment projects</li>
</ul>

We reinitiate coverage of BCP with a BUY rating, based on a 2021E target price of Bt25, which is derived from a sum-of-the-parts (SOTP) methodology. Our valuation implies 0.8xPBV’21E, a 20% discount to the Thai energy sector.The story:
Full-swing earnings recovery by 2H20
Refinery segment on recovery path
Secured stable income from power-generation arm
Added stability &amp; growth from marketing business
Unlocking value of biofuel business with BBGI spinoff
Cheap valuation and attractive dividend yield
Risks:
Raw material price fluctuation
Possibility of impairment losses from investment projects


BCP: Offers Cheap Valuation with Earnings Upcycle Ahead in 2H20

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)

Energy Sector : Overweight- Oil Demand Recovery to Drive 2021 Earnings

Energy Sector : Overweight- Oil demand recovery to drive 2021 earnings. We expect bright E&P business performance from recovering crude price, and...

Pi Securities PCL, Thailand

BCP: Expect 4Q20 Earnings to Recover from Loss

The stock outperformed the SET index by +40% in last two months and surpassed our previous target price of Bt21.6. We expect BCP to continue the...

Pi Securities PCL, Thailand

BCP: 2021 Earnings to Be Dampened by TAM

Yesterday analyst meeting came out in a neutral tone. We maintain the BUY recommendation, while revise down the target price to Bt21.6 (from...

Pi Securities PCL, Thailand

BCP: Positive 2H20 Earnings Outlook

Yesterday analyst meeting came out in a slight positive tone. We maintain the BUY recommendation with a target price of Bt25 derived from a...

Pi Securities PCL, Thailand

BCP: Offers Cheap Valuation with Earnings Upcycle Ahead in 2H20

We reinitiate coverage of BCP with a BUY rating, based on a 2021E target price of Bt25, which is derived from a sum-of-the-parts (SOTP)...

Pi Securities PCL, Thailand

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