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>BBL’s 3Q21 net profit was Bt6.91 bn (+72%YoY, +9%QoQ), 7% better than our forecast.</strong></p><p>• Pre-provision profit grew 83%YoY and 5%QoQ to Bt18.4bn. The YoY growth was supported by growth in both Non-NII and NII.</p><div>• Net interest income was Bt20.7bn (+4.3%YoY, +3.4%QoQ), in line with our forecast supported by loan growth (+6.6%YTD).</div><div></div><div>• Meanwhile, Non-NII grew 41%YoY but dropped 1%QoQ to Bt13.6bn. The YoY growth was due to  better gain from portfolio investment and growth from brokerage fee and bancassurance services’s income.</div><div></div><div>• We expect earnings recovery to continue in 4Q21 onwards backed by loan expansion from corporate segment and better asset quality which will reduce next year provision.</div><div></div><div><strong>Maintain our BUY rating with a target price at Bt162, derived from 0.66x AVG PBV , implying its 3-years trading average. Current share price at 0.5xPBV’22E is quite cheap and provides attractive dividend yield at 4.6%.</strong></div>

BBL’s 3Q21 net profit was Bt6.91 bn (+72%YoY, +9%QoQ), 7% better than our forecast.• Pre-provision profit grew 83%YoY and 5%QoQ to Bt18.4bn. The YoY growth was supported by growth in both Non-NII and NII.• Net interest income was Bt20.7bn (+4.3%YoY, +3.4%QoQ), in line with our forecast supported by loan growth (+6.6%YTD).• Meanwhile, Non-NII grew 41%YoY but dropped 1%QoQ to Bt13.6bn. The YoY growth was due to  better gain from portfolio investment and growth from brokerage fee and bancassurance services’s income.• We expect earnings recovery to continue in 4Q21 onwards backed by loan expansion from corporate segment and better asset quality which will reduce next year provision.Maintain our BUY rating with a target price at Bt162, derived from 0.66x AVG PBV , implying its 3-years trading average. Current share price at 0.5xPBV’22E is quite cheap and provides attractive dividend yield at 4.6%.

BBL: 3Q21 Result Grew Both YoY and QoQ, Better than Our Expectation

<p><strong>We expect its 3Q21 net profit at Bt6.44 bn (+60%YoY, +1.3%QoQ), driven by a drop in provision. Meanwhile, pre-provision profit will drop 22%QoQ (+35%YoY) due to weak Non-NII caused by low economic activities during city lockdown but will be the bottom quarter.</strong></p><div>• We expect earnings momentum to recover from 4Q21 onwards backed by loan expansion from corporate segment and better asset quality which will reduce next year provision.</div><div></div><div>• We maintain our positive outlook toward  2022 earnings and beyond backed by possible reopening country next year which could support further loan growth.</div><div></div><div><strong>We reiterate our BUY rating with a new target price at Bt162 (+5% from previous TP) by rolling over target PBV to 0.66x AVG PBV , implying its 3-years trading average. Our rating factor in secured loan portfolio relative to peers, attractive dividend yield at 5%, and cheap valuation at 0.5xPBV’22E.</strong></div>

We expect its 3Q21 net profit at Bt6.44 bn (+60%YoY, +1.3%QoQ), driven by a drop in provision. Meanwhile, pre-provision profit will drop 22%QoQ (+35%YoY) due to weak Non-NII caused by low economic activities during city lockdown but will be the bottom quarter.• We expect earnings momentum to recover from 4Q21 onwards backed by loan expansion from corporate segment and better asset quality which will reduce next year provision.• We maintain our positive outlook toward  2022 earnings and beyond backed by possible reopening country next year which could support further loan growth.We reiterate our BUY rating with a new target price at Bt162 (+5% from previous TP) by rolling over target PBV to 0.66x AVG PBV , implying its 3-years trading average. Our rating factor in secured loan portfolio relative to peers, attractive dividend yield at 5%, and cheap valuation at 0.5xPBV’22E.

BBL: Expect Pre-Provision Profit to Bottom Out in 3Q21

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

<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> announced its 1H2021 results with sales increasing by +20% YoY and headline net profit decreasing by -22% YoY but removing the impact of the <a href="https://www.smartkarma.com/entities/bank-permata-tbk-pt" target="_blank" data-smartkarma-citation="entities:728:1" rel="noopener">Bank Permata (BNLI IJ)</a> sale last year, net profit increased by an impressive +61% YoY.</p>
<p>The better numbers were driven by a strong improvement in the auto business, with car sales up +50% YoY and motorcycle sales +29% YoY.</p>
<p>The group was also a beneficiary of higher commodity prices in 1H2021, which boosted the performance of its heavy equipment and mining business under <a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ)</a> and its agribusiness under <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a>, which saw net profit +14% YoY and +66% YoY respectively.  </p>
<p>The group consumer finance business saw a +13% increase in the amounts financed with an increase of +2% in net profit growth. Car finance saw a +2% increase and motorcycle finance a +3% YoY increase in net profit, while heavy equipment finance saw a +46% increase in the amounts financed by a -20% decrease in contribution due to a reduced loan portfolio. </p>
<p><a href="https://www.smartkarma.com/entities/united-tractors-tbk-pt" target="_blank" data-smartkarma-citation="entities:698:1" rel="noopener">United Tractors (UNTR IJ) </a>saw a +13% increase in net income with a +60% increase in Komatsu heavy equipment sales and helped by higher coal prices. <a href="https://www.smartkarma.com/entities/astra-agro-lestari-tbk-pt" target="_blank" data-smartkarma-citation="entities:4050:1" rel="noopener">Astra Agro Lestari (AALI IJ)</a>saw a boost from higher crude palm oil prices, which rose +29% in 1H2021.</p>
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<p><a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> remains relatively cautious on the outlook given the current wave of COVID-19 cases but the company is well-positioned to weather any delay in an economic recovery but also to take advantage of any potential opportunities, given its rock-solid balance sheet. <a href="https://www.smartkarma.com/entities/astra-international-tbk-pt" target="_blank" data-smartkarma-citation="entities:46:1" rel="noopener">Astra International (ASII IJ)</a> is trading on 10.6x FY2021E PER and 9.1x FY2022E PER versus its 5-year average forward PER of 14.2x, making it attractive from a valuation perspective. It remains one of our top recovery picks for Indonesia, given its exposure to autos, motorcycles, consumer finance, heavy equipment, and commodities.</p>
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Astra International (ASII IJ) announced its 1H2021 results with sales increasing by +20% YoY and headline net profit decreasing by -22% YoY but removing the impact of the Bank Permata (BNLI IJ) sale last year, net profit increased by an impressive +61% YoY.
The better numbers were driven by a strong improvement in the auto business, with car sales up +50% YoY and motorcycle sales +29% YoY.
The group was also a beneficiary of higher commodity prices in 1H2021, which boosted the performance of its heavy equipment and mining business under United Tractors (UNTR IJ) and its agribusiness under Astra Agro Lestari (AALI IJ), which saw net profit +14% YoY and +66% YoY respectively.  
The group consumer finance business saw a +13% increase in the amounts financed with an increase of +2% in net profit growth. Car finance saw a +2% increase and motorcycle finance a +3% YoY increase in net profit, while heavy equipment finance saw a +46% increase in the amounts financed by a -20% decrease in contribution due to a reduced loan portfolio. 
United Tractors (UNTR IJ) saw a +13% increase in net income with a +60% increase in Komatsu heavy equipment sales and helped by higher coal prices. Astra Agro Lestari (AALI IJ)saw a boost from higher crude palm oil prices, which rose +29% in 1H2021.

Astra International (ASII IJ) remains relatively cautious on the outlook given the current wave of COVID-19 cases but the company is well-positioned to weather any delay in an economic recovery but also to take advantage of any potential opportunities, given its rock-solid balance sheet. Astra International (ASII IJ) is trading on 10.6x FY2021E PER and 9.1x FY2022E PER versus its 5-year average forward PER of 14.2x, making it attractive from a valuation perspective. It remains one of our top recovery picks for Indonesia, given its exposure to autos, motorcycles, consumer finance, heavy equipment, and commodities.


Astra International (ASII IJ) - Leaning into the Recovery

<p><strong>Neutral tone from yesterday analysts’ meeting. We reiterate our BUY rating with a target price at Bt155, derived from 0.65x PBV’21E,which is close to its 3-year average.</strong></p><div>• Management maintain financial targets as previous quarter and in line with our expectation. In essence to our believe, the bank has sufficient loan loss reserve with 190% of coverage ratio in 2Q21  and could decrease its expected credit loss  in 2H21 to meet the target 22,000 million baht in 2021.</div><div></div><div>• The bank will also benefit from expanding export sector and could reach its target loan growth at 3-4% among covid-19 pandemic. Meanwhile, fund management business and brokerage fee would be the key driver for enhancing net fee income of BBL in this years.</div><div></div><div>• We expect earnings momentum to remain weak in 2H21 given prolong pandemic which could depress loan growth and NIM. However, current share price which is trading at 0.4xPBV’21E is quite cheap. Together with its secured loan portfolio, any downside should be limited relative to peers.</div>

Neutral tone from yesterday analysts’ meeting. We reiterate our BUY rating with a target price at Bt155, derived from 0.65x PBV’21E,which is close to its 3-year average.• Management maintain financial targets as previous quarter and in line with our expectation. In essence to our believe, the bank has sufficient loan loss reserve with 190% of coverage ratio in 2Q21  and could decrease its expected credit loss  in 2H21 to meet the target 22,000 million baht in 2021.• The bank will also benefit from expanding export sector and could reach its target loan growth at 3-4% among covid-19 pandemic. Meanwhile, fund management business and brokerage fee would be the key driver for enhancing net fee income of BBL in this years.• We expect earnings momentum to remain weak in 2H21 given prolong pandemic which could depress loan growth and NIM. However, current share price which is trading at 0.4xPBV’21E is quite cheap. Together with its secured loan portfolio, any downside should be limited relative to peers.

BBL: Cheap Valuation with Secured Portfolio Will Limit Downside

<p><strong>BBL’s net profit in 2Q21 was Bt6.36 bn (+105%YoY, -8%QoQ), 5% better than our forecast with stable NPL at 3.7%.</strong></p><div>• Pre-provision profit grew 1.6%YoY and 16%QoQ to Bt17.5bn backed QoQ growth by growing Non-NII. Net interest income was Bt 20.0bn (+10.6%YoY, +1.6%QoQ) ,in line with our forecast supported by loan growth (+2.2%YTD).</div><div></div><div>• Meanwhile, Non-NII dropped 2.6%YoY but grew 23.7%QoQ to Bt13.7bn , driven QOQ by higher dividend income and better gain from portfolio investment. However, net fees and service income declined 6%QoQ due to lower fee income from mutual funds and bancassurance services.</div><div></div><div>• We expect earnings momentum to remain mute HoH in 2H21 given possible rising provision in reaction to prolong pandemic, but to grow strongly YoY due to low base. However, current share price at 0.4xPBV’21E is quite cheap. Together with its secured loan portfolio, any downside should be limited.</div><div></div><div><strong>We reiterate our BUY rating with a target price at Bt155, derived from 0.65x PBV’21E,which is close to its 3-year average.</strong></div>

BBL’s net profit in 2Q21 was Bt6.36 bn (+105%YoY, -8%QoQ), 5% better than our forecast with stable NPL at 3.7%.• Pre-provision profit grew 1.6%YoY and 16%QoQ to Bt17.5bn backed QoQ growth by growing Non-NII. Net interest income was Bt 20.0bn (+10.6%YoY, +1.6%QoQ) ,in line with our forecast supported by loan growth (+2.2%YTD).• Meanwhile, Non-NII dropped 2.6%YoY but grew 23.7%QoQ to Bt13.7bn , driven QOQ by higher dividend income and better gain from portfolio investment. However, net fees and service income declined 6%QoQ due to lower fee income from mutual funds and bancassurance services.• We expect earnings momentum to remain mute HoH in 2H21 given possible rising provision in reaction to prolong pandemic, but to grow strongly YoY due to low base. However, current share price at 0.4xPBV’21E is quite cheap. Together with its secured loan portfolio, any downside should be limited.We reiterate our BUY rating with a target price at Bt155, derived from 0.65x PBV’21E,which is close to its 3-year average.

BBL: 2Q21 Result Was in Line with Our Expectation

Thailand

Bangkok Bank Public Company Limited provides various banking and financial services including commercial, consumer, credit card, and mortgage lending, international trade financing, investment banking, and securities services.

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Bangkok Bank (BBL/F TB)

BBL: 3Q21 Result Grew Both YoY and QoQ, Better than Our Expectation

BBL’s 3Q21 net profit was Bt6.91 bn (+72%YoY, +9%QoQ), 7% better than our forecast. Maintain our BUY rating with a target price at Bt162, derived...

Pi Securities PCL, Thailand

BBL: Expect Pre-Provision Profit to Bottom Out in 3Q21

We expect its 3Q21 net profit at Bt6.44 bn (+60%YoY, +1.3%QoQ), driven by a drop in provision. Meanwhile, pre-provision profit will drop 22%QoQ...

Pi Securities PCL, Thailand

Astra International (ASII IJ) - Leaning into the Recovery

Astra Internations remains one of our top recovery picks for Indonesia, given its exposure to autos, motorcycles, consumer finance, heavy...

Angus Mackintosh

BBL: Cheap Valuation with Secured Portfolio Will Limit Downside

Neutral tone from yesterday analysts’ meeting. We reiterate our BUY rating with a target price at Bt155, derived from 0.65x PBV’21E,which is close...

Pi Securities PCL, Thailand

BBL: 2Q21 Result Was in Line with Our Expectation

BBL’s net profit in 2Q21 was Bt6.36 bn (+105%YoY, -8%QoQ), 5% better than our forecast with stable NPL at 3.7%. We reiterate our BUY rating with a...

Pi Securities PCL, Thailand

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