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>We reiterate our BUY rating with a higher target price of Bt165 (+5% from Previous TP) based on 35xPE’22E, the average of the Thailand energy drink stocks.</strong></p><div>• We expect CBG to report 2Q21 net profit of Bt894m (+1%YoY, +28%QoQ) support by re-stocking products in CLMV market, solid China sales growth at triple digit growth, new functional Drink product (Woody C+ Lock Vitamin C Drink Mixed Berry) on  19 April 2021, two new alcohol products distribution in 2Q21.</div><div></div><div>• In 2H21, we expect CBG earnings to improve HoH caused by (1) Recovering sales in CLMV market, (2) Solid china sales growth, and (3) Reduction of excise tax and lower sugar costs after the company gradually adjust sugar formula by 2H21.</div><div></div><div>• Revised up 2021-22E earnings to factor in reduction of excise tax and lower sugar costs.</div>

We reiterate our BUY rating with a higher target price of Bt165 (+5% from Previous TP) based on 35xPE’22E, the average of the Thailand energy drink stocks.• We expect CBG to report 2Q21 net profit of Bt894m (+1%YoY, +28%QoQ) support by re-stocking products in CLMV market, solid China sales growth at triple digit growth, new functional Drink product (Woody C+ Lock Vitamin C Drink Mixed Berry) on  19 April 2021, two new alcohol products distribution in 2Q21.• In 2H21, we expect CBG earnings to improve HoH caused by (1) Recovering sales in CLMV market, (2) Solid china sales growth, and (3) Reduction of excise tax and lower sugar costs after the company gradually adjust sugar formula by 2H21.• Revised up 2021-22E earnings to factor in reduction of excise tax and lower sugar costs.

<p><strong>Yesterday analyst meeting came out with a positive tone. We upgrade CBG from HOLD to BUY rating and roll over target price to Bt157 (+31% from Previous TP) based on 35xPE’22E, the average of the Thailand energy drink stocks.</strong></p><div>• We expect 1Q21 earnings should be the bottom quarter of the year.</div><div></div><div>• We foresee 2Q21 earnings to improve QoQ supported by re-stocking products in CLMV market, solid China sales growth at triple digit growth, new functional Drink product (Woody C+ Lock Vitamin C Drink Mixed Berry) on  19 April 2021, two new alcohol products distribution in 2Q21.</div><div></div><div>• Upside from reduction of excise tax and lower sugar costs by Bt85m per quarter if the company adjust sugar formula.</div><div>
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</div><p><strong>We maintain positive view toward its medium to long-term outlook driven by 1) Strong demand in CLMV energy drinks market; 2) Solid liquor’s distribution growth; 3) Solid sales growth from china markets; and 4) New S-Curve from new product (WOODY C+ LOCK and Cannabis drinks).</strong></p>

Yesterday analyst meeting came out with a positive tone. We upgrade CBG from HOLD to BUY rating and roll over target price to Bt157 (+31% from Previous TP) based on 35xPE’22E, the average of the Thailand energy drink stocks.• We expect 1Q21 earnings should be the bottom quarter of the year.• We foresee 2Q21 earnings to improve QoQ supported by re-stocking products in CLMV market, solid China sales growth at triple digit growth, new functional Drink product (Woody C+ Lock Vitamin C Drink Mixed Berry) on  19 April 2021, two new alcohol products distribution in 2Q21.• Upside from reduction of excise tax and lower sugar costs by Bt85m per quarter if the company adjust sugar formula.
 
We maintain positive view toward its medium to long-term outlook driven by 1) Strong demand in CLMV energy drinks market; 2) Solid liquor’s distribution growth; 3) Solid sales growth from china markets; and 4) New S-Curve from new product (WOODY C+ LOCK and Cannabis drinks).

CBG: China Market Is a Key Growth Driver in the Next Three Years

CEO, A. Stotz Investment Research

Dr. Andrew Stotz, CFA

Quantamental Investing to beat Benchmarks

A. Stotz Investment Research

We pick stocks. We construct portfolios. All our effort is focused on how to better pick stocks and construct portfolios. We serve fund management companies, family offices, and high net worth individuals.

Thematic (Sector/Industry)

<p>We highlight 14 stocks in Thailand that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Thai market to try to find interesting ideas base upon Fundamentals or Valuation or Momentum or Risk or some combination thereof.</p>

We highlight 14 stocks in Thailand that look interesting to us based upon our FVMR Methodology. Our research team constantly reviews the Thai market to try to find interesting ideas base upon Fundamentals or Valuation or Momentum or Risk or some combination thereof.

The Stocks to Own in Thailand – Vol. 32

<p><strong>We maintain CBG with a BUY rating. Given a positive earnings outlook, our forecast and target price are subject to revise up after earnings announcement on 19th February 2021.</strong></p><div>• Ministry of Public Health has allowed hemp to be planted and commercialized as the ingredient in certain household goods. Interested parties are able to apply for permission for hemp planting with Food and Drug Administration on January 29, 2021.</div><div></div><div>• CBG has an opportunity to launch new functional drink products (Relaxation drinks). We believe CBG has the potential to produce and distribute new functional drinks that include hemp given that CBG is one of the major beverage company that studied. We leave this benefit from hemp as an upside from our forecast.</div><div>
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</div><p><strong>We still like CBG for its 1) Bright outlook in CLMV energy drinks; 2) Potential growth from China market; 3) New S-Curve from new product (WOODY C+ LOCK); and 4) Solid liquor’s distribution sales growth momentum.</strong></p>

We maintain CBG with a BUY rating. Given a positive earnings outlook, our forecast and target price are subject to revise up after earnings announcement on 19th February 2021.• Ministry of Public Health has allowed hemp to be planted and commercialized as the ingredient in certain household goods. Interested parties are able to apply for permission for hemp planting with Food and Drug Administration on January 29, 2021.• CBG has an opportunity to launch new functional drink products (Relaxation drinks). We believe CBG has the potential to produce and distribute new functional drinks that include hemp given that CBG is one of the major beverage company that studied. We leave this benefit from hemp as an upside from our forecast.
 
We still like CBG for its 1) Bright outlook in CLMV energy drinks; 2) Potential growth from China market; 3) New S-Curve from new product (WOODY C+ LOCK); and 4) Solid liquor’s distribution sales growth momentum.

CBG: Ample Opportunity in New Functional Drink Products

Pan-Asia Index Rebalances/ Events/ Delta One, Periscope Analytics

Brian Freitas

Pan-Asia Index Rebalances/ Events/ Delta One

Event-Driven

<p>The SET50 Index is one of the very few indices that is still weighted by full market cap. Stocks need to have a minimum free float of 20% to be eligible for index inclusion but the free float is not used to determine the weight of the stock in the index.</p><p>This had led to stocks with low free floats having an inordinately high weight in the index. The most recent case in point was <a href="https://www.smartkarma.com/entities/delta-electronics-thai-pcl" target="_blank" data-smartkarma-citation="entities:20912:1" rel="noopener">Delta Electronics Thai (DELTA TB)</a> - the stock was an inclusion in the SET50 index at the December review. DELTA is now the third largest stock in the index with a 6.07% weighting, even though the SET free float of the stock is only 22.35%. The stock has jumped 1000% over the last year.</p><p>Media reports now indicate that there are changes brewing that could result in the SET revising the calculation methodology to more accurately determine the free float of stocks, and a change to the calculation methodology of the SET50 Index that would see it move from a full market cap weighted index to a free float market cap weighted index.</p><p>In this Insight, we take a look at the stocks that would be affected by the changes and the impact of passive fund trading on the stocks.</p>

The SET50 Index is one of the very few indices that is still weighted by full market cap. Stocks need to have a minimum free float of 20% to be eligible for index inclusion but the free float is not used to determine the weight of the stock in the index.This had led to stocks with low free floats having an inordinately high weight in the index. The most recent case in point was Delta Electronics Thai (DELTA TB) - the stock was an inclusion in the SET50 index at the December review. DELTA is now the third largest stock in the index with a 6.07% weighting, even though the SET free float of the stock is only 22.35%. The stock has jumped 1000% over the last year.Media reports now indicate that there are changes brewing that could result in the SET revising the calculation methodology to more accurately determine the free float of stocks, and a change to the calculation methodology of the SET50 Index that would see it move from a full market cap weighted index to a free float market cap weighted index.In this Insight, we take a look at the stocks that would be affected by the changes and the impact of passive fund trading on the stocks.

SET50 Index: Change to Free Float Weighting In the Works?

Thailand

Carabao Group PCL, through its subsidiary, manufactures and distributes energy drinks.

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Carabao Group (CBG TB)

CBG: Expect 2Q21 Earnings Improve QoQ

We reiterate our BUY rating with a higher target price of Bt165 (+5% from Previous TP) based on 35xPE’22E, the average of the Thailand energy drink...

Pi Securities PCL, Thailand

CBG: China Market Is a Key Growth Driver in the Next Three Years

Yesterday analyst meeting came out with a positive tone. We upgrade CBG from HOLD to BUY rating and roll over target price to Bt157 (+31% from...

Pi Securities PCL, Thailand

The Stocks to Own in Thailand – Vol. 32

A. Stotz Thai Portfolio: We highlight 14 stocks in Thailand that look interesting to us based upon our FVMR Methodology.

A. Stotz Investment Research

CBG: Ample Opportunity in New Functional Drink Products

We maintain CBG with a BUY rating. Given a positive earnings outlook, our forecast and target price are subject to revise up after earnings...

Pi Securities PCL, Thailand

SET50 Index: Change to Free Float Weighting In the Works?

There is a strong possibility that the SET revises the calculation methodology to more accurately determine the free float of stocks, and changes...

Brian Freitas

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