Asian Insight Provider - Actionable ideas, CrossASEAN Research

Henry Soediarko

Asian Insight Provider - Actionable ideas

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

Equity Bottom-Up

Bangkok Expressway and Metro / Equity Bottom-Up

<p>Low ridership and reopening have presented a dilemma to investors whether it is time to start building positions in the mass transport operator <a href="https://www.smartkarma.com/entities/bangkok-expressway-and-metro-68c0c1b3-af0c-4380-a380-f3dc7ba5d5ac" target="_blank" data-smartkarma-citation="entities:22849:1" rel="noopener">Bangkok Expressway and Metro (BEM TB)</a> . On one hand, the low ridership presents room for improvement which means recovery of net income, therefore, a lower forward PE multiple. On the other hand, the reopening is yet to happen and how much is the increase in ridership is unclear. </p>
<p>With the reopening date is set, coming back to school, and the support from the Thai government to jump-start the tourism sector by having a grandiose New Year celebration with no less than sending an invite to the world-renown Andrea Bocelli to perform,  the mass transport ridership is set to increase from both the domestic reopening as well as from the increase in tourists arrival.</p>
<p>Compared to <a href="https://www.smartkarma.com/entities/airports-of-thailand-pcl" target="_blank" data-smartkarma-citation="entities:239:1" rel="noopener">Airports of Thailand (AOT TB)</a> which trades at 8x book value, BEM (at 3.6x book value) does not look expensive.  BEM'share price is trailing behind <a href="https://www.smartkarma.com/entities/stock-exchange-of-thailand-set-index" target="_blank" data-smartkarma-citation="entities:22915:1" rel="noopener">Thailand SET Index (SET INDEX)</a> in the recovery from COVID-19.</p>
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<p>source: Reuters</p>
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Low ridership and reopening have presented a dilemma to investors whether it is time to start building positions in the mass transport operator Bangkok Expressway and Metro (BEM TB) . On one hand, the low ridership presents room for improvement which means recovery of net income, therefore, a lower forward PE multiple. On the other hand, the reopening is yet to happen and how much is the increase in ridership is unclear. 
With the reopening date is set, coming back to school, and the support from the Thai government to jump-start the tourism sector by having a grandiose New Year celebration with no less than sending an invite to the world-renown Andrea Bocelli to perform,  the mass transport ridership is set to increase from both the domestic reopening as well as from the increase in tourists arrival.
Compared to Airports of Thailand (AOT TB) which trades at 8x book value, BEM (at 3.6x book value) does not look expensive.  BEM'share price is trailing behind Thailand SET Index (SET INDEX) in the recovery from COVID-19.



source: Reuters


Bangkok Expressway (BEM): Ridership Increase

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

<p><strong>We maintain BEM with a BUY rating while roll over target price to Bt10.30 (previous TP: Bt9.90) derived from SOTP methodology, which is equivalent to 51.5xPE’22E.</strong></p><div>• We expect the company to report net profit of Bt21m in 3Q21. (-90%QoQ -97%YoY), the lowest level in our available data. QoQ and YoY contraction will be mainly due to impact from 3rd wave of COVID-19 widespread, which trimmed down average daily toll traffic to 670k trips/day (-13%QoQ -41%YoY) and MRT ridership to 80k trips per day (-33%QoQ -72%YoY)</div><div></div><div>• Earnings from core business operation will be under break-even point in 3Q21, but will alleviate with dividend incomes from TTW (We estimate dividend income in 2Q21 at Bt221m)</div><div></div><div>• Recent rally in stock price factored in expectation that recovery in toll and MRT traffic number will be strong in 4Q21 after lockdown measures have eased. We expect MRT Orange-line (Bt1.9 per share upside) bidding to proceed by December’21 or latest in 1Q22. Earlier-than-expected announcement will be the key catalyst to support stock price in short-term.</div>

We maintain BEM with a BUY rating while roll over target price to Bt10.30 (previous TP: Bt9.90) derived from SOTP methodology, which is equivalent to 51.5xPE’22E.• We expect the company to report net profit of Bt21m in 3Q21. (-90%QoQ -97%YoY), the lowest level in our available data. QoQ and YoY contraction will be mainly due to impact from 3rd wave of COVID-19 widespread, which trimmed down average daily toll traffic to 670k trips/day (-13%QoQ -41%YoY) and MRT ridership to 80k trips per day (-33%QoQ -72%YoY)• Earnings from core business operation will be under break-even point in 3Q21, but will alleviate with dividend incomes from TTW (We estimate dividend income in 2Q21 at Bt221m)• Recent rally in stock price factored in expectation that recovery in toll and MRT traffic number will be strong in 4Q21 after lockdown measures have eased. We expect MRT Orange-line (Bt1.9 per share upside) bidding to proceed by December’21 or latest in 1Q22. Earlier-than-expected announcement will be the key catalyst to support stock price in short-term.

BEM: Expect 3Q21 Earnings to Be Bottom of This Year

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.

<div><div><div><p><strong>Monitoring the virus situation and lockdown</strong><br>BEM reported weak results QoQ in 2Q21 and soft traffic volume YoY in July given the new wave of the pandemic and the lockdown measure to curb the spread. Although the outlook remains uncertain, we maintain our call that traffic and earnings in 2022E will improve sharply upon containment of the outbreak. We thus maintain our Buy call for BEM, with the SOTP-based TP of Bt9.60.</p></div></div></div>

Monitoring the virus situation and lockdown BEM reported weak results QoQ in 2Q21 and soft traffic volume YoY in July given the new wave of the pandemic and the lockdown measure to curb the spread. Although the outlook remains uncertain, we maintain our call that traffic and earnings in 2022E will improve sharply upon containment of the outbreak. We thus maintain our Buy call for BEM, with the SOTP-based TP of Bt9.60.

Earnings Review: Bangkok Expressway and Metro Plc. (BEM)

<p><strong>We maintain BEM with a BUY rating with a target price of Bt9.90 derived from SOTP methodology, which is equivalent to 49.5xPE’22E, 30% discount to Thai transportation sector. A discount due to huge net loss of Airport of Thailand.</strong></p><div>• We expect the company to report net profit of Bt101m in 2Q21. (-67%QoQ -34%YoY), the lowest level in our available data. QoQ and YoY contraction will be chiefly due to impact from 3rd wave of COVID-19 widespread, which trimmed down average daily toll traffic to 770k trips/day (-21%QoQ -4%YoY) and MRT ridership to 119k trips per day (-44%QoQ -11%YoY)</div><div></div><div>• Earnings from core business operation will be under break-even point in 2Q21 onward to 3Q21, but will alleviate with dividend incomes from TTW and CKP. (We estimate dividend income in 2Q21 at Bt271m)</div><div></div><div>• We believe a recent correction in stock price has already priced in poor earnings that will be reported in 2Q21 and 3Q21, impacted by full measure of lockdown in July and most likely to be extended to August. Number of Vaccine rollout and a sign of contraction in number of daily reported patients will be the key catalyst to support stock price in short-term.</div>

We maintain BEM with a BUY rating with a target price of Bt9.90 derived from SOTP methodology, which is equivalent to 49.5xPE’22E, 30% discount to Thai transportation sector. A discount due to huge net loss of Airport of Thailand.• We expect the company to report net profit of Bt101m in 2Q21. (-67%QoQ -34%YoY), the lowest level in our available data. QoQ and YoY contraction will be chiefly due to impact from 3rd wave of COVID-19 widespread, which trimmed down average daily toll traffic to 770k trips/day (-21%QoQ -4%YoY) and MRT ridership to 119k trips per day (-44%QoQ -11%YoY)• Earnings from core business operation will be under break-even point in 2Q21 onward to 3Q21, but will alleviate with dividend incomes from TTW and CKP. (We estimate dividend income in 2Q21 at Bt271m)• We believe a recent correction in stock price has already priced in poor earnings that will be reported in 2Q21 and 3Q21, impacted by full measure of lockdown in July and most likely to be extended to August. Number of Vaccine rollout and a sign of contraction in number of daily reported patients will be the key catalyst to support stock price in short-term.

BEM: Expect Earnings to Remain Dull at Least in 2Q21 and 3Q21

<p><strong>We expect earnings to slightly drop YoY in 1Q21 pressured by a sharp fall in traffic on tollway and mass transit system as a result from partial lockdown in January. The impact will be substantially offset by reduction in amortization cost arises from toll business after concession extended in FEB’20.</strong></p><div>• Expect tollway and MRT traffic to recover from the bottom.</div><div></div><div>• Report 2020 net profit at Bt2bn (-62%YoY). Stripping out gain from divestment, core earnings would be at Bt3.1bn (-34%YoY).</div><div></div><div>• 4Q20 earnings was at Bt570m (-31%QoQ +9%YoY). YoY gain was due to a fall in amortization expense. QoQ fall dragged by dividend paid from TTW in 3Q20.</div><div></div><div>• Revise down 2021-23E earnings by 13-32%</div><p></p><p><strong>We maintain BEM with a BUY rating with a new target price at Bt10.0 (Previous TP: Bt10.60) after revised net profit in 2021-23E down by 13-32%. Our target price derived from SOTP methodology, which is equivalent to 59xPE’21E, 50% discount to Thai transportation sector. A discount due to huge net loss of Airport of Thailand.</strong></p>

We expect earnings to slightly drop YoY in 1Q21 pressured by a sharp fall in traffic on tollway and mass transit system as a result from partial lockdown in January. The impact will be substantially offset by reduction in amortization cost arises from toll business after concession extended in FEB’20.• Expect tollway and MRT traffic to recover from the bottom.• Report 2020 net profit at Bt2bn (-62%YoY). Stripping out gain from divestment, core earnings would be at Bt3.1bn (-34%YoY).• 4Q20 earnings was at Bt570m (-31%QoQ +9%YoY). YoY gain was due to a fall in amortization expense. QoQ fall dragged by dividend paid from TTW in 3Q20.• Revise down 2021-23E earnings by 13-32%We maintain BEM with a BUY rating with a new target price at Bt10.0 (Previous TP: Bt10.60) after revised net profit in 2021-23E down by 13-32%. Our target price derived from SOTP methodology, which is equivalent to 59xPE’21E, 50% discount to Thai transportation sector. A discount due to huge net loss of Airport of Thailand.

BEM: Phases of Recovery and Growth Are Around the Corner

Thailand

Bangkok Expressway and Metro PCL is a transportation company. The Company combines toll and metro line networks. Bangkok Expressway and Metro is based in Thailand.

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Bangkok Expressway and Metro (BEM TB)

Bangkok Expressway (BEM): Ridership Increase

the reopening date is set, and with the support from the Thai government to jump-start the tourism sector, the MRT ridership is set to increase....

Henry Soediarko

BEM: Expect 3Q21 Earnings to Be Bottom of This Year

We maintain BEM with a BUY rating while roll over target price to Bt10.30 (previous TP: Bt9.90) derived from SOTP methodology, which is equivalent...

Pi Securities PCL, Thailand

Earnings Review: Bangkok Expressway and Metro Plc. (BEM)

BEM reported weak results QoQ in 2Q21 and soft traffic volume YoY in July given the new wave of the pandemic and the lockdown measure to curb the...

Krungthai XSpring

BEM: Expect Earnings to Remain Dull at Least in 2Q21 and 3Q21

We maintain BEM with a BUY rating with a target price of Bt9.90 derived from SOTP methodology, which is equivalent to 49.5xPE’22E, 30% discount to...

Pi Securities PCL, Thailand

BEM: Phases of Recovery and Growth Are Around the Corner

We expect earnings to slightly drop YoY in 1Q21 pressured by a sharp fall in traffic on tollway and mass transit system as a result from partial...

Pi Securities PCL, Thailand

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