Asean-focused. Ex-Head of Thai Research

Athaporn Arayasantiparb, CFA

Asean (Thailand) Focused Independent Research

M Corp Review

M Corp is led by Athaporn Arayasantiparb who served as Head of Research for UOB and ANZ in Thailand and was an award-winning telecoms analyst at UBS in 2010 (AsiaMoney Thailand category) and Regional Strategist for DMG in Singapore. Prior to that, he also served as Kasikornbank credit analyst and scholar. He has a total work experience of 17 years, of which 14 were in research and 4 in research management roles. He started his career as an engineer for PTT and currently manages family investments. He holds an MBA from Stern (NYU) and CFA Charter since 2006. Apart from IPO Radar, which focuses on future listings, MCorp Review also provides six on-going thematic series ranked by frequency in descending order, namely: 1) Silicon Stories (technology) 2) Sathorn Series (financial services) 3) Thai-Coons (billionaire origin stories) 4) Reality Check (data-driven, investigative) 5) Thai Media Spotlight; and 6) Thai Macro Watch (global market drivers).

Equity Capital Markets

Supalai Real Estate Investment Trust / Equity Capital Markets

Supalai, the country's second most valuable property company traditionally focused on the residential niche, is launching an IPO of its office REIT on Rama 3.<ul>
<li>
The IPO. As a norm, Thai REITs are initially priced at Bt10/unit. The initial asset size of Bt3.2bn implies a market cap of US$106m and 320m units. Jay Capital is Financial Advisor, with SPM as Property Manager, Adelphi as REIT Manager, and KTAM as Trustee.</li>
<li>
Assets and business. The asset is the 34-storey Supalai Grand Tower on Rama 3. The office building has an 88.5% occupancy rate. Utilities and parking space account for 7% and 5% of revenue respectively, and the main growth driver should be the 3% rental increase across most space.</li>
<li>
Valuations. Our valuation range is very tight at Bt11.5-11.7/unit, implying a 15-17% upside from IPO price. As an existing Supalai shareholder, we are planning to participate. Supalai itself should also benefit marginally from value crystallization.</li>
<li>
Key risks and limits. Key risks to the investment case includes potential loss of tenants, fund execution risk, land repossession, and macroeconomic risks. Property fees and maintenance fees are capped at 2.7% and 2% respectively.</li>
</ul>

Supalai, the country's second most valuable property company traditionally focused on the residential niche, is launching an IPO of its office REIT on Rama 3.

The IPO. As a norm, Thai REITs are initially priced at Bt10/unit. The initial asset size of Bt3.2bn implies a market cap of US$106m and 320m units. Jay Capital is Financial Advisor, with SPM as Property Manager, Adelphi as REIT Manager, and KTAM as Trustee.

Assets and business. The asset is the 34-storey Supalai Grand Tower on Rama 3. The office building has an 88.5% occupancy rate. Utilities and parking space account for 7% and 5% of revenue respectively, and the main growth driver should be the 3% rental increase across most space.

Valuations. Our valuation range is very tight at Bt11.5-11.7/unit, implying a 15-17% upside from IPO price. As an existing Supalai shareholder, we are planning to participate. Supalai itself should also benefit marginally from value crystallization.

Key risks and limits. Key risks to the investment case includes potential loss of tenants, fund execution risk, land repossession, and macroeconomic risks. Property fees and maintenance fees are capped at 2.7% and 2% respectively.


IPO Radar: Supalai REIT, Office Tower Operator on Rama 3

TQR, which is an acronym for Team Quality Relationship, is a new small-cap reinsurer that will IPO on the MAI, advised by Jay Capital. MCorp Review explored many aspects of this new and interesting company.<ul>
<li>
IPO is good for 230m shares or 26.1% of the company. Post-IPO, the founding Panipa family would be diluted to 44.4%, but still retain a strong controlling interest.</li>
<li>
Business. 35.8% of revenues came from traditional business, but the bulk from alternative business. TQR connects insurers such as Bangkok, Dhipya, and Maung Thai to reinsurers such as Swiss Re, Munich Re, and Thai Reinsurance.</li>
<li>
Valuations. We value TQR at Bt4.7/sh using DDM method. Given the much smaller size compared to TQM, we do not expect the same valuations, but its strong net cash position means that it can offer a very attractive dividend yield. Furthermore, it is a stock that potentially benefits from the pandemic.</li>
<li>
Key risks to our investment case includes: 1) pandemic; 2) credit ratings; 3) concentration risks; 4) competitive rivalry; 5) cyber attacks; and 6) regulatory risks.</li>
</ul>

TQR, which is an acronym for Team Quality Relationship, is a new small-cap reinsurer that will IPO on the MAI, advised by Jay Capital. MCorp Review explored many aspects of this new and interesting company.

IPO is good for 230m shares or 26.1% of the company. Post-IPO, the founding Panipa family would be diluted to 44.4%, but still retain a strong controlling interest.

Business. 35.8% of revenues came from traditional business, but the bulk from alternative business. TQR connects insurers such as Bangkok, Dhipya, and Maung Thai to reinsurers such as Swiss Re, Munich Re, and Thai Reinsurance.

Valuations. We value TQR at Bt4.7/sh using DDM method. Given the much smaller size compared to TQM, we do not expect the same valuations, but its strong net cash position means that it can offer a very attractive dividend yield. Furthermore, it is a stock that potentially benefits from the pandemic.

Key risks to our investment case includes: 1) pandemic; 2) credit ratings; 3) concentration risks; 4) competitive rivalry; 5) cyber attacks; and 6) regulatory risks.


IPO Radar: TQR, Small Cap Reinsurer With Strong Potential

Senior Bank Analyst - Japanese Banks, Windamee Research

J. Brian Waterhouse

Senior Bank Analyst - Japanese Banks

Windamee Research

Japanese Banks

Equity Bottom-Up

Mitsubishi UFJ Financial (MUFG) / Equity Bottom-Up

Interim results for <a href="https://www.smartkarma.com/entities/mitsubishi-ufj-financial-group" target="_blank" data-smartkarma-citation="entities:218:1" rel="noopener">Mitsubishi UFJ Financial (MUFG) (8306 JP)</a>highlighted the fragility of the profit contribution from several of the group’s recent overseas acquisitions, and the increasing reliance on equity-accounted profits from <a href="https://www.smartkarma.com/entities/morgan-stanley" target="_blank" data-smartkarma-citation="entities:1122:1" rel="noopener">Morgan Stanley (MS US)</a> to keep group earnings up.  Rising credit costs were by far the largest headwinds to group profitability, with 1H FY3/2021 credit costs rising to an annualized 48bps: far exceeding the group’s 21bps in credit costs for the whole of FY3/2020.Buying megabank shares is always a 'crowded trade' at the best of times.  While there often seems to be little difference in share price performance between MUFG and mega-rival <a href="https://www.smartkarma.com/entities/sumitomo-mitsui-financial-group-inc" target="_blank" data-smartkarma-citation="entities:217:1" rel="noopener">Sumitomo Mitsui Financial Group (8316 JP)</a>, on balance we prefer the latter for the group’s tighter discipline and more stable profits ‘track record’.

Interim results for Mitsubishi UFJ Financial (MUFG) (8306 JP)highlighted the fragility of the profit contribution from several of the group’s recent overseas acquisitions, and the increasing reliance on equity-accounted profits from Morgan Stanley (MS US) to keep group earnings up.  Rising credit costs were by far the largest headwinds to group profitability, with 1H FY3/2021 credit costs rising to an annualized 48bps: far exceeding the group’s 21bps in credit costs for the whole of FY3/2020.Buying megabank shares is always a 'crowded trade' at the best of times.  While there often seems to be little difference in share price performance between MUFG and mega-rival Sumitomo Mitsui Financial Group (8316 JP), on balance we prefer the latter for the group’s tighter discipline and more stable profits ‘track record’.

Thematic (Sector/Industry)

Brett King's bestseller Bank 4.0 highlights many important trends that could overturn conventional banking. In this review, we look at how some of them threaten Thai banks and how the banks adapt to these emerging changes. Here are some of the most important highlights:<ul>
<li>
Models that start from scratch. The First Principle highlights fintech business models that eliminate the need of certain facets such as physical branches, while conventional banks here have a tougher time downsizing to cope up with the trend.</li>
<li>
Rising regulatory costs and investments could end up crippling the Thai banks and putting them at a disadvantage to fintechs, but part of this burden will be up to the regulators themselves. Banking is labor-intensive, and there's a lot of good-paying jobs at risk if they make the wrong move.</li>
<li>
Encroachment by telcos. With banking expected to resemble technology platforms in the future, telecom operators who control such infrastructure could end up eating a big part of the banking business. Some very profitable services today such as wealth management will be more vulnerable than others.</li>
</ul>

Brett King's bestseller Bank 4.0 highlights many important trends that could overturn conventional banking. In this review, we look at how some of them threaten Thai banks and how the banks adapt to these emerging changes. Here are some of the most important highlights:

Models that start from scratch. The First Principle highlights fintech business models that eliminate the need of certain facets such as physical branches, while conventional banks here have a tougher time downsizing to cope up with the trend.

Rising regulatory costs and investments could end up crippling the Thai banks and putting them at a disadvantage to fintechs, but part of this burden will be up to the regulators themselves. Banking is labor-intensive, and there's a lot of good-paying jobs at risk if they make the wrong move.

Encroachment by telcos. With banking expected to resemble technology platforms in the future, telecom operators who control such infrastructure could end up eating a big part of the banking business. Some very profitable services today such as wealth management will be more vulnerable than others.


Nine Reasons Why Thai Banks Should Be Worry About in the Future

Cross Asset Strategy

We identified five interesting news/developments that could influence Thai equities:<ul>
<li>
Protests reach breaking point. The protest starts to show econmic impact, as protestors start to block malls in addition to public places (Palaces, government offices).</li>
<li>
Thai Banks: Too little, too late?MCorp Review observed several banks becoming very proactive. KBANK delivered the country's first bank perpetual bonds, while BAY invites behemoth BlackRock into the Kingdom, but if Brett King has anything to say, it's probably too late for the sector.</li>
<li>
Intuch looks into Point Exchange. Intuch's venture capital arm Invent invests an undisclosed sum into ChomChob, an innovative platform that allows cashing and exchange of loyalty points.</li>
<li>
iPhone 12's uphill battle. Apple's long-awaited 5G iPhone finally arrives. Though Thailand is undergoing an economic recession, the tax subsidy on consumption may help sales.</li>
<li>
Ngern Tid Lor's upcoming IPO in 2021 has sparked some interest as one of Thailand's large non-bank lenders. A sizable IPO with links to names such as BAY and private equity firm CVC.</li>
</ul>

We identified five interesting news/developments that could influence Thai equities:

Protests reach breaking point. The protest starts to show econmic impact, as protestors start to block malls in addition to public places (Palaces, government offices).

Thai Banks: Too little, too late?MCorp Review observed several banks becoming very proactive. KBANK delivered the country's first bank perpetual bonds, while BAY invites behemoth BlackRock into the Kingdom, but if Brett King has anything to say, it's probably too late for the sector.

Intuch looks into Point Exchange. Intuch's venture capital arm Invent invests an undisclosed sum into ChomChob, an innovative platform that allows cashing and exchange of loyalty points.

iPhone 12's uphill battle. Apple's long-awaited 5G iPhone finally arrives. Though Thailand is undergoing an economic recession, the tax subsidy on consumption may help sales.

Ngern Tid Lor's upcoming IPO in 2021 has sparked some interest as one of Thailand's large non-bank lenders. A sizable IPO with links to names such as BAY and private equity firm CVC.


Snippets #46: Thailand in Turmoil, Intuch Points Exchange

Thailand

Bank of Ayudhya Public Company Limited provides a full range of banking and financial services.  The Bank offers corporate and personal lending, retail and wholesale banking, international trade financing, asset management and investment banking services, to customers through its nationwide branches. It also has branches in Hong Kong, Vietnam, Laos, and Cayman Islands.

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

Bank Of Ayudhya (BAY TB)

IPO Radar: Supalai REIT, Office Tower Operator on Rama 3

Supalai REIT is another single asset REIT on Rama 3. Our valuation range is Bt11.5-11.7/unit, and we recommend participating in the IPO for the...

Athaporn Arayasantiparb, CFA

IPO Radar: TQR, Small Cap Reinsurer With Strong Potential

TQR is a new insurance reinsurer small cap IPO. Any price under Bt4.7/sh looks really compelling for a sector that benefits from the pandemic and a...

Athaporn Arayasantiparb, CFA

MUFG (8306 JP): Wavering in the Ranks

Interim results for MUFG (8306 JP) highlighted the fragility of the profit contribution from some of its recent overseas acquisitions, with credit...

J. Brian Waterhouse

Nine Reasons Why Thai Banks Should Be Worry About in the Future

Brett King's bestseller sheds spotlight on one of the world's largest sector anywhere. Is the business model dead? Do regulators get it? Are you...

Athaporn Arayasantiparb, CFA

Snippets #46: Thailand in Turmoil, Intuch Points Exchange

The iPhone 12 finally arrives even as Thailand faces a historic protest. Meanwhile, Intuch finds a compelling points exchange startup, and Thai...

Athaporn Arayasantiparb, CFA

Price Gauge

52-week Range

Market Cap (USDm)

P/E

Dividend (Yield)